Amazon: malignant monopoly, or just plain evil?
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You can hire that done for a flat rate, without giving up 85% of your money in perpetuity.
"will even pay quite well if I accept extremely onerous terms."
What are these "extremely onerous terms"?
There aren't any. They will pay you 70% of retail, on time, every month. No exclusive contracts. No Byzantine "royalty statements". Their accounting is quite clear. No signing over your copyrights forever.
"if I were to self-publish through Amazon I would be vulnerable to exactly the same pressure that Hachette is currently on the receiving end of, but with less recourse"
This, of course, is pure nonsense.
It may eventually come about that Amazon starts abusing authors, but that's certainly not the case now.
This is also nonsense. If your Kindle books are DRMed it's because your publisher insists on it. It's a checkbox in the publishing portal. Amazon doesn't actually care if you add DRM or not.
No they won't.
70% royalties is only available if you sell your book for less than $9.99, otherwise it drops to 35%: https://kdp.amazon.com/help?topicId=A301WJ6XCJ8KW0
That's what you might call an "onerous term".
The Kindle editions of virtually all of Stross's books are less than $9.99 anyway, so this doesn't even apply.
>You must set your Digital Book's List Price (and change it from time-to-time if necessary) so that it is no higher than the list price in any sales channel for any digital or physical edition of the Digital Book.
>But if you choose the 70% Royalty Option, you must further set and adjust your List Price so that it is at least 20% below the list price in any sales channel for any physical edition of the Digital Book.
Additionally, Stross can't even tell us which of the terms he believes are onerous:
>You will not, without our express, prior written permission: (a) issue any press release or make any other public disclosures regarding this Agreement or its terms
2) Amazon wants you to sell your ebook for less than the paper edition (i.e., not rip off their customers). Also not "onerous".
And of course you CAN do both of these things. You'll just get 35% rather than 70%. Which is still more than 2X what you'll get from a traditional publisher.
I see exactly two books that are more than $9.99. Both are $10.99.
If Stross published those himself and dropped the price to $9.99, he'd be getting $6.99 per copy. As it is, he's likely getting $1.60 or so per copy.
Also note that Amazon have the right to drop your price on that scheme to anything they think will ship more copies -- including zero, by pushing it as a promotional freebie, or $0.99, as a daily deal. Which means I don't get $6.99 a copy; I get $0 per copy, or $0.69 per copy.
No. Amazon does not require exclusivity.
"Which means I don't get $6.99 a copy; I get $0 per copy, or $0.69 per copy."
No. If Amazon discounts your book, you still get paid based on the retail price.
However, his list price is in the $4 range, so the terms may differ for higher priced books as well.
Strange then tthat Amazon talks about matching prices offered on other merchants.
Can you point to those terms that requires exclusivity?
The only exclusive deal I can think of is the Kindle Owner's Lending Library. That does require exclusivity. In that deal, Amazon will lend your book (for free) to Amazon Prime members, and still pay you for it. It's like getting paid for checking your book out of the library.
That doesn't sound like a horrible abuse of authors to me.
Maybe the people who publish your friends have cut a bad deal, but that's not the deal they give to indy authors.
"And again: if you want Amazon's best remuneration deal, you're required not to sell to their competitors.)"
Dead wrong. Link or retract.
35% seems higher than competiting publishers with major marketing power.
The contract is also full of delightful potential gotchas like Amazon demanding worldwide distribution rights at exchange rates set by them, without reference to any externally defined rates.
The whole thing is incredibly biased in favour of Amazon over the author. This should be absolutely no surprise whatsoever given Amazon's history: At one point, they were charging EU authors their local VAT rate, whilst only paying 3% VAT in Luxembourg: http://www.theguardian.com/technology/2012/oct/21/amazon-for... (they may have given up on this particular piece of blatant gouging, but I'm sure they're trying to make up for it elsewhere).
$0.15/megabyte.
Most ebooks are considerably less than one megabyte.
"even though Amazon only incurs the costs when delivering 3G data."
Really? They get data centers and bandwidth for free?
Meanwhile Amazon Cloudfront charges $0.12 per Gb. What was that about data centres and bandwidth again?
Be serious: $0.15 per Mb is a massive rip-off compared to the actual cost of delivery, unless the download is over 3G in which case it's merely an obnoxious markup rather than an outright rapacious one.
