Amazon’s Monopsony Is Not O.K.
nytimes.com
nytimes.com
When Hachette's contract with Amazon expired, Amazon (rightfully) stopped ordering advance inventory for stocking, but continued taking orders for available titles and transmitted those orders to Hachette as they arrived. From there, it's Hachette's responsibility to deliver the orders to an Amazon distribution center. Once the books arrive, Amazon packs & ships them to purchasing customers as normal.
That's why, when Hachette's contract expired, all of their books were listed as "Out of stock: ships in 1 to 6 weeks" - that's how long it takes Hachette to deliver stock. That's slow as hell.
Amazon didn't "boycott" or "drop" or "betray" authors or "discourage" readers from buying their books - it ceased offering retail inventory management services to a supplier whose contract had expired, and made a rational and defensible business decision when it became clear that the supplier was not negotiating in good faith to establish a new agreement.
When one buyer represents 50-60% of sales, the "most important job" of any seller is to come to "mutually agreeable terms" with that buyer. Is Amazon's "most important job" to come to terms with Hachette? Not even close. One party to the negotiation can walk away; the other cannot. So "mutually agreeable terms" is kind of a hilarious phrase meaning, "we will state the terms, and then you will agree to them. That is now your most important job."
And Hachette is the largest publisher, with something like 16% market share (2010 numbers). That's why this negotiation is even happening.
When Amazon talks to smaller publishers, this isn't even an issue. They are your boss; they tell you what to do; you do it. Except they're a little different from a normal boss, because they absolutely do not care about you; it is actively in their interest to see your business fail. People who survive in Amazon's buying department have to be OK with that -- the in-house name for Amazon's Small Publishers Negotiation Program was the "Gazelle Project," before the lawyers made them change it.[1]
Support publishers, don't support publishers, whatever. If you think authors will be better off without publishers that's a separate conversation. But if there's any industry you do like, you should be very concerned about Amazon gaining market share in that industry.
[1] http://bits.blogs.nytimes.com/2013/10/22/a-new-book-portrays...
I don't follow the logic here. Your fatalistic assessment assumes Hachette (and other publishers) are paralyzed and cannot adapt. However, the business world isn't static therefore Hachette can walk away. (If not this particular contract renewal because of timing pressure then at least the next one -- if they have a smart strategy.)
If amazon has 60% of sales, it was the book publishers who willingly signed previous business deals to allow amazon to become that dominant. Likewise, those book publishers can put on their business-thinking hats and figure out how to make amazon less powerful.
Victim thinking: ok, amazon wants to pay us less for our books. Since we're helpless deer in the headlights, what do we do?
Business thinking: ok, we got our executive team in a conference room here. The CEO says, "this is where all you vice presidents and MBAs earn your salaries. Give me a business plan to lessen amazon's pricing power over us." Options:
1) Rethink/reprioritize other reseller relationships and offer better terms to Barnes & Noble, Apple iBooks, etc
2) Open our own online book store. Talk to other publishers about starting a consortium or joint venture to create a new online book store to sell direct.
3) Maybe Google Inc is also interested in partnering with us to beat amazon.
4) Call CEO of Sony and tell him we want help his eReader beat Kindle by offering exclusive titles just for that device.
5) dozens of other creative business ideas...
If all the big publishers want to, they can join forces and pull all their book titles from amazon. Amazon is then left with just the self-published CreateSpace titles. The book publishers made voluntary deals to get them into this position of weakness and likewise, they can start making voluntary strategic moves to get them out of it.
Airlines used to pay a big commission to travel agents. The airlines used the emergence of the internet to reduce commissions to agents. In this case the vendor (airlines) got more leverage than the reseller (travel agents). However, cruise ships still rely on travel agents for the bulk of their bookings. Maybe the relative positions of market power will change. Maybe not. Businesses can adapt and change if they want to.
All the articles from New York Times, salon.com, author blogs, etc sympathizing with the book publishers have not convinced me that Hachette is a helpless victim of amazon dominance.
Hachette is a major company that has no problem fighting back, problem is in the internet age they are incompetent, for that they deserve whatever the market is dishing out to their outdated business model.
Unfortunately, the set of solutions {!collusion, practical} is very small. It might be empty.
I don't see what would be illegal about book publishers partnering up to create their own online store and making their titles exclusive to that store.
The major record labels jointly own Vevo[1] for youtube content. They also collectively own a big chunk of Spotify.
Pearson Publishing is a competitor of O'Reilly and yet they were partial owners of the O'Reilly online subscription system.[2]
If your company is relying on a joint venture to save its future, you should probably update your resume...
To relate back to amazon, I'm guessing Jeff Bezos has to buy old HBO content at a loss to fill out the selections for Amazon Prime Video. That way, the $99 membership fee looks like a good value. Could amazon put a price squeeze on HBO? It doesn't look like it. Amazon needs HBO content more than HBO needs Amazon.
