More nonsense from Authors United. Their letter to the Assistant Attorney General in crazy bold italics, my level-headed responses in regular text.
This is a long one, because their letter was so long. And so, so stupid. Tomorrow I'll spank the Authors Guild, which did something semi-helpful by blogging about ebook royalties, and then stomped on that good faith with awful opinions about piracy, and by endorsing the following nonsense:
Dear Assistant Attorney General Baer:
We believe that Amazon has gathered unprecedented market power over the world of books, which many experts have asserted make it both a monopoly in its role as a seller of books to the public and a monopsony in its role as a buyer of books from publishers. We believe Amazon has been misusing that power in many ways, and we seek the benefit of your office to address this situation.
Amazon is not a monopoly, via Time Magazine:
While Amazon is certainly a large and growing online retailer, even a liberal interpretation of its share of the domestic e-commerce market puts the figure at less than 50%, which is well below the 70% threshold courts typically require as proof of monopoly power. (...) And even if a court found Amazon to possess monopoly power — as one could somewhat realistically claim it does in the e-book market — that’s still only half the battle, as it must also be proved that said power is being exercised to the detriment of consumers.
Lower prices is not to the detriment of consumers.
Neither is Amazon a monopsony.
The theory of monopsony assumes that the monopsonist has the power to dictate terms to its suppliers. However, to show monopsony, one must show that suppliers are forced to sell their products at prices so low that the loss results in a reduction of supply. Harm to the market results when suppliers are, in turn, driven out of business, or have less money to invest in new innovation, technology, equipment and/or expansion.
Good luck trying to show that suppliers are being forced to sell ebooks at a loss, which reduces the supply. There are more ebooks available than ever, with more suppliers than ever. Digital media doesn't subscribe to the rules of supply and demand. Supply is unlimited, because ebooks can be copied and delivered with the press of a button, with low to no overhead other than sunk costs involving the initial production (editing, cover art, formatting, etc.)
The Big 5 are hurting because they are too stupid, lazy, and inefficient to compete. Not because Amazon is controlling them, or anyone else. And, ultimately, pulishers aren't suppliers. They are middlemen. Writers are the suppliers--something Authors United can't seem to grasp.
On its current course, Amazon threatens to derail the benefits of a revolution in the way books are created and sold in America. This shift was brought about by two broad innovations. The first is the e-book, the most dramatic new technology in publishing since the invention of the printing press. Because of the low cost of producing and distributing an e-book, many more authors now have the opportunity to self-publish, and millions of people can read books in formats that better fit their pocketbooks and preferences.
The second advance is the e-commerce technology that makes possible on-line bookstores. This techonology has connected readers with a vast selection of physical books, including rare, obscure, and out-of-print volumes. E-commerce has also made it far easier for small publishers to reach customers around the world.
I might be getting ahead of the letter, but apparently Amazon threatens to derail the benefits that Amazon itself--at great cost and risk--revolutionized.
Also, I hope Authors United spell-checked and corrected "techonology" before sending this. Lots of irony in misspelling that...
Not only do these technological advances benefit our readers, they have revolutionized the way most of us research, write, edit, and publish our own books. Together, they provide the foundation for a renaissance in 21st century intellectual, political, and cultural life.
Yet, as with the coming of the railroad or the telegraph, disruptive new technologies can also become instruments of monopoly, reduced competition, and lost freedom if our laws and regulations fail to prevent the potential concentration of power they make possible.
New technologies are neutral; they do not pre-determine any particular economic, social, or political outcome. One set of rules can ensure that a new technology promotes opportunity, competition and diversity in the marketplace. A different set of rules might allow a single firm to wield that same new technology in ways that amass profit, control and power in itself.
Name a business that promotes competition. A single business.
Amazon doesn't control technology. It controls an application of technology that it invented and promoted, and an online store where people choose to shop---choose being the operative word.
To state that technology is neutral shows a fundamental misunderstanding of capitalism. Companies pump money into research and development, and advance technology, in the hopes of making money. This isn't illegal or even immoral. It's business.
Initially, Amazon deployed these new technologies in ways that benefited both readers and authors. While Amazon did not invent the e-book or e-reader, it created a platform that made it easy for millions around the world to access e-books, including readers who live nowhere near a brick and mortar bookstore.
But as Amazon has become a global corporation of unprecedented size, scope, and power, it is increasingly engaging in practices that undermine the interests of readers, authors, publishers, and society as a whole. Amazon has used the digital revolution in book publishing to exercise control over the marketplace of ideas in ways that threaten not merely open markets but free speech.
And Gutenberg needed to be stopped because he sold more printing presses--you know, that thing he invented--than anyone else.
If by "threatening an open market" they mean "competing better than anyone else" then they are correct.
I'm looking forward to see how Amazon also threatens free speech and the marketplace of ideas. Let's read on...
While Amazon contends that its goal is to serve consumers by eliminating middlemen in publishing (which it calls the “gatekeepers”), Amazon’s executives have also made clear they intend to make Amazon itself the sole gatekeeper in this industry.
Unlike every other company, which limit themselves to small shares of a marketplace without ever trying to grow. I mean, Coke never tries to take market share from Pepsi. That would be unfair.
But what’s at stake here is not merely monopoly control of a commodity; what is at stake is whether we allow one of the nation’s most important marketplaces of information to be dominated and supervised by a single corporation.