Or you can go for the 30% deal and have Amazon eat the costs. You'll still be getting twice what you'll get from a traditional publisher.
They get it for significantly less than $0.15/MB. AWS S3, where Amazon likely stores eBooks, charges $0.12/GB with the first GB each month free. Even if you add the $0.03/TB to store the data and the $0.0000004 per request, and it's still more than 1000x times less than they're charging authors.
Charging for 3G data might be reasonable, but charging that much for regular internet traffic is excessive.
No, they don't. You can choose any or all of 245 territories, and set the price individually for each one.
I don't know where you're getting this information from.
"5.3.2 Currency Conversion. We may sell your Digital Book using foreign currencies. When we do, we will convert the List Price you submit to other currencies (each, a "Sale Currency") at an exchange rate we determine. We may periodically update the converted List Price in order to reflect current exchange rates. If the converted List Price would be outside of the minimum or maximum List Price we accept for the Sale Currency, your List Price will be converted so that it is equal to the applicable minimum or maximum List Price for that Sale Currency. Minimum and maximum List Prices are specified here. The converted List Price in the Sale Currency will be your List Price when we offer and sell your Digital Book in the Sale Currency. For example, your Royalties will be calculated based on the converted List Price in the Sale Currency."
They're referring to the conversion for the sale price, not the author payment.
No, they don't. You can choose any or all of 245 territories, and set the price individually for each one.
Not under the 70% royalty program you can't:
"ii. Distribution Territory: If you select the 70% Royalty Option for a Digital Book, you must make it available to us for distribution in each territory for which you have appropriate distribution rights, and you must comply with any other restrictions or requirements we may provide from time to time for the 70% Royalty Option in the Program Policies."
iow, if you're an individual author and you want to use the 70% royalty program then you have to give Amazon worldwide distribution rights.
So? That's not "demanding worldwide distribution rights".
If the music industry is any guide, the writers will adapt. And if the software industry is any guide, then we do need an Amazon competitor.
There aren't any. They will pay you 70% of retail, on time, every month.
"Note that if your Digital Book is eligible for the 70% royalty option, your Digital Book will earn 70% on each sale of the Digital Book at a Promotional List Price set under the Kindle MatchBook program regardless of whether the Promotional List Price is within the maximum and minimum list price requirements for the 70% royalty option."
What does that mean? It means that Amazon can set any price they like for your book, right down to $0.00 and as the author you get to eat it - your sole remedy is to withdraw the book from sale with a 5 day delay. Amazon makes an error and misprices your book, resulting in half your expected sales being made at $1 instead of $10? Tough - you get to eat it (and yes, this has happening to authors in the past).
It means nothing of the sort. The MatchBook program is a special deal that you have to enroll your book in yourself (it lets people who've purchased your paper book get the ebook at a discount). What it actually means is that if you have voluntarily signed up for MatchBook, you're only going to get 70% of the discounted price, not 70% of the list price.
If you're not signed up for MatchBook this doesn't apply at all.
"5.3.4 Customer Prices. To the extent not prohibited by applicable laws, we have sole and complete discretion to set the retail customer price at which your Digital Books are sold through the Program. We are solely responsible for processing payments, payment collection, requests for refunds and related customer service, and will have sole ownership and control of all data obtained from customers and prospective customers in connection with the Program. "
ie, the author gets to set the "list price", but Amazon sets the sale price. However, looking down the contract, it appears that they pay either a 35% or (70% - costs) royalty based on the list price for both choices. I'm fairly sure it used to be the case that Amazon applied the (70%-costs) royalty to their sale price, which they could change at will, unlike the 35% option, where you always got 35% of list. Either I'm wrong or they've changed this since I last looked at the whole Kindle contract set up.
Yes, authors get paid a royalty of 6%-25% of the cover price. However, the biggest cut of the cover price goes to the distribution/retail chain. And when I say "biggest" I mean "50-70%".
In general, the publisher spends about the same amount as the author royalties on production and manufacturing overheads. And reaps the same again as their profit share.
Between us my publishers and I typically end up getting 20-30% of the price of each book sold, with another 10% going on production costs. Amazon then take 50-70%. They may choose to pass half their share on to the consumers, but they're still trousering more profit than my publisher and I get, combined.