20 years ago, HBO didn't have these type of business options. If HBO didn't like Comcast terms, it would be unrealistic for HBO to start digging streets and laying new video cables to a million residential homes. With the internet, they don't have to. I'm not convinced that book publishers have no chess moves left to use.
[1]http://deadline.com/2014/10/richard-plepler-time-warner-inve...
But you can't wave away the power Amazon has in that fight. The number of businesses that can survive, say, a 50% drop in sales for a year is pretty darn small, and the number of businesses that will tolerate a 50% drop in sales for six months without tossing out the CEO is even smaller. That means Amazon has a lot of power right now to decide how practically every supplier in the book market behaves. And they are pushing in exactly the opposite direction with all that power -- they're trying to consolidate.
So this is dynamic in both directions -- it's a tug of war where Amazon's monopsony power will either increase or decrease. I feel like the smart money has got to be on increase. (See Amazon's P/E ratio.)
Wasn't this exactly what happened and resulted in Amazon getting the Att. General to investigate antitrust allegations?
But the idea that they could see Amazon becoming a bigger and bigger buyer and fail to do anything to diversify their wholesale and retail outlets should also be a strike against Hachette.
EDIT: I'd also suggest that as a default with the participants in this particular disagreement, anyone with self interest at heart should probably think about siding with Amazon. Jeff Bezos doesn't lose too many fights.
You can check out some of Krugman-the-journalist's most notorious contradictions here: http://wiki.mises.org/wiki/Paul_Krugman#Contradictions
That's a very different thing to any suggestion he might be part of an orchestrated PR move by Hachette which was the original implication.
Krugman has a very full bio so you can find all sorts of things there, he hasn't hesitated to work with anyone willing to listen to his opinions and expertise.
I mean, the apocalyptic end game here is that publishers are forced out of business entirely and Amazon ends up buying content directly from authors, I guess. That doesn't sound so bad to me, nor like something that's going to "hurt America". Maybe then they might squeeze authors too, though that seems like something publishers are already able to do today, no?
What's the critical function provided by publishing houses that Amazon is in danger of disrupting?
Imagine a simplified supply chain: authors distribute through Amazon to reach readers. Amazon exerting pricing pressure on authors benefits readers in the short term by reducing their reading costs. But by reducing authors' profits, Amazon dissuades new entry. Authors with skills elsewhere write less; the diversity and quality of new books suffers. Monopsony, when it reduces producer profits below equilibrium (e.g. what these authors would earn with many Amazons fighting for their business), dissuades investment in production.
Reality is complicated by the middleman, publishers. Now we have authors contracting with publishers to distribute through Amazon to reach readers. There are multiple publishers competing for authors, so for now the authors don't appear to be squeezed as much as the middleman. Authors' continued use of publishers hints at the value of their services, which may be nothing more than collective bargaining.
Removing legacy middlemen is healthy. Skewing producers' bargaining rights is not. Disentangling publishers' rents (the fraction of publishers' profits which come from them being, before Amazon, authors' only choice for distribution) from authors' costs of production (what good authors need to be paid to compensate them for the time, skill and risk which goes into writing) is difficult.
I take it you do not know what the median author makes from writing a book. Lets just say if an author was also a rational economic agent they would flip burgers rather than write books.
"It's not enough to just live. You have to have something to live for."
And flipping burgers ain't it.
The same people who come up with ideas like "rational economic agent" either have their bills taken care of or are surrounded by other people who think that stuff up, too. Individuals are sometimes rational, but a lot of people have to consider quality of life, life having other plans, etc., which doesn't seem to have been included in the ideas behind "rational economic agent."
"Rational economic agent" boils all the "life" out of life. There's what we should be doing; there's what we want to be doing; sometimes there's what we need to be doing; and then there's the idea of what we need to be doing. Some of it earns us money, but all of it has value, which "rational economic agent" completely misses.
We're human beings, not some godsdamned little spreadsheet automatons.
Rather that an argument advanced based on rational economic thinking is invalid when talking about writers in the general sense as they do not produce their work based on the expectation of a reasonable profit.
If Amazon keeps playing hardball with Hachette, they will drive down writers profits, but writers will keep writing books because they don't care about profit. eg. There will be no reduction in the supply of books.
Rather read works by people who are creating for the sake of art, and not money.
This does not mean that I believe authors should not be correctly compensated, but has more to do with the impetus for action itself and the resulting quality of work that is produced.
What I'm curious about is why you think Amazon's actions will drive away those creating crap for the sake of money. When I look through the Kindle Store the thing that always strikes me is how many knocked together short books written by people with no great expertise there are. To me that's the main current impact of Amazon's democratization of publishing.
