Big, bad Amazon
economist.com
economist.com
[1] https://news.ycombinator.com/item?id=8493736
[2] http://www.vox.com/2014/10/22/7016827/amazon-hachette-monopo...
Look at an area that "cheap" has destroyed: the Internet. The Internet is full of crap. I had to censor the ads on a HuffPo article before printing and sending it to someone the other day. That's journalism circa 2014 where there is no money to pay for class.
Is that what we want to have happen to books too? Drive down the prices so the only way to make any money off books is to plaster the end of every chapter with full color ads of Kim Kardashian? Because that's the road Amazon is taking us down, along with all the other companies who make money from distributing rather than creating content.
Ironically, people used the exact same argument against the printing press and pretty much every single development in publishing. Remember when the gramophone destroyed the live performance? When TV killed theatre?
All of those developments lowered the price of production and/or distribution radically, and allowed the production of new cheap crap, but did not kill the incumbent as predicted.
The same is true today. Before the Internet, you would probably be subscribing to a newspaper, probably at quite high expense. If you limited yourself to free reading, you would only get crap - as true then as now.
If the traditional newspaper is largely irrelevant, there's a large and healthy selection of paid-for journalism out there, just get out your wallet. I'm a fan of The Economist, but that's far from the only selection.
Remember when the gramophone destroyed the live
performance?
(The aspect of the change that makes me most ambivalent is its effect on people making their own music. When you can't just turn on music--music far better than you're able to create--people sing for themselves and each other. People still sing some, but most are now embarrassed to sing in front of others. You're basically supposed to be ashamed of your singing ability.)
Increased competition has had a negative effect on the media. Go watch CNN clips from the 1980's and compare to today. Its a totally different product than CNN today, and it was possible because they were insulated from the degrading effects of market competition. They didn't have to plaster Kim Kardashians rack over every piece in order to make money, like they do today. And what's driving that competition? Lowest common denominator Internet media like Huff Po that can churn out dreck at zero marginal cost.
CNN is widely credited with inventing and pushing the 24 hour news cycle, driving the subdivision of news into every smaller and ever less important chunks, incessantly valuing speed over depth. "You heard it here first!" - well, who the h... cares?
Anyway, my point, which I don't feel you meaningfully addressed was that once you get out your wallet, every newsstand out there are piled high with magazines and weeklies dedicated to every conceivable topic, many of them high quality (and many of them, admittedly, not!), plenty of them completely devoid of Kardashian-themed content. Just go buy them instead of lamenting that your free entertainment is worth exactly what you paid for it.
My point which you're ignoring is that the existence of competition from the crap forces legitimate media down market. For the cost of a cable subscription, CNN is a lot crappier than it was 20 years ago.
It's still pretty useful. I just use Amazon for reviews instead of Google now. ;)
Consumer Reports doesn't have the resources to review everything and neither do outlets like CNET.
Creating a valuable review actually requires a systematic approach. Take, for example, a review of a cell phone's battery life. Such reviews are useless without disclosure of your usage patterns, whether you're in a good signal or bad signal area, whether you like to jack up the brightness to 100%, etc. And aggregating a bunch of shoddy reviews can't compare to one good one.
Typically the greater the number of consumer reviews will offset this problem. Again, some information is better than no information.
> And aggregating a bunch of shoddy reviews can't compare to one good one.
As you've already mentioned, many people can discern bad reviews from good ones. It's not perfect but it's better than nothing.
3 of the 5 reviews of this Dell 4K monitor are clearly using it on computers that can't drive 4k@60 HZ. The fourth is from someone who owns a completely different, non-4K Dell monitor. That leaves one reliable review, which provides very little information.
I wish I could say I were cherry-picking.
Ranking up there with your hyperbolic comment.
But I do agree with you that it's not legitimate to expect content to be both free (advertising supported) and high quality. It's wonderful when it happens, but people can't really complain when it doesn't, much less complain not only about the quality of the content but also the quality of the advertising. If people want high-quality content carefully selected by human editors and presented in attractive ways then they should pay for it.