Okay, I think I'm beginning to understand. So many consumers and suppliers use Amazon, freely and by choice, that free speech and ideas will be squelched, because...
Because there is no other place to speak freely or exchange ideas. Because Amazon has become the sole omnipotent totalitarian power in the universe, because...
Because consumers and suppliers freely choose it to be.
Ack. And there are 20 more pages of this crap.
Many people of goodwill have trouble seeing how threatening Amazon has become to the public interest. In part this is because, although Amazon’s market share in books and e-books defines it as a monopoly by any historical standard, the corporation’s business model does not fit the mold that people associate with classic monopolies.
Amazon is not a monopoly, by any definition. Where are the links to these historical standards?
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity.
This isn't the case. Anyone can sell ebooks. And monopolies themselves aren't illegal. Per Wikipedia:
The existence of a very high market share does not always mean consumers are paying excessive prices since the threat of new entrants to the market can restrain a high-market-share company's price increases. Competition law does not make merely having a monopoly illegal, but rather abusing the power a monopoly may confer, for instance through exclusionary practices (i.e. pricing high just because you are the only one around.)
Since Amazon has ample evidence it tries to keep prices low, and since a large portion of Amazon's sales is from third parties who sell through Amazon (effectively making Amazon in competition with itself), the pejorative "monopoly" isn't being used correctly. Rather, like the references to free speech and idea marketplace, it is alarmist rhetoric meant to scare.
What's scarier is how a group of supposedly smart writers could write this nonsense.
Also, note the fallacious appeals to "goodwill" and "the public interest." Authors United doesn't care about the public. They want to go back to a world where hardcovers are thirty bucks and they got all the coop space on the retail shelves.
Amazon is barely profitable, for example. It excels in customer service and in providing low prices and wide selection. The face it presents to consumers is friendly and helpful. But there is a reason why Wall Street has bid up Amazon to make it one of the most valued brands in the world, despite 20 years of low profits. Wall Street recognizes, and is willing to bet big money, on Amazon’s ability to squeeze out much of its remaining competition – not only in book retailing but increasingly also in book publishing – even as it throws up barriers to entry.
Even if there was a link to an in-depth Wall Street insider's reasons for investing in Amazon (there is no link), even a stock market neophyte knows that investors are trying to make money, and therefore invest in companies they believe will make money. Squeezing competition may be one way to make money. Amazon created the ebook market where one didn't exist before (at least not successfully).
Amazon didn't grow its ebook market share by squeezing Nook and Sony. It grew because consumers prefer the Amazon shopping experience, selection, reading experience, and prices.
This isn't war. It's natural selection. And it's legal.
Already, Amazon has started to charge higher prices for many of the backlist, scholarly, and small-press books it sells, where its market share can reach upwards of 90 percent. As a New York Times article in 2013 noted, “with Borders dead, Barnes & Noble struggling and independent booksellers greatly diminished” there was growing evidence that Amazon is “beginning to raise prices.”
Uh, isn't that what publishers wanted all along?
And where is this evidence? Amazon hasn't raised prices on any of my titles. And with the Agency Model, Amazon doesn't control pricing, the supplier does. Can you show some data that ebook prices are going up, and some proof Amazon is doing this? Because without that, your claim is skeevy.
At the same time, Amazon’s strategy from the beginning has been to use its book business as a “loss-leader” for other lines of commerce where it faces greater competition, but also often earns higher margins. Amazon sells books below cost in order to build its customer base and gather data on those customers to support its sales of non-book goods, such as televisions, shoes, and toys. The effects of this long term, loss-leader customer acquisition strategy have been harmful to the publishing industry.
Again, no data, no evidence. But let me try to get this point straight. I'll pretend I'm a Big 5 publisher, and I sell ebooks to Amazon for $10 each. Amazon goes and sells them for $5 each, as a loss lead. And this is harming me because…
Damn, I wish Amazon would sell all of my ebooks as a loss lead.
As Amazon extracts an ever larger share of revenue from booksales, the publishers’ shrinking revenue base is already curtailing the diversity and quality of carefully written, well-edited books available to the public.
I get it now! The Big 5 are the only ones that can offer diversity and quality!
I mean, not counting all of the books that the Big 5 don't publish. And not counting the crap the Big 5 does publish. We can ignore all of that, because we all know that the only worthwhile books are the ones published by legacy publishers. Except for the ones that aren't. Which are readily and easily available, thanks to Amazon.
Many prominent voices share our concerns. Opinion writers and editorialists on both the right and left have sounded warnings about Amazon. The op-ed pages of the New York Times and the Wall Street Journal have editorialized against Amazon’s abuses of power.
And those prominent voices have been full of shit.
Paul Krugman, the Nobel Prize winning economist, wrote that “Amazon.com, the giant online retailer, has too much power, and it uses that power in ways that hurt America.”
Barry Eisler and I annihilate Krugman's BS here.
We are not experts in antitrust law, and this letter is not a legal brief.
Don't let that stop us from telling you how to do your job, Mr. Baer.
But we have a deep, collective experience in this field, and we believe Amazon poses an unnecessary and preventable danger to our industry and to our society. This is a serious charge.
Think of the children! For God's sake, someone think of the children!