There's a very good question to be asked about why the current publishing elite should be the gate keepers to who gets published and who doesn't, however you don't have to browse much of Amazon to see the impact on quality when there is no gate keeper at all and, to me at least, it doesn't look like a utopia of art for art's sake.
that said, that doesn't solve the problem of discovery, although it does alleviate it a bit.
that's the logic, feel free to educate me :)
Surely the quality of the output rather than the purity of the intent should be the driving metric? Weary journalists knocking out a book to order are realisticall better than 95% of enthusiastic amateurs.
Besides, most writers are notoriously penny less. Why do you think anyone is going into it for the money?
>Rather read works by people who are creating for the sake of art, and not money.
What does that have to do with the low quality of many self-published works? There is tons of fiction out there written entirely for 'art' and it is nearly all complete trash.
There is so much trash on Amazon because they are killing publishers who traditionally filtered out most of the trash. For every crappy bestseller they published the publishers weeded out tens of thousands of other crappy works.
Crappy authors will still write, even if only for public praise (some people do like rubbish).
Without the publishers filtering you can't just pick a book at random and be ensured it probably won't make you want to claw your eyes out (at least publishers would clean up the major spelling mistakes, grammatical errors, and incoherent plots).
So what is left is popularity, and as already established that doesn't stop shitty authors writing books.
Peer recommendations are a real crap-shoot unless you have vetted your peers thoroughly, which takes time.
Whoever can build out an automated system to rank and recommend self-published books will make a fortune.
If you self-publish without doing an ounce of marketing through curation of an audience, then your book falls under the "vanity publishing" sphere. Then why should anyone care if your work is good? You clearly didn't do a good enough job of selling it.
(Note that publishers don't do anything for first time authors in this regard, either.)
Reader reviews are okay for the best sellers if you read a lot of reviews (but I find it tends to heavily skew towards those who loved the book, with a handful of haters), but I find it is pretty much worthless when it comes to average books which only have a handful of reviews.
I'm thinking of a more objective system. It could be based on reader reviews but would need to do something like making the review rank the book on a a set of criteria and then figuring out if the reviewer is trustworthy by cross comparison. eHarmony for books.
1) You are using it in a way that I'm not able to. For you it is a tool that leverages pre-existing relationships, which I'm sure is great. I know about four people that use Goodreads, and their tastes just don't align to me. And unfortunately for me, the stand-alone recommendation service Goodreads offers that people like me try to rely on is just terrible.
2) Even if I had a critical mass of friends making recommendations, they themselves identified the books they should read somewhere. Yes, we can all socially recommend books we like for awhile, but eventually someone has to start separating the wheat from the chaff to start making those recommendations. Books are not movies or songs, and it's much more time-consuming to do this en masse. I don't trust Goodreads to facilitate upstream discovery (that can leveraged downstream via social recommendations) in a publisher-less world primarily populated by self-published books.
2) I'm not sure how much injection of discovery into the network graph in the first place is a concern. There's always people who like trying random new books that they see, or who read something about an author and decide to try them out, or pick up a random book in a bookstore because it looks cool, etc etc etc. I agree that it'll be a much slower process than in the publisher-gated case, but I don't see why you wouldn't see the same sort of ecosystems arise as did for indie music with independent review sites.
So basically the independently wealthy.
As someone who is earning a living by writing, I typically produce a book a year, plus change (sometimes up to two books per year).
If downward pressure on production costs results in me having to seek work elsewhere, then of course I won't stop writing ... but I'll write a lot less.
Amazon's strategy of driving down prices by leaning on publishers to cap prices across the board works on the assumption that all books are created equal. It's commodification, equating work of serious artistic or literary merit, or work that lots of people like, with work that is neither artistic, meritorious, or even popular. If the monopsonist gets their way, then all authors take a haircut. Even if you're a market fundamentalist, this has problems: Amazon may be sending a price signal, but it doesn't apply to the individual SKU but instead to the manufacturers' entire product range across the board. Any useful information is thus lost in the noise ...
Books have a high up front cost and low unit cost. This means that quadrupling sales is better than doubling prices and books "that lots of people like" will always be dramatically more successful than books that are "neither artistic, meritorious, or even popular". There is no risk of the type of commodification you are worried about.
I think there is a valid point to be made about books of serious artistic or literary merit losing out as we shift focus to books that lots of people like.
Put it another way: posit that there is a constant number X readers out there who want to buy the next Charlie Stross novel. Is it a better strategy for me to pursue sales at a higher price point, or lower? Now posit that I might acquire more readers by lowering my price point ... but is it a linear relationship? Will I get my hypothetical profits back by deep discounting?
Answers on the back of a postcard, please. (Bearing in mind that actually doing the experiment is highly dangerous, because that's an entire year's income stream you're jeopardizing if you get it wrong.)
I know I read about 10 times as much (including a few of yours, thank you!) as before getting one, although I'm probably an extreme case because it's slow and expensive to get English-language books here in Italy.