Disagree. Amazon Publishing is notorious for putting more money in the author's hands/pocket than a traditional publishing house. I'll take cheaper books and having to spend a bit more time finding what I'd like versus to the alternative future publishing houses would prefer (continuing to squeeze profits out of fewer readers while keeping more of the profit for themselves instead of the author).
I feel that is a silly premise. I was unable to find any cost breakdowns of how much it costs to produce a dead-tree $8 US paperback, but I wouldn't be surprised if manufacturing & shipping is at least $4 of that cost. Lets just assume that after everyone else takes their cut, the publisher gets $2.
Now, with ebooks, you don't have that $4 manufacturing cost. No grinding up tree pulp, etc. No shipping boxes of heavy hard-cover books to stores. If publishers wanted to, they could sell ebooks directly from their own online storefront for $2 and, for the purposes of this argument, make the exact same amount of money.
Your grim future only happens if people stop seeing a $2 book as worth the money. Like mobile games- developers found out that even a $2 purchase price is too high a barrier of entry for many people, and free, ad supported games could make more money. If anything, cheaper purchase prices of books would help prevent this. Deciding between a free, ad-supported ebook or paying $8 for the same thing is a hell of a lot easier decision than deciding between free-with-ads or spending $2.
It's really just a convenience thing. E-books are easy to pay for. News websites are not. This also has to do with how we consume news: nobody wants to pay to click on grandma's Buzzfeed links on Facebook.
Also remember book authors traditionally make about 10-15% of hardcover sales and about a dollar a paperback. Ebook royalties are reportedly 25-30%, and I bet they will go higher.
The Success of Amazon: Welfare As We Should Know It
http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-colu...
Amazon's Tax Breaks Are Essential to Its Survival
http://www.cepr.net/index.php/blogs/beat-the-press/amazons-t...
Franklin Foer Confuses Amazon's Subsidies from the Government With Profits
http://www.cepr.net/index.php/blogs/beat-the-press/franklin-...
Is it really an easy choice though?
As a reader, I want access to interesting content and it seems that pushing the price down to the cost of production makes it harder to produce good content.
Another way of looking at it is the following. We as a community say that we ought to charge based on value produced and not cost of production. Shouldn't book sellers and author's be able to do the same?
Sure. What's stopping them? Authors are free to charge whatever they want. Hell, they even have a state-granted, life + 80 years monopoly on their works.
What they can't is force Amazon to sell their books for whatever price they want.
Still you can follow conversations on this very site which rail against the costs charged for music and movies and yet they have high costs of production as well.
Another article I read today talks about how traffic on the internet has been shaped by the users to where very few sites, just a few dozen, are responsible for half of the traffic.
I am in the camp of, the legacy systems are doing their damnedest to stay relevant in a world where they are not, it is as if the milk man refused to stop delivering milk and wanted to and succeeded in stopping stores from selling it.
As a reader, do you want to optimise for price or for quality? The argument is that one will ultimately come at the expense of the other, because good books need good editors and good authors need sufficient money to allow them the time to write.
I'd be very skeptical about that...
> an editor matching service doesn't seem that far fetched
This seems a lot more reasonable. I agree with your overall point that publishers are unlikely to be the best way of doing things, and there's no need to preserve the status quo for its own sake. I'm just not sure Amazon is going about it the right way, and I think reducing the perceived value of books is a dangerous game. That all said, I don't want to be too down on Amazon. They've made reading more convenient for many through the Kindle and the Kindle Store, and that alone is worth a hell of a lot...
The gaming industry is in the middle of doing exactly this. What exactly are you skeptical about? Whether an attempt will be made, or whether an attempt will succeed?
Neither. More about if it will compromise the artistry if plot is decided by a committee, which is effectively what will happen if the public gets to 'vote' for what they want to be made. Plot-by-comittee works for a lot of television and film so maybe it'll work for books too, but my gut reaction is that you'll get a much better product if the creator can act alone and not have to worry about getting defunded if they kill off a favourite character or some such thing...