But we believe it is supported by fact. In this letter, we detail many of Amazon’s practices that we consider monopolistic, predatory, intimidating, exclusionary, and threatening to the free flow of ideas. Never before in American history has one corporation achieved monopoly control of an informational marketplace—not in telegraph, newspapers, radio, television, or (most recently) broadband internet.
Wait… when did Amazon gain control of the informational marketplace? Did Bezos buy the World Wide Web?
Lemme check Google.
Wait, doesn't Google have control over the informational marketplace?
If I can't trust Google or Amazon, whom can I trust?
Hmm. Maybe I should go to my local Barnes and Noble, and see what the vetted, carefully written, well-edited books made available to the public by the Big 5 have to say about this. You know, the books whose gatekeepers that are being disintermediated by Amazon. The ones who pay the authors of Authors United all that money.
Do you think that could be the reason Authors United is so threatened by Amazon? Because their million dollar contracts are in jeopardy of going the way of the dodo?
We call on the Justice Department to take action against this unprecedented concentration of control in an area vital to democratic discourse and the free flow of ideas.
And I call upon the Justice Department to take action against Authors United. Because Authors United has a monopoly on stupid. Authors United threatens freedom of speech, and represents a danger to society and the informational marketplace. I say so, so it's true.
In America, the importance of an open market for books was clear from the first. In January of 1776, when most printers feared to publish Thomas Paine’s Common Sense
Something Authors United should have read before writing this letter...
a Philadelphia bookseller named Robert Bell took a risk, paid Paine a small advance, and ran off an initial printing of 1,000 copies. Within three months Common Sense became the best-selling book in America up to that time and one of the most influential revolutionary treatises ever published. When Paine and Bell later quarreled over profits, Paine found another Philadelphia printer to bring out a longer version of his book, at half the price. For two centuries, America’s scrappy book business, comprising thousands of competing authors, publishers, and booksellers, was the freest, fairest, and most competitive in the world. More than a business, it was a marketplace of ideas, with publishers acting as venture capitalists, advancing funds to give authors the freedom to write their books, hoping to make a profit.
So much bullshit here.
- Not all authors get an advance. Some get no offers at all. And advances for first novels are almost unheard of.
- Venture capital is no longer required to publish. Amazon has allowed anyone at all to publish, for cheap or even free.
- Amazon's business model is much freer and fairer than the old, gatekeeper legacy model. With Amazon, there are no barriers to entry.
- All businesses are free to compete with Amazon.
- All Amazon suppliers are free to sell elsewhere.
- All consumers are free to shop wherever they want.
All this was done without a penny in government subsidies. In this way the profit motive was put in service of a personal right and a vital national interest.
From the very beginning, Americans understood the central role that open and competitive markets play in promoting freedom of expression and protecting our democracy. “The best test of truth,” Oliver Wendell Holmes wrote in 1919, “is the power of the thought to get itself accepted in the competition of the market.” What Americans seek, he said, is “free trade in ideas."
Cue the "Star Spangled Banner"! Raise the flag! Release the bald eagles over the cheering crowd!
The fallacious appeal to patriotism aside, this is all wrong. Publishers are in it for profit, like all businesses are. None of these Authors United scribblers are Thomas Paine, vital to national interest. They are self-interested and driven by profit motive. The major publishers have censored the "free trade in ideas" Holmes wrote about, by denying many writers access to their distribution network. The Big 5 have been the ones squelching freedom of expression, not Amazon.
Here's the full Holmes quote:
Persecution for the expression of opinions seems to me perfectly logical. If you have no doubt of your premises or your power and want a certain result with all your heart you naturally express your wishes in law and sweep away all opposition...But when men have realized that time has upset many fighting faiths, they may come to believe even more than they believe the very foundations of their own conduct that the ultimate good desired is better reached by free trade in ideas. . . . The best test of truth is the power of the thought to get itself accepted in the competition of the market, and that truth is the only ground upon which their wishes safely can be carried out
In other words, Holmes is speaking against the very thing that Authors United wants. AU wants the Assistant Attorney General to go after Amazon because they don't like Amazon, and want laws against Amazon. In fact, it's companies like Amazon that have turned the publishing industry from censoring oligopoly into a true free trade market. AU doesn't want to accept Amazon as competition, so they're trying to say Amazon is making it impossible to compete, and they want the government to persecute Amazon for it.
Amazon isn't the one trying to sweep away opposition. Authors United is.
As recently as a generation ago, fierce competition still existed at all levels in the book business in America. In the 1970s, no retailer could even imagine being powerful enough to control what books Americans would read, to influence what books would be published, or to intimidate authors and damage their careers. The four largest chains together accounted for less than 12 percent of trade book sales. Similarly, no publisher was powerful enough to dictate terms to retailers. In 1978, the five largest publishers accounted for less than one-third of all trade book sales. The top 75 percent of trade book sales were divided among 50 independent publishers.
Legacy publishers don't compete. They collude to fix prices, and all offer lockstep, unconscionable boilerplate contracts to authors. Contracts that remain secretive, unlike Amazon who makes its KDP terms available for all to read.