This quote, from upstream in the thread, makes sense to me:
> Removing legacy middlemen is healthy. Skewing producers' bargaining rights is not. Disentangling publishers' rents (the fraction of publishers' profits which come from them being, before Amazon, authors' only choice for distribution) from authors' costs of production (what good authors need to be paid to compensate them for the time, skill and risk which goes into writing) is difficult.
You doubtless have a closer seat to the action and more skin in the game - do you think there is already an effect on authors? To me it seems a bit too early to tell exactly what is happening where, with who, with certainty. I don't see Amazon trying to squeeze so hard that it strangles authors, but I suppose they're big enough they might well do stupid stuff inadvertently.
I think books are great value for what you pay in terms of entertainment, and I'm a pretty fast reader.
I also have a physical stack of unread books, which I'll probably never get around to read now that I have a Kindle, created mostly due to impulse buying on bookstores. Some I also bought again digitally.
I'm now growing my virtual kindle queue, faster than I can read, but with a different approach: I added all my wishlist authors (including cstross, incidentally) to ereaderiq, which notifies me of price drops, and buy 1.99 daily deals or similar range. So far I got very good deals on good titles of Arthur Clarke, Kurt Vonnegut, Neal Stephenson, William Gibson and so on.
So, again, anecdotally, I might buy things that I'll never read, but the amount of titles that I haven't read is bigger than my daily reading time, and after a certain quality threshold, titles seem mostly interchangeable.
I'd guess the best price point is the one just on 'impulse buy'.
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http://www.antipope.org/charlie/blog-static/2010/04/cmap-8-l...
Modern democracies usually strive to prevent concentration of power in few hands, especially if those hands aren't elected. The market, however, does often favor concentration of power, and when that happens, democracies should protect themselves.
The US in particular has had a history of businesses gaining too much power and seriously hurting the public. This is Krugman's main point:
[Y]es, I have Amazon Prime and use it a lot. But again, so what? The desirability of new technology, or even Amazon’s effective use of that technology, is not the issue. After all, John D. Rockefeller and his associates were pretty good at the oil business, too — but Standard Oil nonetheless had too much power, and public action to curb that power was essential... The robber baron era ended when we as a nation decided that some business tactics were out of line. And the question is whether we want to go back on that decision.
Personally I think that exploitative practices by big business are making a huge comeback, in Silicon Valley in particular (see Google with privacy, Uber with workers, the SV non-poaching cartel and more). It is interesting to compare and contrast this with the Gilded Age robber barons. It's certainly not the same, but the robber barons are coming back, albeit in a new form.
I'm not sure how you site "exploitative practices by big business" then give an example of Uber. Uber is % of cab services? I would not classify them as big business. And while you might have a point with Google and privacy, users are not their customer but rather their product they sell to advertisers. So to argue they use exploitative practices and comparing to Amazon is weak considering the users aren't really a part of the supply chain but rather opt-in voluntarily.
In as much as SV companies "disrupt" old industries, they usually consolidate power. Uber may not be big yet, but it's bigger than any single taxi company, and it wants to be a lot bigger still. How Uber transfers risk to its workers and pretends its nothing but a "marketplace" has the potential to change work relations and job security. It's just that Amazon's business practices look more similar to the ones we know from the gilded age, while what Google and Uber do is new, but not any less exploitative.
Opting-in and choice has little relevance here. A modern democracy must ensure that no unelected entity (and even elected bodies have checks and balances) gains too much control over people's lives even if people seem to want it.
2nd paragraph. Uber might transfer risk to workers but without uber these workers wouldn't even have jobs as taxicabbers due to the cost of fees/regulation government applies to taxi services. I find it ironic the employees are complaining about a company they voluntarily work for, and arguing against the practices that allow the company to exist and employ them. Uber has ample competition so I wouldn’t say they exactly wield power— they are trying to fight the consolidated power where their competitors are in bed with the government whose laws provide a barrier of entry to the existing inefficient industry. Same thing is happening with Telsa. Whenever a transformative company enters an industry, the existing players lobby government for regulation and/or to enforce the regulation already in place. Throughout history it has been 1.big company(ies) establish huge market share in an industry 2. Said companies lobby government for regulation that prevents new entrants. RR, coal, automotive, finance, health insurance, utility industries have all done this.
3rd paragraph. This is ridiculous. Government’s role is to serve the people. Government knows better than the people? The government needs to protect citizens from themselves? How would they determine when an “unelected body” gains too much control over people’s lives? The fact is the free market determines winners and losers and is the most efficient way to allocate resources. Transactions only occur when both parties think they’ll benefit. No one is forced to do anything. To think the government knows better than everyone else is naïve at best and destructive at worst.