Now, if they create something that people don't like, sure they will have a tough time getting funded again. But this is a point that is relevant to both the publisher and crowd sourcing model.
There is a huge market out there. Publishers don't prevent bad books from getting to it.
And they don't really pay authors to write books. More often, all different types of authors, good or bad, have to shoulder the risk of their first few manuscripts on themselves and hope a publisher picks them up. If their first published book does well, then the publisher pays to have more books written. It's a system that is useless to the most popular, breakout authors--they have essentially bootstrapped a book-writing company--and disadvantageous to the anyone who doesn't write a superawesomebestseller on their first try--as the publishers often design the contracts to leave no residuals for the writer.
Books can be--and often are--just as empty and vapid as reality TV. We just tend to put books and the people involved in their production a pedestal in our culture.
The unstated assumption seems to be that publishers are either the best or only way to enable this.
How about neither? Or either/or, in different measures? Both sides have some good points and some questionable points. Both sides have clear agendas that are, more often than not, unexpressed in their public talking points.
I'm not trying to draw a false equivalence between the two. On the balance, I'm more inclined to support Amazon's arguments -- if largely because the publishers have been grabbing margin from their writers, and because their business practices haven't evolved with the times. That said, I don't savor the prospect of Amazon's total, end-to-end dominance of the book market. I'd like there to be Amazon and publishers in this world. Both sides can fulfill a vital function in bringing great books to the market, and making them available at reasonable prices. I'd just like the publishers of the future, whoever they might be, to modernize and adapt. I'd also like companies that have the ability to compete with Amazon as a bookseller (Apple, Google, etc.) to take another look at the book market. It's not the sexiest market in the world, from a total-revenue standpoint. But it's a decent-sized market, and it's a "gateway" market into other forms of media and entertainment. (I realize Apple has to tread carefully re: the book market these days).
I do not believe that to be true, not even remotely.
It is tiring to hear that kind of argument all the time to determine if a business is a monopoly ( monopsonist ) or not and then it is supposed to be business 101 to know that people do not optimize their finance to the last cent and can be hooked into a company by habit or convenience.
What matters is if amazon clients actually do go around Amazon or not and based on what criteria. Google thinks of Amazon as a threat to their ads business because people use Amazon as their search engine for stuff to buy. I would say that a pretty good indication that the original author may have had a point.
> Setting up online stores is not rocket science ( to compete with Amazon )
Sorry but I can't read past that. Beside being insulting for anybody that has tried to put an online business together, can a economy journal be taken seriously when publishing that kind of statement in 2014 ?
It's Hachette's fault that they don't have an eReader to compete with the Kindle, and it's Hachette's fault they don't have a storefront to sell directly to consumers. The writing has been on the wall for almost a decade. Any idiot could tell you that we were moving toward eReaders. A smart company would see the trend and adapt. Nothing stopped Hachette from hiring engineers and making a push into the future, except for their own 200-year-old stubborness.
This is just another case of industry incumbents failing to keep up with moving technology. For others, see MPAA, RIAA, Taxis, etc. I have no sympathy for a company that could have entered the game five years ago, but failed to. Hachette, if anything, was in a better position, from a market/supply chain standpoint, to develop eReaders. They just failed to.
Excluding Oreilly and other guys like the Pragmatic books, the only thing the publishers try is litigation. Moreover Hachette cares much less about customers than Amazon does.
The only difference between an ereader and a tablet today is the display and weight. IIRC it's still some form of Android below. Why can't an ereader have different apps for different storefronts? An Amazon app for their books, a Kobo app, maybe even a Hachette app if we wanted. Though it's not perfect, the idea of reading all books from all publishers, fully legally (no need to strip DRM) on a SINGLE device would be awesome.
Sure, there's no DRM available this way (not that the Kindle DRM is very strong anyway), and there'a tiny bit of setup required. There's a danish e-book-shop (riidr.com - Amazon doesn't carry Danish e-books) that uses this mechanism to deliver books to customers, so I should think it works.