Unless you put it in KDP, in which case you get 70% and the retail chain gets 30%.
With respect to perpetuity, maybe your contracts are better than most people get but "term of copyright" is quite common.
Amazon, as best I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers -- Matthew Yglesias
In this case they are a middleman replacing another middleman. That's just capitalism. Publishers had a good run.
Can Amazon turn evil? Sure. But it will be 20 years this year and they still haven't. If they do, you can replace them tomorrow.
You can even read a book bought anywhere else on your Kindle. EPUB converts to MOBI just like that
ebook-convert book.epub book.mobi
As to the point that somehow we will run out of books to read, there is not even the slightest chance that I will read the best 1% of the books published until today in my entire lifetime. That's assuming everyone stops writing now. And statistically I'm a heavy reader, I'm up to 2-3 not-strictly-technical books a month.
I think we must have a very different idea of 'model corporation'
http://www.salon.com/2014/02/23/worse_than_wal_mart_amazons_...
>The series revealed the lengths Amazon was prepared to go to keep costs down and output high and yielded a singular image of Amazon’s ruthlessness—ambulances stationed on hot days at the Amazon center to take employees suffering from heat stroke to the hospital. Despite the summer weather, there was no air-conditioning in the depot, and Amazon refused to let fresh air circulate by opening loading doors at either end of the depot—for fear of theft
>On June 2, 2011, a warehouse employee contacted the US Occupational Safety and Health Administration to report that the heat index had reached 102 degrees in the warehouse and that fifteen workers had collapsed.
>On July 25, with temperatures in the depot reaching 110 degrees, a security guard reported to OSHA that Amazon was refusing to open garage doors to help air circulate and that he had seen two pregnant women taken to a nursing station. Calls to the local ambulance service became so frequent that for five hot days in June and July, ambulances and paramedics were stationed all day at the depot
Those stores are not the everyday in and out working environment, nor is a factory job any way comparable to a 100k salary position. You definitely are not going to have as cushy a work environment no matter what factory you work in.
So what you're saying is that since their salary is low, they don't deserve humane working conditions?!
The fact that they just accepted the health risks for their employees out of "fear of theft" (why couldn't they put a security guard there?) makes them evil.
That's giving far too much credit to the argument that Amazon will put authors out of business. Amazon may very well put publishers out of business (and replace them). They have no incentive to put authors out of business, because without authors Amazon would have no new books to sell.
That's precisely the concern though. That, if one day Amazon were to turn evil, the landscape will be so radically changed that no viable competitor would be able to emerge, and there'll be no one to replace them with.
Has Stross considered that maybe it's Hachette that is holding out for unreasonable terms? Maybe he could go with another publisher. He also writes:
"They have a publishing subsidiary and allow me—if I want to self-publish—to use them as a sales channel, and will even pay quite well if I accept extremely onerous terms."
I don't see how being paid quite well is extremely onerous.
"It's anti-author, and in the long term it will deprive you of the books you want to read."
On the contrary, my impression is that there's been a recent explosion of new titles being released, as well as putting old out-of-print books back on the (electronic) shelf.
That's not how I read it. I read it as he gets paid extremely well if he accepts the onerous terms. What are the onerous terms? I wish he'd elaborated, but you can imagine it might have something to do with ownership once you've published with Amazon. I really do wish he'd elaborated though so we know for sure.
https://kdp.amazon.com/help?topicId=APILE934L348N
>You will not, without our express, prior written permission: (a) issue any press release or make any other public disclosures regarding this Agreement or its terms
When I first began testing different ebook formats a few years ago, not only was the iPad hardware superior to the Kindles and Nook, the ePub reading experience in iBooks was vastly better than the same ePub on the Nook or the .mobi equivalent in the Kindles.
Where Apple failed was in the purchasing experience (the iBookstore/iTunes mess) and some of the back-end tools for publishing. Other than updating the iTunes Producer interface for submitting new titles, and improving iBooks Author for Apple-only rich media ebooks, I haven't seen any significant improvements for readers or publishers who want to use the Apple platform over the past two years. Meanwhile, the Kindle Fire has brought Amazon customers a slick alternative to the iPad at a much lower price point.