The oil and rail companies of the gilded age. It was government regulation (the Sherman Act[1]) that helped put a stop to monopolies. If you read up on Rockefeller, JP Morgan, Stanford and pretty much any robber baron, you'd see that they were in the business of constant consolidation. True, at many points they were aided by local government, but that's because local government wasn't regulated either.
> Uber might transfer risk to workers but without uber these workers wouldn't even have jobs...
Maybe and maybe not, but that doesn't justify exploitation. Think of an island where the people are starving, and some industrialist moves his business there and has the islanders build iPhones for two slices of bread per day. Both the islanders and the industrialist benefit from the transaction, but the transaction is still exploitative, as the industrialist uses the threat of death by hunger to get an unfair deal.
> Same thing is happening with Telsa. Whenever a transformative company enters an industry, the existing players lobby government for regulation and/or to enforce the regulation already in place. ..
I'm not saying that government regulation is always used for good, or that it's even used for good most of the time. I am saying that society is on the whole better with regulation than without it, because (at least in the US) the population was being massively exploited during the gilded age and called on the government for help, and I think pretty much everyone agrees that America is much better for it, even if growth has slowed.
> Uber has ample competition so I wouldn’t say they exactly wield power.
My original comment may have been confusing, but Uber was mentioned simply as an exploitative company (which might some day become powerful) -- not a currently powerful one, unlike Google and Amazon, which are already too powerful.
> This is ridiculous. Government’s role is to serve the people. Government knows better than the people? The government needs to protect citizens from themselves?
Democracies protect people from themselves even when it comes to the democratic process itself. Most democracies prevent people from voting in a dictator, even if the people really want it. They install checks and balances to prevent an accumulation of power even if the people want it. And it's not about knowing better, but averting disaster by slowing down the growth of potential "cancerous tumors". The government doesn't (and can't) always decide what's "good" and what's "bad". All it can do is prevent individuals or organizations from growing too strong, so that if something bad happens, the damage is limited. This means that some potential positive effects are slowed down as well, but lowering the risk for a disaster is usually worth it.
> How would they determine when an “unelected body” gains too much control over people’s lives?
Just as Teddy Roosevelt did. When the exploitation starts piling up, the media exposes the control, and the people call for change.
> Transactions only occur when both parties think they’ll benefit.
Like I said before, this doesn't mean the transactions are carried out when both sides are free of duress. A surgeon and a homeless person aren't as free when it comes to the choice of, say, buying drugs. The surgeon has a lot to lose if caught, while the homeless doesn't. Performing transactions when one side of the deal has limited choice or limited knowledge is exploitative even if that side benefits, too. In democracies, the weak side will hopefully be educated of the exploitation, and then use their political power to tip the scales more in their favor. The idea is that democracies (though they're far from perfect at that; really far) are able to generate other forms of power to offset that of property.
If the rich are free to exercise their power -- money -- any way they like, the poor should be free to use their power -- their numbers -- to fight back. This is why I think American libertarianism is so hypocritical, as it places limitations only on one side but not the other. If regulation on money is to be completely lifted, than so should regulation on violence. But since many people don't want that, we have democratic institutions that give the poor some power back (though not nearly as much as they would in an anarchy, where they'd be free to use violence, which is why democracy, too, mostly serves the rich).
Yes, but they're also taking almost risk, so it's still exploitative. The island example was simply meant to show that transactions where both sides benefit aren't necessarily fair, and can still be considered exploitation -- not as a direct comparison to Uber.
That's nice and all, but history says otherwise, with the Gilded Age as the primary example: Monopolies existed in the relative regulatory vacuum, and it took government power to break them up.
It optimized for massive growth at the expense of everything else, yes. That's not what most people actually want. Most people understand they aren't going to be Vanderbilts.
> Government corruption and high tariffs helped prevent competition and helped establish the monopolies it later set out to break up. RRs benefitted from the creation of the interstate commerce commission
So government did everything wrong and businesses did everything good, then and always, for ever and ever, amen. And you Austrian-School Libertarians wonder why nobody takes you seriously.
More to the point, do you not understand the economic benefits of massive vertical and horizontal integration, and how difficult it is to break into a field like railroads, even if we do posit a total regulatory vacuum?
S.O. was a serious force in reducing the price of kerosene to the public - by 70%.
I read the book, and would be most interested in a cite for this.
> the people begged government to help curb the robber barons,
True, but that's not a statement the public was seriously harmed.
> Teddy Roosevelt wrestled power away from them
True, but also not a statement that the public was seriously harmed.
It's possible that "Titan" is a whitewash, but it has 4.5 stars on Amazon and appears to be well regarded.
Well-known authors don't need publishing houses as much, but most of them would rather spend their time writing than publishing, and they know that their sales make it possible to bring in new faces.
Publishers routinely demand that authors submit their next book (or even everything you write in the same genre for years) to them first and even if they reject it they have the right to match any offer you get later.