Nevertheless, that's the relevant bar to clear. If consumers reasonably have another option, no matter if the use it or not, then there's not a monopoly. At any given time, there will be a "most convenient" or otherwise "default" provider for a given class of product, a sort of "monopoly of convenience", and there will be some stickyness to that provider - but that's stickyness, not monopoly.
Just like the supermarket down the road can't lure you away from your "default choice" supermarket with a 2 cent discount on butter, Amazon's competitors can't lure customers away with minor niche publications - but if Hachette actually choses not to distribute, say, the promised new Harry Potter universe books on Amazon, a very large number of people will break their stickyness to Amazon to read it - and Amazon would do well to heed such a threat.
> Sorry but I can't read past that.
Come on - setting up an on-line store is trivially easy - Amazon can provide services covering you for ordering, payments, fulfillment...
I disagree. If every freely chooses to buy from Amazon when they could have bought elsewhere, that doesn't mean they have a monopoly. It means they offer a superior product (or a superior price). As soon as someone comes along and offers a better price or product, people will stop buying from Amazon.
Power still lies with the consumer in this case; government regulation is not required.
Baen has been remarkably successful with their ebook brands.
The discussions around the conflict have, to me at least, shown pretty clearly that book publishing as it currently is isn't a model which stands up to too much scrutiny when you look at how well it works for anyone outside it.
On the other hand I think we'd all rather it wasn't Amazon, a company who many seem to like using but don't trust much further than they can comfortably spit a dead rat, giving it a kicking. The old metaphor about frying pans and fires springs to mind.
Maybe we just live in a more cynical time but it would be nice if our disruption was something people generally felt optimistic about.
But being nice? I see no evidence that old businesses are nice (we're just more used to their nastiness) and I certainly see no case that new, disruptive businesses are any way worse. If anything I think back to the likes of Google in the don't be evil days - young idealists who just wanted to make the world better and would work out the money side of things later.
Even if that weren't true, I still want to be optimistic about change. I accept that it's not all great, that everything comes with a cost, but if you're doing something that's so obviously potentially positive, surely something is wrong if people don't feel good about it?
Being optimistic (or pessimistic, really) about such a broad concept doesn't make sense. Could positive consequences come out of any massive change? Depending on your point of view, perhaps, with exactly the same probability (undefined) as negative consequences.
Current companies' and industries' goodness or badness are almost always a matter of perspective (though some are easier to argue one way or the other, again, depending on your point of view). Removing or stunting them with a new paradigm certainly changes things, but rarely if ever in a black and white, "things are universally [better|worse] now" way.
http://en.wikipedia.org/wiki/Pareto_efficiency
That's not to say it's not an overall improvement though.
Disruption starts --> Early Adopters modify behaviour --> If huge, global population adopt as well --> Disillusionment, new needs coming up --> New disruption would be needed then, but corporations are slow and clumsy and sometimes are not able to adapt as faster as the market does.
This is the case of Amazon as it's been the case of many more in the past. You cannot eternally grow without decreasing your value at some time, reformulating your value proposition and launching your new proposal to the market.
So this is normal to me. Nothing strange. What sounds weird to solve the problems they are facing is their new proposal: a non-online store :/
[1] http://en.wikipedia.org/wiki/Jumping_from_the_frying_pan_int...
Since Amazon doesn't really carry Polish books, I get .mobis from random e-stores all the time. It takes no effort. There is no barrier to entry. Well, except actually having something in stock (easy enough when it's an infinitely copyable file) and making your website/UI not atrocious (not that easy, apparently).
Most will even email it and Amazon will deliver it straight to the device. No need to look for the usb cable.
Yeah, appeal to the sample size of 1, great argument...
I do use Amazon for discovering new books, now he has a sample size of 2 and Amazon controls a massive 50% of the world's "buzz". That changed fast didn't it.