And then, post 1975, publishers began to coalesce and combine into 6 (now 5) major companies. But Authors United didn't mention that little nugget of information, instead skipping forty years ahead in time to:
It is a different picture today. In 2015, by any reasonable standard, Amazon enjoys a near monopoly in the sale of both physical books and ebooks,
Okay, can we see any of the "reasonable standards" you mention? Any of them? List a bunch. List one.
while at the same time exercising what economists call “monopsony” power over its suppliers, which means it has the ability to dictate book prices to publishers, and by extension to authors.
Newsflash: all retailers have the ability to dictate prices to suppliers. If the suppliers don't like it, they don't sell to the retailer.
But the Big 5 didn't like this, so they colluded to control prices.
Is AU actually saying that under the legacy publishing system, authors had control over their prices?
Authors NEVER had control over pricing. Except, you know, with Amazon...
Amazon is both the largest retailer of books in the world, and (if self-published books are included), it is also the largest publisher of books in the world. This gives Amazon vertical and horizontal control over the book industry as well as an interest in promoting its own books and services across every sector of the business.
Kind of like any retailer promotes its own store brand? Last I checked, there was nothing wrong with that.
Amazon is the largest book retailer because publishers choose to supply Amazon. Perhaps AU needs to tell their publishers to stop selling to Amazon.
But for some reason I don't see that happening.
This one corporation controls the sale of:
• More than 75 percent of online sales of physical books.
• More than 65 percent of e-book sales.
• More than 40 percent of sales of new books.
• Some 85 percent of ebook sales of self-published authors.
See how they sneakily slipped in the hot button word "controls"?
Amazon doesn't control sales. Amazon offers titles, which consumers buy because they choose to. Amazon isn't a utility. They don't control the only gas line, or water line, or train line, or Internet connection. They are simply a retailer. Suppliers can sell elsewhere. Consumers can buy elsewhere. Writers can publish elsewhere.
As a recent New York Times article put it, “for many consumers there is simply no other way to get many books than through Amazon.” Many cities and most suburbs and towns in America no longer have bookstores.
Really? No other way? BN? Ebay? Powells? Kobo? Smashwords? Alibris? All of these stores can be ordered from online.
According to the American Booksellers Association, the number of member independent bookstores has increased more than 20 percent since the depths of the recession, from 1,651 in 2009 to 2,094 in 2014.
Does that sound like Amazon has a monopoly?
In addition to the figures above, we also find direct evidence that Amazon enjoys sufficient market power to control prices and exclude competition. Amazon routinely exploits its position as a dominant seller of books and a dominant buyer of books to:
• Block or curtail the sale of certain authors’ books, causing damage to those authors’ careers. (As we discuss on pages 7 and 8.)
I'm so sick of refuting this tired meme.
Amazon is a retailer. It can sell whatever it wants to sell. And yet, it has repeatedly tried to help authors during publisher disputes.
• Extract a greater share of the total price of a book from publishers, through the
imposition of fees, under the threat of punishment. (As we detail on pages 14 and 15.)
You mean, like coop? Something brick and mortar bookstores have been doing for decades?
My legacy books were never in Walmart. Should I have contacted the DOJ because that isn't fair to me?
• Charge readers higher prices for many scarce and obscure books than it could in a
more open and competitive market. (As we mentioned on page 3.)
Mentioned on page 3, with no examples.
And "higher prices" than whom? Another retailer? Meaning there are other retailers with lower prices offering these same titles?
As I mentioned earlier, Amazon offers third party sales, so it competes with itself on pricing. Anyone who wants to sell through Amazon, lower than Amazon does, can.
• Generate fear and stifle free expression in authors, agents, editors, publishers, and
others who do not cooperate with the company. (As we detail on page 11.)
Amazon has helped me sell over a million ebooks. Yet, yesterday, I published a blog post chastising Amazon for their review policy.
If Amazon retaliates, I'll let you all know. But Amazon doesn't generate fear in me, or stifle my free expression.
Contrast this to my legacy years, when I was afraid to criticize any of my publishers publicly because I would be blackballed. Which I have been. I've been openly critical of the Big 5, and none of them will ever touch any of my work.
Maybe I should write a letter to the Assistant Attorney Genral.
• Steer readers toward buying books published by Amazon and away from books
published by other companies. (As we detail on pages 17 and 18.)
Unlike Penguin Putnam, who steers readers away from Penguin Putnam books and toward Macmillan titles?
Are you guys high?
I'm actually grinding my teeth at how stupid this is getting.
Amazon’s share of the book market continues to grow. It is gaining e-book market share even in the face of competition from Google and Apple, as well as increasing its share in physical book sales. As its market share grows, so do its anti-competitive practices.
Thanks! I forgot to mention Apple and Google--two gigantic bazillion dollar companies--as places people can buy ebooks. Even those poor people in cities and towns that don't have bookstores.
Beginning in March 2014, Amazon interfered with the sale of millions of books published by Hachette Book Group, one of the largest publishing houses in America. Amazon stopped taking preorders, delayed shipping, eliminated discounts, and used search engine modifications and pop-up windows to redirect readers to non-Hachette books. Amazon targeted more than 8,000 titles by 3,000 authors. Because of Amazon’s large market share and its proprietary e-book platform, other retailers were unable to make up the difference.
This again? Refuted ad nauseum:
In all, Amazon’s sanctions drove down the sales of these books on Amazon.com by fifty to ninety percent in all formats, according to sales figures obtained by Authors United.
It wasn't a sanction. It was a legal dispute between retailer and supplier. One Hachette could have ended much sooner.