I don't like having an Amazon monopoly, but some of the blame should be assigned to the erstwhile competitors who can't seem to get it together.
Personally, as a happy Amazon customer, one aspect is funny. I get insight into how satisfied Microsoft users must have felt in the 90s when the monopolistic criminality became widely known. :-)
Edit: Any suggested alternative stores, which deliver paper books all over EU? (Sigh, I am happy with Amazon.)
I think Apple can afford to sell books without DRM and will do so if publishers allow them. I don't think Amazon.com and Apple are evil. It is the publishers who increasingly find themselves less useful and are willing to sacrifice usability for the sake of temporary relevance.
Problem is right now they have selection issues, no cross platform availability and they colluded to raise prices.
Making format-shifting illegal is a hateful thing to do and there should be exceptions in law for this.
Troubles on the producer side might force some producers out, but since this is in the creative sphere we cannot really know which Shakespeare we've missed because he "became a banker".
I do feel sorry for Stross the writer that might have to switch publisher, or the artist who gets .002 cents per download, but hey, my Amazon or Spotify experience rocks and delivers great value.
Other comments rightly add that in the transition from monopsony to oligopsony (: say Apple enters) producers might be able to retain more value, but then again, these producers still have to deal with the middle men. You have this stacked market here where each party would blame the others for not getting his / her 'appropriate' level of reward:
producer (creative, high-risk endeavor, superstar effects) <--> publishing house (makes market, creates prints, less risky endeavor, but has competition in picking winners) <--> *platform Amazon (delivers product, makes userbase, pays per sale: least risk but low added value per sale)
They won't if there are no more good books to read/music to listen to, because the gains aren't worth the effort that goes into producing them.
I don't think danger is books or music disappearing, but that the quality goes down, as the incentives for authors/musicians/composers to invest significant time and effort producing high quality work are reduced.
This particularly applies to the 'avant-guarde' works which push the envelope creatively/intellectually, but typically don't correlate with high volumes.
Amazon's strategy is price, convenience and selection. It has been since at least the famous 1997 letter to shareholders.
(Of course, Kindle isn't a monopoly either. None of the pricing is predatory - ie temporarily selling at a loss for anticompetitive purposes. It's razor and blades.)
First World Problems at its finest. "Those fucking starbucks guys have a MONOPOLY on good coffee!!" Suck it up or use widely-available inferior products and services.
From the point of the producer, if you're not on amazon, you're not reaching 80% of your audience. You don't have a choice.
Actually, this does happen from time to time when Amazon decides to promote a book for free and still pays list price royalties.
So by this standard, they are an ebook monopoly, but not necessarily one that would be slapped by the feds, provided that people believe Amazon's large market share wasn't the result of abused or unfair power.
Yes, on many occasions these guys would be the scariest 12-year old in the playground. But this time they're getting picked on by Mike Tyson.
At any rate, the most interesting points in the blog post were that firstly it's not clear that Hachette aren't playing some shenanigans of their own with delivery times, and secondly that there's this whole background of court-ordered deal renegotiation that Stross didn't mention.
[1] http://www.theguardian.com/technology/2014/may/23/amazon-esc...
It's always a good sign when an article expands one's vocabulary. (Yes, look it up!)
That said, I basically agree with the premise of this article. When the price is comparable I prefer buying eBooks from publishers, with an advantage of getting multiple formats. Yesterday I bought one book on Kindle and another directly from the publisher. The book I bought on Kindle was unfortunately much cheaper from Amazon than the publisher's direct price.
But I'm left with a question - is Amazon stupid? They rely on new works coming out just as much as authors and publishers. Why are they acting in a way that will drive off the creation of new content in the long term? It looks like a losing strategy for them.
In the article Stross says that "after a while, there will be no more Charlie Stross novels because I will be unable to earn a living and will have to go find a paying job".
Paying authors 70% rather than 15% is going to "drive them off"?
Okay.
If Amazon started gouging, someone else would spring up to replace them. Unlike the tradpubs, Bezos is thoroughly aware of how fast disintermediation can occur.
At that point amazon is free to dictate terms to any publishers (perhaps with the exception of larger ones that could plausibly bootstrap their own retail channels if forced to) and earn their loss back.