I'm sure there are good responses to Krugman out there, but this isn't one.
And here's a response to his response: http://www.newrepublic.com/article/119977/what-matt-yglesias...
"But I’m not sure that even Yglesias would want to live in the world he’s envisioning. Mark Krotov, an editor at Melville House, points out on Twitter that in posts like these two, Yglesias has often recommended 'good, unusual books' such as Maxine Hong Kingston’s Tripmaster Monkey and Daniel Dennett’s Consciousness Explained. 'I’m confident that none of these books, as different and diverse as they are, could ever have found their audience without a publisher,' Krotov writes."
I'm rather suspecting that Evan Hughes could stand to be less ignorant of the industry he's discussing.
For one thing, Tripmaster Monkey is at least the fifth book that Kingston has written (I can't find a complete bibliography.) and Dennett's Content and Consciousness was published in 1969, 22 years before Consciousness Explained. Both of them had already "found their audiences" before those books were written, much less published.
Further, Dennett has published many of his books with academic presses, where advances are rare. (Anyone know if MIT Press pays them?)
With insurance (Particularly now, in the US), everyone can pay in and get it. With publishing, only a super select few ever get in, and those that do will get dropped if they get 'sick' and stay 'sick', regardless of whether or not they were 'healthy' when they got in.
I have found lots of books on Audible based entirely on popularity, and I am sure Kindle is the same. IMHO subscription services have far more power to push a particular title than a normal shop as you are a captive audience. You are much more likely to go for the serendipity of a popular title that may not appeal to you normally as you are not spending a cash amount. And with Audible there is no risk as you can return titles you don't like.
Even when you know what you want, Amazon will make it difficult or impossible to figure out what you need. My wife enjoys a few popular fiction offers who publish different series of books. Amazon has no obvious way to search for a book in a series. Even used book thrift shops figure that out!
Then you have the issue of third party listings cluttering up search results. If you want to buy a Mac Mini, you'd better be familiar with the Apple model numbers, because you may have a 3 year old model land at the top of the stack.
With all due respect maybe this is TMI but I've been listening to an audiobook-ish lecture series about fantasy literature and we've come to the lecture about Ursula LeGuin's Earthsea series so I visit Amazon this morning, search for Earthsea in the kindle store, I get six results presented In Series Order and for each book right underneath the star ratings for each individual book it lists "Book 1 of 6 in the Earthsea Series" So I'm a pretty happy little customer.
For fun I just tried the same search technique for Harry Potter and got the same result. The search results had the books In Series Order with "Book 1 of 7 in the Harry Potter Series" written under the star ratings. Cool.
Amazon is, however, not consistent. I went more obscure and tried "Classics of Buddhism and Zen Thomas Cleary" and got the predictable first 5 results (awesome, because its a five volume translation series) but in book order 1, 4, 2, 3, 5 rather than sequential. Too lazy to research but I'm guessing something related to edition / reprint date.
I did more research and found an even more epic failure, searching for "feynman lectures on physics" in books results in just a tepid random pile of tangentially related books.
I searched for Steven Brust in the Kindle Store and didn't get a very good list, although it mentioned the "Vlad Taltos" series, so I searched for that.
I'm currently seeing Book of Dragon as the second entry (which is a collection of part of the series), an unrelated Brust book, and something by Michael McClung.
Click "Recommended for you". Their "search for something specific" interface may have problems, but their "suggest me something new, I don't really know what" interface is top-notch.
A pretty basic use case for people who read serial novels (ie. millions of people) is the ability to recommend a series or books within a series. People can down-vote me because Amazon is a cool company, but it's a use case that they just don't fulfill.
You can go into recommendations and there's a drop down where you can tag why a recommendation is inappropriate, tell amazon it was a gift and the whole topic will magically, nearly instantly, disappear.
I had the same issue with Thomas the Tank Engine and I'm not sure which of us had it worse.
Its a UI failure in the checkout process, just because I don't want amazon to wrap my gifts for me doesn't mean that I'm buying something thats not a gift at checkout time.