By the time the Amazon and Hachette settled their dispute eight months later, tens of millions of books that would have otherwise been sold were not.
Please, PLEASE, show us the math on this. The link. The quarterly statements. The loss of income.
The effect on the literary marketplace, and on readers, was profound. Millions of readers could not find the books they wanted at Amazon, or, having found them, were deterred from ordering them.
Uh, isn't this what Authors United wanted? People buying books someplace other than Amazon?
Or does Authors United want their books for sale on Amazon.com, but only under their specific terms?
If so, talk to your publishers. Or try self-publishing. Then you can price your work how you see fit.
But if you believe that Amazon has some Constitutional obligation to sell your work, and some legal imperative to sell your work exactly in the way you want it sold, you're in Fantasy Land.
Authors watched their sales plummet and many – especially debut and midlist
authors – saw their careers harmed.
Yeah. Hachette sure screwed their own authors.
The free flow of ideas in our society was disrupted.
Actually, the titles of one supplier on one retailer were disrupted. The ideas were still available elsewhere.
Amazon’s power over book sales also has been a major factor in causing publishers to combine to increase their ability to resist Amazon’s demands. The most extreme such merger took place in 2013, with the combination of the biggest two of the “Big Six” publishers, Random House and Penguin. Given that sales of Random House and Penguin equal those of the next four trade publishers together, many expect the remaining trade publishers will follow suit, until we see the ranks of top tier publishers trimmed to three or even two giant corporations. Such mergers further harm the interests of readers, authors, and the citizenry at large.
Maybe they'll be trimmed to a single, giant corporation.
Thankfully, they won't be a monopoly, because they'll have Amazon as competition.
Since the founding of our nation, Americans have been concerned with the danger of public and private control over any marketplace of information. The framers wrote the First Amendment in part to prevent the government from exercising monopoly control over information by restricting freedom of expression. But Americans long ago decided that private companies must also be prevented from capturing too large a share of an information medium.
Let's define "marketplace of information."
The "marketplace of ideas" holds that the truth will emerge from the competition of ideas in free, transparent public discourse. The "marketplace of ideas" concludes that ideas and ideologies will be culled according to their superiority or inferiority and widespread acceptance among the population.
Now, I might buy this argument if Amazon controlled the Internet. But they are one retailer on the Internet. Amazon is optional. Using Amazon is a choice. They don't control people. They don't prevent the spread of ideas. They sell information in the form of books, but they don't own that information. Suppliers are the ones who own that info, and they freely choose to opt-in to Amazon.
When telegraph lines were being strung across the continent, the Telegraph Act of 1866 blocked a single corporation, Western Union, from gaining monopoly control over this first electronic informational medium.
They did so because Western Union was a utility, not a retailer. But even in the case of utilities, competition arises. There was only one cable TV provider in my area, years ago. Now there are a myriad of choices.
There are many non-Amazon ways for people to get the same information Amazon offers. And if Amazon begins to price too high, or restrict information, competition will arise to offer that information for less. Amazon can't stop that. They don't have any power to.
In the 20th Century, U.S. courts repeatedly used antitrust law and other regulations to reduce concentration of control in the markets for information and ideas. Important cases include Associated Press v. National Labor Relations Board (1937), Associated Press v. the United States (1945), FCC v. National Citizens Committee for Broadcasting (1978), United States v. AT&T (1982), and Turner Broadcasting System v. FCC (1994).
Justice Hugo Black’s statement in the 1945 Associated Press case is instructive. “The First Amendment, far from providing an argument against application of the Sherman Act, here provides powerful reasons to the contrary. That Amendment rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public.”
Is Authors United claiming restraint of trade? Has Amazon prevented anyone from the freedom to conduct business? Or has Amazon prevented some from conducting business with Amazon? If the latter, they are allowed to conduct business with whomever they like. If the former, show some proof.
Now, I'm pretty sure Amazon has a metric shit-ton of lawyers who make sure they don't violate the Sherman Act. I'm also pretty sure that Amazon isn't preventing any publisher from conducting business, or preventing the spread of ideas.
Amazon can sell what they want to sell. They don't owe anyone, including the Big 5 and their authors, a living.
The conviction that antitrust law plays a vital role in protecting freedom of expression
continues to this day. Justice Anthony Kennedy, in the Turner Broadcasting case, wrote, “Assuring that the public has access to a multiplicity of information sources is a governmental purpose of the highest order, for it promotes values central to the First Amendment,” and that, “[t]he First Amendment's command that government not impede the freedom of speech does not disable the government from taking steps to ensure that private interests not restrict, through physical control of a critical pathway of communication, the free flow of information and ideas.”
Wow, this is a stretch.
So the idea here that Amazon--a private company--is preventing access to information sources?
Penguin Putnam is the world's largest publisher. Are they preventing access to information sources because they didn't publish my last novel?
Google is the world's largest search engine. Are they preventing access to information sources because they aren't including darknet in search results?
The Library of Congress is the world's largest library. Are they preventing access to information sources because they haven't cataloged Chuck Tingle's opus Space Raptor Butt Invasion?