How many VCs demand rights over your next N years of startups?
Or we could talk about high-discount clauses: Where publishers get a bigger percentage when your books are discounted below a threshold they claim is unlikely... Only to turn around and encourage retailers (including Amazon) to discount your book just below that threshold - where they make more per book and you make substantially less.
How often do VCs make more money by going behind your back to convince an acquirer to pay less?
Or we could talk about rights reversion games, shuffling sales through shell companies cut royalties and on and on and on.
I know VCs can be ruthless, underhanded and worse, but traditional publishers can make them look like kittens by comparison.
You can't get anywhere useful by excluding the bad actors in one industry and focusing solely on the bad actors in another industry.
In the case of books, you'd see that by cuts in editing, by authors shortening the amount of time that they spend writing a book, and through authors dropping out and leaving the field to less talented writers with fewer alternative income sources.
The textbook monopsony is government health care. Most visibly, the long wait times for some health care services.
I just spent $10,000 editing and producing my latest book that's going to be self-published. Comparing the royalties I'll get with self-publish (not using CreateSpace BTW, though I have no problem with them) including those fees - not even half of which would be picked up by a publisher, mind you - with a publisher who absorbs ALL of my editing/producing costs is STILL a joke. Publishers are predatory towards anyone but the somewhat-ready-to-breakout writers. They do nothing for the established writer except salve his ego and they do nothing for the startup writer who begs for help.
And more important, to many new and more established writers, the editors in publishing houses provide serious value in the form of advice and guidance. It's easy to think that because you read books you surely know how to write a good one. But that's similar to thinking that because you use applications you surely know how to code a good one.
And lastly, good publishing houses serve as brands for consumers. People won't see a self-published technology book with the same eyes as if it was published by O'Reilly (for example). From past experiences they probably feel guaranteed of a certain level of quality from the O'Reilly book that a small lone author almost never can provide
I'm not claiming that the publishing system is a panacea or that all editors are amazing. But you described it as mostly useless, bordering on a ripoff, and I think it's far from the truth.
Of what? The cost of the books? Because advances have gone basically to zero. I was offered none.
As far as your other questions: Books won't sell unless you curate an audience prior to writing it. And if you do that, the need for a publisher disappears quickly.
I don't know with which publishing houses you've been in contact with, and I think most of what you say comes from a bad experience with dubious publishers. But, in a serious one you work with an editor, whose job is to read your manuscript and tell you what's good and what can be improved, and how it can be improved. A good editor with some knowledge of the field your book is about is an enormous help.
James Altucher has written about this extensively, and his stuff is very widely read (certainly far more than I).
Most of the publishers I've spoken with are well-regarded non-fiction houses who have done medium and big time projects. Their cut of royalties were usurious, to say the least. When I compared what I got with what I would be paying them, it was insane. That's where my perspective comes from.
...
Have you noticed that most PUBLISHED stuff is garbage, too?
Worse, the argument is over pricing on e-books, not physical stock, so Hachette's stance makes even less sense.
As usual, Paul Krugman sees everything through a political lens, so naturally Amazon is evil and must be beaten down.
If the lower price really would make more money for everyone, then surely Hachette would readily do it. Since they don't, and since they understand this market as well as anyone, a reasonable person might assume that they would indeed make less money with a lower price.
Even free-market fundamentalists must see that free markets don't function when dominated by monopoly or monopsony. So isn't there a legitimate public policy question about whether the state should limit that market power?
Lower prices decrease profits for book publishers who make money both from Amazon and book stores.
Editors
Having a "everybody can publish anything" model is great. But it doesn't fit all cases.
Yes, an editor is really helpful. Revision, pagesetting, etc, as well.
That's the problem under examination here.
To Amazons various competitors: Google Play Books, iBooks, Barnes and Noble...
"about a 50% market share for books sold online (that’s ebooks and printed books sold via the Internet)" http://www.digitalbookworld.com/2013/is-amazon-invincible/
You don't even need to not sell through Amazon to compete with them, just be willing to take a smaller cut with competitors that give you a more favorable terms (allowing them to undercut Amazon).
That sounds like a recipe for success to me. What about you?
At what point could this function be largely automated? At what point fully?
Algorithmic editing brings up novel possibilities. You could have footnotes added as information is corroborated or countered. Editions could be instantly localised for almost every language and cultures. One may even get to on-the-go re-editing for individual readers (for example, I may prefer a punchier writing style with non-referential footnotes inserted in-line). This changes what a "book" is, but so did paperback publishing and the Kindle.
Once we have strong AI capable of analyzing semantic content, determining which passages most strongly support the intended message, determining which unwritten passages could be written to more strongly support the intended message, determining the semantic linkings between different sections as the message is built up and optimizing the order of those sections.
In other words, never.
For some reason this creeps me out, as reading is quite a personal thing, but it seems the attempt to turn it social and crowdsource data from it is happening.