Its also a backend failure, come on Amazon lets think this one thru a bit, looking at the rest of my ordering history do you Really think I'm a big Thomas fan? Really? I mean he's cool, sure, but...
I've just done so out of interest.
There isn't even a Books category! But they're happy to show me Amazon Instant Video recommendations even though I'm not a Prime member.
In Computers & Electronics they suggest five different colours of Hudl2 cases, because I bought a black leather one last week....
Not at all impressed if this is the best they can do with 12 years of purchasing history
Try typing something like "Jack Reacher series" into the search box and look at the search suggestions as you are typing. Amazon's actually pretty good at helping you find this sort of thing - which makes sense, given the likely propensity of consumers to purchase all the items in a series if they're available and Amazon's financial incentive to help the consumer do so.
Third-party listings, on the other hand, are more of a challenge. Limiting your search to Prime-eligible items often helps quite a bit.
On the other hand, Amazon is Google's biggest threat in general product search(and probably discovery). So surely Amazon is even stronger in books.
And i'm sure Amazon does play with search/recommendation ranking, and publishers see the effect on sales, or else they wouldn't have bothered with this fight.
OTOH, the Economist article isn't petty, but it doesn't seem to make any particular groundbreaking point.
Krugman also makes the point that Amazon is a (and perhaps the dominant) discovery mechanism for books. Of course, if you aren't in Amazon you miss that mechanism. Combine these two things, and it makes creating a competitor very, very hard. That's doesn't make it illegal, but it's a very big concentration of market power. Edit: notably, this makes it difficult for even publishers to compete: if the dominant discovery mechanism for your items excludes you, then it's a problem. Note the similarities to Google here, and how careful Google is to emphasise the algorithmic nature of their search ranking. Amazon can't use that defense.
I'm not sure I totally buy Krugman's argument that Amazon is actually using its power in ways that "hurt America". But, I am more amenable to his argument that it has too much market power in the book market as outlined above - not totally convinced, but I think his points in that area are much stronger than the Economist makes them out to be.
What's going on here is that publishers want to use Amazon's platform, but they want to dictate the terms of that usage.
And then there's the author's need to earn a respectable living. Obviously that equation produces different numbers based on whether the product (the book being the product) sells a thousand vs. a million copies per year.
If a publisher is in the middle then they need to make money to offset their fixed and variable costs. The presumption is that they provide the author with valuable services.
I've paid up to $200 for privately published eBooks on very specific subjects from authors with deep expertise in the matter. In this case the authors undertake the entire task of producing the book, often hiring people to help edit, format, illustrate, etc. I wonder how the economics of such ventures works out. In all cases the books have always been worth every penny.
One of my pet peeves with Amazon is that they don't offer eBooks in PDF format. I hate the Kindle experience, even on their PC application. I far prefer PDF documents everywhere.
>>On the other hand, it is incredibly easy to go around Amazon. One of the works Amazon is supposedly dooming, according to Mr Krugman, is a book called "Sons of Wichita". But if one googles "Sons of Wichita", then one of the first results is the book's page at the website of Barnes & Noble, a rival online bookseller. Barnes & Noble offers a competitive price and 24-hour delivery (same day delivery in Manhattan!).
There is a fundamental difference in how people search for books compared to other items. Since people know Amazon has such a huge inventory, they go to Amazon and THEN search for their title. 99% of people I know do not simply Google a book title and then select the first result they get in Google, it just doesn't happen that way.
This is an important fact which undermines the idea it's "easy" for consumers to selectively use another vendor to get their books from. It also gives a lot more weight to the fact Amazon really is a monopsony.
I don't understand why Krugman wrote a column about a firm which offers great selection at low cost with rapid low-cost or free shipping. Customer service is great as well. If only all firms aspired to be Amazon!
>LAST week, the Nobel prize in economics was awarded to Jean Tirole
There is no such thing as the Nobel prize in economics. The prize's real name is the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. It's not a Nobel prize.