Antitrust law and common sense make it clear that these concerns apply not just to
newspapers, radio stations, and television, but also to books. FTC Chairman Robert Pitofsky said in 2000, “if somebody monopolizes the cosmetics fields, they're going to take money out of consumers' pockets, but the implications for democratic values are zero. On the other hand, if they monopolize books, you're talking about implications that go way beyond what the wholesale price of the books might be.”
Let's imagine a world without publishers.
Twenty years ago, a world without publishers might have meant a world without books. Or at least, a world without the easy means to connect books and readers.
But today, we could easily survive a world without publishers. Because of Amazon.
And if Amazon somehow becomes the only company to sell books (a big "if"), and if Amazon also decides it doesn't want to sell certain books (another big "if"), Amazon will encourage competition to fill in that marketplace gap. If Amazon then somehow prevents that competition (impossible unless they seize control of the Internet), then Authors United might finally have a case. Because, as we all know, millionaire bestselling authors are entitled to their careers. The First Amendment clearly states:
"No retailer shall ever prevent an artist from reaching consumers, because writers are the bastion of rich literary culture, and freedom of speech goes hand in hand with forcing companies to sell your crap, under your terms."
Into the 1990s, regulators actively worked to keep the market for books open and competitive. After Barnes & Noble in November 1998 announced plans to buy Ingram Book Group, the largest wholesale book supplier in the United States, FTC staff recommended that the Commission sue to stop the deal. Barnes & Noble promptly shelved its plans.
This is a good point to bring up, since Amazon is trying to buy the Big 5…
Oh, wait. They aren't.
Monopoly is not illegal in America. But Congress and the Supreme Court have repeatedly made clear that a company violates the Sherman Antitrust Act when it takes advantage of monopoly power to engage in anticompetitive exclusionary or predatory conduct to maintain its control.
If this is about the Hachette or Macmillan disputes, contract negotiations between retailer and supplier isn't anticompetitive, exclusionary, or predatory.
For example, imagine you're holding out for higher ebook royalties from Penguin Putnam, and they only agree to those terms if you sign an NDA stating you'll never reveal them because they fear other authors will make the same demands. You may be at an impasse for a few weeks or months because in good conscience you'd never agree to that, since you are obviously so concerned about your peers and their careers.
Is Penguin engaging in predatory, anticompetitive, and/or exclusionary behavior during your contract negotiations because you refuse to capitulate to their demands?
Ha! Like that would happen.
But, seriously, if you don't sign with Penguin Putnam, you can go elsewhere. Maybe you'll make less money, but that's your choice.
Exactly like Hachette could go elsewhere during their contract dispute with Amazon if they didn't like the terms.
Or maybe Hachette could get together with the other big publishers and force Amazon to accept Agency Pricing. That's legal, right?
Further, as we have noted, the founders, Congress, and the Supreme Court have
repeatedly made clear that a concentration of private power over any marketplace of ideas is not compatible with American ideals of liberty, competition, free speech, and the unfettered flow of ideas. We believe Amazon’s monopoly control over the retail book market, combined with its aggressive use of its monopsony power to punish publishers and sanction authors, violates the law and poses a danger to freedom of expression in the United States.
Yeah, that's a tough sell, because, you know, Amazon doesn't have power over the marketplace of ideas, or control over the retail book market. They don't have a monopoly or a monopsony. They have an online store, which managed to become very large by being customer centric, innovating, offering a wide selection, keeping prices down, and prioritizing customer service.
In doing so, they're hurting a bunch of entitled, archaic publishers who innovated nothing, restricted choice, colluded to raise prices, prevented authors from reaching readers, and offered zero customer service.
And now the lapdogs of those publishers are whining because they want to protect their paydays while cloaking their intent in altruistic free speech brouhaha.
If this is the best you guys can come up with, I'm sad for you.
Consider what happened in August 2014 to Wisconsin Congressman Paul Ryan, the 2012 Republican Party candidate for vice president and who was at the time considered a possible candidate for president in 2016. Ryan’s new book, The Way Forward, was released August 19. Unfortunately for Ryan, his publisher was Hachette. In the days leading up to August 19, potential readers of The Way Forward were not allowed to preorder the book on Amazon in any format, e-book or hardcover, permanently damaging the prospects for a successful and bestselling launch of the book.
We can do this? Really?
Then Mr. Baer, I must bring to your attention that not a single novel of mine has been reviewed by the New York Times, the #1 book reviewing periodical in the world, and they've permanently damaged my prospects for a successful and bestselling launch of every single damn thing I've written.
And author Douglas Preston, who began Authors United, has never featured my books for sale on his website, or even given them an endorsement, which has permanently damaged my prospects for a successful and bestselling launch of every single damn thing I've written.
And Paramount Pictures has never made any of my books into movies, preventing them from reaching that lucrative film-going audience and making big bucks.
And in college, Sue Ann McFeltyshantz put me in the friend zone because I wasn't her type, preventing me from having sex with her… and thereby preventing me from ever having sex with anyone ever again. That's how much power she had. And her power pales next to Amazon's.
Congressman Ryan, speaking on CNBC’s “Squawk Box” the morning of August 20,
described his experience with Amazon as “a very frustrating thing… Clearly Amazon’s making kind of a power play here.” When asked whether he thought government law enforcers should address Amazon’s actions Ryan hedged, but his words revealed his thinking. “If I were just a private citizen, I would voice one strong opinion. But since I’m a member of Congress and a policymaker, I’m gonna… withhold from making comments.”