I mean, sure, if that's an author you already know and there's no other way to get the book, you might do it. But die-hard fans are always going to buy the books anyway, that's not what publishers and authors compete for. Reaching the audience that has not read previous books is the main purpose.
Crying on the sideline about how evil Amazon is whilst doing nothing to service readers doesn't get any sympathy votes from me.
And that includes Charlie Stross, who's work I love. I have money and e-reader, but if I want to buy his books, he sends me to... Amazon. To buy DRM-ed vendor-locked Kindle-only copies.
Okay, Accelerando is an exception, but we're talking pretty much the most tech-savvy, open source minded fiction author out there. You can pretty much imagine the state of the rest of the industry.
Amazon is the only party that innovates and tries to provide for the needs of the reader. They've earned their monopoly the hard way. Hachette is not the little guy. Hachette is a multinational that sat on its fat ass counting money for two decades.
By the logic of the article everybody who negotiates a price is evil because they want to drive the other party out of business by aiming for lower and lower prices.
As another poster pointed out upthread, there will always be plenty of people who will write even if they get paid very poorly. Charlie Stross might not be one of them; if the pay he can get from writing goes down enough, he might, as he says in his article, have to stop writing and find another job that pays more. But there will be plenty of authors who will continue to write even under Amazon's self-publishing terms.
I don't think it would be in Amazon's interest to encourage alternate channels by driving quality authors away.
They probably also can not just sell any crap that calls itself a book, so they need good authors (assuming books are even significant revenue for them anyway).
I didn't say this will happen, nor did I say it would necessarily be a good thing if it happened. I just said it might happen. Stross himself appears to agree that it might; see below.
> If people value Stross' work enough, they will pay.
And if they don't, they won't. More precisely, the more it costs to get Stross' work, the fewer people are likely to pay. Will there be enough at a higher cost (such as buying printed books or buying direct from the author) for Stross to make a living at it? Stross himself didn't seem too hopeful in his article; if you think otherwise, perhaps you should tell him, not me.
> I don't think it would be in Amazon's interest to encourage alternate channels by driving quality authors away.
I don't think Amazon cares about quality authors as such; I think they care about selling what the public has shown, by its buying choices, that it wants to buy. If the public wants to buy the work of quality authors, Amazon will sell it--and try to undercut everyone else's price. If the public wants trash, Amazon will sell that--and try to undercut everyone else's price.
> They probably also can not just sell any crap that calls itself a book, so they need good authors
Maybe, maybe not. See above. It's not Amazon that's ultimately deciding this; it's us, the readers.
> (assuming books are even significant revenue for them anyway).
I don't know about revenue, but I think it's quite possible that books, or at least e-books, might be a significant portion of their profits. They have distribution costs down extremely low for anything digital, and the prices in the Kindle store indicate to me that there could be quite a bit of margin there.
For example, think about fishing. If there are lots of fishing boats they will tend to overfish. They can't leave fish in the ocean to reproduce because other boats will catch them. If there is just one boat (or all boats are owned by the same company) it will take out the optimal number of fish so that the fishery remains healthy and pays the highest dividends in the future.
I tried looking for the article that talked about this, but I couldn't find it. The conclusion of the article was that some form of regulation was necessary.
My gut feeling is that the monopolist strategy can work, but only if the company's board implements strong internal controls and the executives don't get them changed. I feel that this is a bit of a gamble though as you have two powerful diametrically opposed forces. Also, members of the board could be looking for a quick exit from time to time as well.
On another note, while I was looking for the article, I found this interesting article on the necessary characteristics for a Marine Protected Area to work: http://www.nature.com/nature/journal/v506/n7487/full/nature1...
What are you saying? That media always tends towards higher quality, especially after consolidation?
Therefore, it has an incentive to create an ecosystem that maximizes it's long term profit.
There's no reason why this would preclude vast oceans of swill produced by isolated independent artists, from which a few mega-hits arise from time to time. (App Stores?)
For example, think about fishing. If there are lots of fishing boats they will tend to overfish.
The problem here, is that in this discussion it seems that fish correspond to authors. I don't think that's correct. Authors of a given "species" aren't a partially fungible resource that is "killed" when utilized. (Unless the authorial landscape turns into a vast ocean of swill from which a few megahit one-hit wonders sometimes arise.)