(Btw, I'm playing Devil's advocate here. I don't buy at Amazon for ethical reasons - I just don't find their purchasing power to be a problem)
If Amazon screws the publishers out of business and begins publishing themselves our alternatives to Amazon would be reduced significantly. Then they have the power to increase prices for consumers because there's very little we can do. We can still use libraries and book shops but for new releases published by Amazon they could make themselves sole distributor.
What's the reason in your case? I genuinely wonder - considering dumping them too.
But again: the linked article isn't about monopoly power. If you want to draw a line between this behavior and a future monopoly, it needs clearer argumentation.
And why that abuse of power is a bad thing: "It’s definitely possible, with some extra effort, to buy a book you’ve heard about even if Amazon doesn’t carry it — but if Amazon doesn’t carry that book, you’re much less likely to hear about it in the first place."
Recall that Amazon publishes directly right now. They haven't raised prices unreasonably.
- Amazon continues to drops prices. Great for consumers.
- They drop prices so low that either publishers reduce how much they pay writers or they go out of business.
- Writers then start shifting publishing to Amazon who can give them a bigger piece of the pie.
- Publishers die out leaving Amazon as sole publisher + distributor.
- NOW they can exploit their power. They can raise prices and we can do nothing as they are the sole publisher and distributor.
- Things are good now for consumers but long term Amazon can increase and exploit their power.
Maybe they are a nice company and won't screw us but that's not a risk we should be willing to take.
> your new startup can't get any of the authors people want to read.
If Amazon is not serving the needs of those authors, they'll be interested in switching horses.
... yet. What's to stop them from doing so when they've killed off a few more of their competitors?
> If Amazon is not serving the needs of those authors, they'll be interested in switching horses.
Assuming there are horses left which are viable to switch to.
Whether the current situation with extra ineffectual intermediaries is much better I am not sure, probably not.
Having a single buyer of a commodity good is bad, but books aren't commodities. Basically right now book authors, to first approximation, get paid basically nothing. But a few are huge successes with the ability essentially to set their own price. Amazon can't squeeze Joe-nature-book-writer any more than his publisher does already. But could even Amazon squeeze J. K. Rowling? I doubt it.
I just don't see the path to this argument. Needs numbers or something.
With competition there is little space for 30% margins but there is still room for retail to take some margin. It is not a hugely profitable business but there are good niches.
The value of a music album has decreased significantly because anyone can create one in their bedroom with free software and under $1000 worth of equipment. Same with a book - all you need is a laptop and you can self-publish either through e-books or on-demand publishing. Even video content - you can film entertainment content with your cell phone and distribute it on YouTube.
It's a zero-sum game with entertainment, because the public only has so many hours in a day that they can spend consuming media content. So 30 minutes spent watching YouTube videos where the author makes MAYBE $0.05 per view means 5 minutes less to spend watching content with a higher value.
Publishers will never go away for "premium" content: they do serve a marketing function where they can spread risk among a number of options. But their importance in a highly segmented market like book publishing is likely to decrease.
> applying the same strictures to Standard Oil would have left that company alone rather than breaking it up. And that’s a conclusion that I’m entirely happy with too.
So it would have been fine far Standard Oil to take over the entire US economy as long as it reduced prices far consumers?
Like in the music industry, where a few hits fund a lot of up-and-coming bands publishing has a few hits and many smaller authors that may or may not get big but need up-front funding to try. It's like VC for authors.
"Walmart is squeezing manufacturers to push prices down, which is bad becuase... why?"
When minimizing price becomes the dominant merchant behavior, quality suffers. Yes, you can get a computer mouse shipped to your door in 2 days or less for $7. But you will also be replacing it in a few months when its cheap microswitch starts randomly double-clicking from a single button press.
This, in itself is no big deal. You got what you paid for, basically. The danger is when other manufacturers, that formerly had more trustworthy brands, replace their microswitches with the cheaper part, without informing the customer that their build quality has been reduced. So you can also buy a $60 name-brand mouse that experiences exactly the same failure mode as the $7 item.
Then value-based shoppers and cost-based shoppers end up buying exactly the same item, even though the former would dearly love to buy just one mouse that lasts for 10 years rather than 20 that last anywhere from 1 to 24 months each. Meanwhile, the quality-based shoppers have to pay higher prices for parts that are no longer available at scale. Or, as is more frequent, they take to the secondary market to buy goods manufactured before the cost-driven breakdown in overall quality.
Aggressive cost controls are great for people who always buy the goods with the lowest up-front cost. But they absolutely suck for people who do not want to ensure things work by purchasing an ongoing subscription for replacement parts. I want my goods to be durable and reliable, not cheap enough to replace when it inevitably breaks.