Breaking News: A politico, who probably knows as much about the publishing world as I know about organizing a caucus, has an opinion but doesn't share it. Film at eleven.
After Ryan complained, Amazon made The Way Forward fully available, offering discounts and providing immediate shipment. In lifting sanctions from Ryan’s book,
Which included a flotilla of ships around Hachette's warehouses, preventing any copy from being shipped out.
Oh, wait. There was no flotilla. And there was no book--these were pre-orders.
Wait, is that a thing? Not only can I force retailers to carry my work, I can also force them to make it available for pre-order?
Dear Mr. Baer, I must bring your attention to the actions of the Coca-Cola Company, which hasn't made any of my books available for pre-order, thereby violating the entire Bill of Rights, and probably some other amendments as well.
And, also, I can't help but notice there are no pre-order buttons for my work on the WhiteHouse.gov website. As you know, the White House is home to the President, the most powerful man in the free world. Remember what Kennedy did for Ian Fleming? And what Reagan did for Tom Clancy? I demand my fair share of that Presidential recommendation cashola! Just look at the cases of Plessy v. Ferguson, Roe v. Wade, Godzilla v. The Smog Monster, and Ali v. Frazier II.
Amazon may have acted out of concern about offending a powerful politician. Or Amazon may have been seeking to show favor to Ryan’s political point of view.
You mean we can also engage in speculation? Fun!
Amazon might have also acted because the alien overlords commanded it. Or maybe Amazon was trying to cover up the fact that reality is a computer simulation run by AI from the future. Or maybe Amazon was negotiating with Hachette and used this as leverage. Anything is possible if we use our imaginations!
Whatever Amazon’s motive, the executives who run Amazon demonstrated that they had the power to pick and choose which books to advance or retard, even in subject areas that touch directly on vital political debate in America. Amazon’s aggressive and retaliatory behavior has engendered fear and stifled expression throughout the book industry. As we can attest from our own experience at Authors United, such fear runs deep among authors, editors, and literary agents. We saw this in August 2014, when we published an open letter in the New York Times condemning Amazon’s suppression of books by Hachette authors.
We wasted a hundred grand on a self serving ad, so you'd better listen to us!
Dozens of successful, bestselling authors declined to sign the letter, not because they disagreed with it, but because they said they were afraid of Amazon.
The list of famous authors who expressed fear of retaliation by Amazon would surprise most Americans. Some literary agencies instructed their clients not to sign the letter for fear that Amazon would target the agency’s business and their authors’ careers. Most editors we contacted also expressed concern that Amazon might retaliate against them or their company if they spoke out.
We won't tell you who these authors are. And they'll never admit it. But for chrissakes, acknowledge these facts without any proof because we said so.
Many of those who signed the letter were similarly apprehensive. Of the 17 authors who contributed between $1,000 and $20,000 each to pay for the Times advertisement, 10 did so on the condition that we keep their names confidential. Several prominent authors who helped draft the Times letter also asked Authors United to keep their names private, citing Amazon’s history of retaliation. We received dozens of emails from authors expressing concern that their signature might make them subject to reprisals.
And then, once the letter was published, Amazon stopped selling the books of everyone who signed the…
Oh, wait. Amazon didn't do that.
Amazon didn't retaliate at all.
This fear of Amazon is well founded. Amazon has a decade-long history of retaliating against businesses and individuals who challenge the company.
Which we aren't going to link to. But trust us. There has been a whole bunch of retaliating going on.
Also, we never actually visited the moon. Trust us. We don't need to prove our point. We're famous bestsellers.
Amazon’s suppression of Hachette books was only the latest of such actions. It appears that retaliation is a fundamental business practice at Amazon. As Brad Stone revealed in his book on Amazon, executives even coined a special name to describe a program in which the corporation demands higher fees from small and university presses, then employs a host of algorithmic tricks to make it harder to find or buy the books of the publishers who don’t pay. They called it the “Gazelle Project” after Amazon CEO Jeff Bezos reportedly said in a meeting that “Amazon should approach these publishers the way a cheetah would pursue a sickly gazelle.”
It's a book critical of Amazon that's available only through back alley sales and silk road purchases on the black net because Amazon managed to suppress it worldwide with its monopoly power.
Oh, wait. It's also available on Amazon.
Imagine that. Amazon selling a book critical of Amazon. A book that details Amazon's nefarious acts of capitalism in a free market. And poor Brad Stone went into hiding, like Salman Rushdie, fearing Amazon's fierce reprisal, right?
Amazon has wielded this weapon against publishers at least since 2004, when it targeted the publisher Melville House. When that company’s CEO, Dennis Johnson, publicly complained about Amazon’s sudden demand for extra fees, Amazon immediately stopped selling all Melville House books. Johnson soon capitulated. “I paid that bribe,” he told Brad Stone, “and the books reappeared.”
That sounds like that time my books were 40% off on the front tables at Borders and Barnes & Noble.
Oh, wait. They were never on the front tables. Because those stores demanded coop money for that space, and my publishers never paid that bribe. Dear Mr. Baer....
According James Marcus, one of Amazon’s first employees, the company tracked the
browsing habits of individual authors at Amazon.com to see how often they checked their own book pages. When Amazon had difficulty with a particular publisher, it would “mess with” the books of the publisher’s authors who most frequently checked their pages, in an effort to intimidate and distress them.