Please cite just one historical example where a media monopoly increased the quality of authorship in its domain.
I do not see how Amazon starts squeezing authors hard without losing them to somewhere else.
This is really a stupid way to put it.
The 1/10th size company is plenty big enough to hire top notch lawyers, lobbyists, PR people etc to fight this battle. The fact is this is really a battle where, past a certain point, size doesn't matter. We are not talking about a schoolyard fight.
What Amazon is doing is wrong (if as reported) however making out the underdog (if you want to call it that) as a "David" as if they are some small 10 person company being picked on by, say, google (and their algorithm) is just hyperbole.
Is this claim backed up by any actual evidence? Does Amazon pressure self-published authors the same way they pressure publishers?
If your list price is above $9.99, you get 35% royalties instead of 70%.
The claim is not that Amazon is pressuring self-publishing authors today - it's that they could start in the future, as an ebook monopoly would give them have the means, motive and opportunity.
The only authors that have to fear that future are those that produce works uninteresting enough that people won't look for them outside of the Amazon store.
Does this mean Stross is an uninteresting writer? Or is he worrying about nothing?
Maybe he is. SF has never been particularly interesting to the general reading public, alas.
Seriously, has it been so long since Microsoft that people can't recognise straight up abuse of market position anymore?
You can sell your books through Amazon. But you can't sell your books anywhere else cheaper than Amazon.
The internet is the great democratizer of commerce.
Most print shops will do the printing & binding for you, you can get mailers from Uline, and mail with the USPS.
It's hard to see how Amazon could stop or even inhibit any of that.
"I could do this myself, and self-publish, but I don't want to be a publisher, I want to be a writer: we have this thing called "the division of labour", and it suits me quite well to out-source that side of the job to specialists ... in particular if I were to self-publish through Amazon I would be vulnerable to exactly the same pressure that Hachette is currently on the receiving end of, but with less recourse"
I think Amazon bring 4 things:
- Audience
- Bandwidth
- A platform for taking payments, refunds and so on
- DRM
Bandwidth is probably not a serious concern, unless he's going to sell upwards of millions of books. The payments can be handled by other platforms easily, eg. PayPal. DRM is likely unnecessary. So it's really audience, and I guess Stross has that already, although other writers probably don't.
He is in the enviable position of not having to worry too much about whether his next book will sell, but for the vast majority of the traditionally published authors, this safety makes a huge difference.
Crowdfunding is a lousy way to fund a book. Backers in general are willing to fund printing costs on finished books, and that's it. They will not pay a writer in advance so he can spend the next year writing a book. So either he's taking a job, or dipping into his savings. And he will at least have to pay for the cover design and other marketing materials in advance, because visuals are crucial in a crowdfunding campaign. Then, he spends at least six weeks preparing and running the campaign, during which he will probably have no time to write. After that, he has to deal with publishing and fulfillment issues, but after all that... well, he probably breaks even. But he will have some excess inventory left that he can sell directly or ship to distributors at a deep discount to try to make some profit.
Obviously they're a specialised kind of bank manager who has this specialised skill. Like the mortgage loan guy or the business loan guy.
Oh wait, that's "a publisher".
Still waiting any proof from him about that predatory pricing accusation
Oh, it already exists...
Amazon's negotiating tactics are not unique and don't make them evil. B&N pulled the same tricks when negotiating with Simon & Schuster last year: http://www.nytimes.com/2013/08/20/business/media/simon-schus... It's a common incident in the television industry as well. Time Warner dropped CBS last year while negotiating a fee dispute: http://www.reuters.com/article/2013/08/04/us-timewarner-cbs-...
It doesn't matter that one party is in a stronger negotiating position than the other. That's capitalism; don't hate the player, hate the game.
p.s. The DOJ anti-trust lawyers never had a focus on preventing monopolies before the '80s. Their focus has always been on the prevention of the abuse of market power whether by monopolists or oligopolies. If Amazon should be targeted for having an ebook monopoly then Apple would have been on the hitlist first for having a digital music monopoly that they managed for half a decade before the Kindle.
Well, yes, the point is that the game is broken.
Try some other words in there and see how you feel:
"That's fascism; don't hate the player, hate the game."
At least it's clear that you wish to resolve corporations from responsibility for what they do.