The only thing I have a problem with is when costs are cut by reducing wages to the point where employees have to take public assistance. This is government subsidization of your business. This should be solved with a mandatory minimum wage set to a value that is a living wage.
Industrial organization is very interesting and important field to follow even if you are a layman interested in game theory, mechanism design and implementation theory. Market structure is big important part of efficiently working free markets.
From the article linked below: $27.99 hardcover generates $5.67 profit to publisher and $4.20 royalty to author
$14.99 agency priced e-book generates $7.87 profit to publisher and $2.62 royalty to author.
Hardcopy: $9.87 total profit: approx 57.8% to publisher
e-book: $10.49 total profit: 75% to publisher
https://web.archive.org/web/20130713080118/http://aardvarkno...
Does it? For a business with a low barrier to entry like selling books? I'd like to see some examples.
The reason Amazon can have a monopsony is because it keeps prices low. It retains customers and forces publishers to go through them. If they raised prices, they'd lose their advantage, and there are plenty of competitors ready to take the market, including well funded companies (e.g. Apple and Google).
If this was what's usually called a "natural monopoly", maybe that could be argued, but book selling - and especially ebook selling - is anything but.
That said, if you look at the big 4, they largely consist of mergers of very old companies, and Amazon is really the only successful ebook seller in english at the moment, even Google seems to have problems getting far in that market. So the barriers to entry may be higher than you think.
Amazon offer a painless way of adding books to the device. Buying a book takes seconds and it magically appears on the front page of the device waiting to be read. Its one reason why book piracy didn't go as insane as music piracy, the means of adding books was easier than the device
On my ipad I have iBooks, Marvin and Kindle. The first app I open is the Kindle due to the 180+ books that already sit on Kindle's cloud. And I doubt that is going to change.
As an utter aside I do have an e-ink reader. I went from an ipad and kindle to an ipad mini and then back to the former. Reading on an e-ink device a fall asleep reading on an ipad mini the light kept me awake...
My answer is: it depends. My wife and I have well over a thousand books on Kindle, but I've got a growing library of Kobo books (from taking advantage of some impressive discount coupons) and almost everything DRM-free I get outside a major ebookstore (e.g. books bought directly from publishers or authors) goes straight into Google Books (they're the best with uploads).
Yes, having books scattered across multiple apps isn't perfect, but it isn't that big a deal, either. Amazon has a significant edge (especially with customer service), but it is nowhere near insurmountable.
If your service doesn't give easy access to drm-free ebooks in standard formats, then any barriers are caused by them and not Amazon.
Amazon is easy to bypass. The major publishers could set up their own online stores tomorrow if they wanted to. Authors could set up their own stores too. There are a ton of viable alternatives.
It's never been easier for an author who wants to sell his own books to do so. It also isn't hard for like-minded authors to pool their resources and set up their own sales site.
As with any business, how well they do with their own site is strongly dependent on:
1. the quality of the book
2. the promotion and marketing
3. customer service
4. price
None of this is trivial, but it is certainly doable. Small businesses thrive (and fail) all over the internet, selling books is hardly any different.
And, of course, the 100% failure rate happens only when you quit before you start.
Soon adds up:
60p (plus £3.40 if an interlibrary loan is necessary)
Often cheaper just to find it for £1 plus postage costs on Amazon or Abebooks.
If I recall correctly, in Seattle the University Bookstore has (had?) free shipping according to some deal or condition, and if not you can have it delivered there, and then get out of the house and sniff books.
But most of my book buying these days is DRM-free pdfs from O'Reilly.
To get an invite:
Send a private message to @ebookfarm on Mobilism [Must have an active Mobilism account]
Send a private message to @ebookfarm on Reddit [Must have an active Reddit account]
Send a private message to Ebooka Farmer on Facebook [Must have an active Facebook account]Even if the co-op doesn't actually do any of the technical side itself, and outsources that, they could easily retain control over the code and the customer base, which would be a good thing for them.
I wonder if there was a way of cutting the middle man and selling the books directly from their website in a way that is readable in all e-book readers, hummm
I say this because it appears to be a middling-common belief.
(I suspect you're looking for something more comprehensive than just the formats, but I'm not sure what, exactly.)
And of course, just provide DRM-Free books on their website for a discounted price.
Translation: I absolve myself of all responsibility as a consumer for the business I choose to conduct.
[1]http://www.washingtonpost.com/blogs/wonkblog/wp/2013/08/06/h...
[2]https://www.opensecrets.org/orgs/summary.php?id=D000023883
economics is not a science and his nobel prize is on par with obama's nobel piece prize, given for every piece of the middle east he was about to surge with troops.
Capitalism is based on grow and destruction. It is just as absurd to argue against Amazon as it would have been to argue for Blockbuster. Netflix comes along, and Blockbuster disappears. Markets are brutally efficient, and crying over the losers is a waste of time at best, and if this bleating results in government regulation, harmful.