That actually made me laugh. If it's true, it's pretty funny.
If Amazon was messing with my books because they had a problem with my publisher, I'd blame my publisher. I signed with that publisher to get me the widest distribution possible. If they couldn't get my books available from the largest bookseller on the planet, I'd be pretty annoyed.
As Amazon’s power over the book market has increased, so has its willingness to use such hardball tactics against larger publishers. Amazon’s first big target was Bloomsbury in 2008. In 2010 it removed the “buy buttons” from web pages offering books by Macmillan.
And then later compensated Macmillan authors for lost revenue. Kind of forgot that part, huh Authors United?
It is difficult to quantify how such an excercise of market power, and the fear it generates, might be affecting what books are published. Common sense, however, tells us that as Amazon decides to boost the sales of some books and authors and to choke off the sale of others, publishers may choose to publish more books that Amazon is likely to favor and fewer books that Amazon is likely to disfavor. This would clearly interfere with the free, vigorous, and competitive exchange of ideas in our society.
Because the only free, vigorous, and competitive exchange of ideas in our society is via publishers.
You know, except for the millions of self-pubbed books.
Amazon also uses its monopsony power in ways that weaken the economic system that has supported American writers and the publishing industry for more than two centuries, threatening the production of well-crafted, well-edited, accurate, and consequential books.
Because only New York Publishing can produce well-crafted, well-edited, accurate, and consequential books.
You know, except for the millions of self-pubbed books.
The idea that Amazon would intentionally use its power in a way that vitiates the book
industry strikes many Americans as counterintuitive, much like choosing to kill the goose that lays the golden eggs. But Amazon’s goal has never been to sell only books.
Well, then. Problem solved.
On the contrary, Amazon executives from the first spoke of their intent to build what they called “the everything store.” Amazon analyzed twenty product categories before choosing books as the company’s debut “commodity.” As George Packer explained in the New Yorker, as early as 1995 Amazon founder Jeff Bezos made it clear that he “intended to sell books as a way of gathering data on affluent, educated shoppers. The books would be priced close to cost, in order to increase sales volume. After collecting data on millions of customers, Amazon could figure out how to sell everything else dirt cheap on the Internet.”
Now that's true evil. Using my own buying habits to offer me low prices on stuff I'll like.
Why isn't Bezos behind bars yet?
As a result, Amazon has from the beginning employed practices that harm the book industry, in service of its long-term goal of dominating commerce on the Internet. Its intention was not to sell books per se, but to use book sales as a way to acquire customers and data to sell them nonbook goods with higher margins.
Wait, didn't you just say Amazon wanted to sell everything dirt cheap? What are these higher margins you speak of?
And doesn't Amazon sell more books than any other retailer? Isn't that helping the book industry?
Amazon often goes about acquiring those affluent customers by selling books for less than the price it pays the publisher. This practice is called “loss leading,” and it has long been used by well-capitalized corporations to drive less rich competitors from the field.
Loss leading isn't illegal. Nor is it sustainable.
How about citing some case law involving predatory pricing?
Wait… has there been any?
No one doubts that Amazon has used “loss leading” in a systematic way to capture market share from independent bookstores and big book chains. In the two decades since Mr. Bezos first explained his business plan, Amazon has sold tens or possibly hundreds of millions of physical books at or below cost.
Again, break me off a piece of this action. If a giant retailer like Amazon wanted to subsidize my business by selling my work for below cost, I'd need to be sedated to stop my 24/7 Snoopy Dance.
The practice became more extensive in 2007, when Amazon used its (then) 90 percent share of the e-book market to dictate to publishers when to release a particular book in electronic form (i.e. the day of publication),24 and to impose a one-price-fits-all $9.99 sticker on all e-books, no matter how much authors and publishers had invested in those books. For years after the introduction of the Kindle, Amazon paid publishers $12 to $14 for many new e-books it sold at a loss for $9.99. This strategy worked very well for Amazon, which sold millions of Kindle devices and added many customers to its Amazon Prime program. And on the surface, it would seem to have worked well for “consumers” who paid less per book. But this strategy badly damaged the publishing industry by driving down the price customers were willing to pay for new books, hence reducing the amount of revenue available for publishers to invest in new books. This, over time, also harmed readers.
Whoo boy. The bullshit here is deep.
Hardcovers cost about two bucks to produce, and sell for thirty. Publishers got away with this for decades, because that was the only way readers could buy books. Readers didn't like it. I know this, because when they were given the chance by Amazon to pay less, they took it.
In retaliation, the publishers illegally colluded, forced Amazon to accept Agency Pricing, and raised prices even though the publishers and their authors made less money. Publishers did this to protect their paper sales.
Readers haven't been harmed by Amazon. They've been harmed by publishers. And publishers were forced to pay readers recompense in the DOJ settlement.
Revisionist history much, Authors United?
Another way Amazon routinely abuses its position as a monopsonist is to squeeze publishers with fees on top of the normal cut received from the sale of a book. Large book retailer chains like Barnes & Noble have long taken advantage of their power to charge publishers for favorable product placement, such as display in a storefront window or on a prominent table. But Amazon’s greater dominance of the market means publishers and authors enjoy even less bargaining power than they did against the big box chains.
Uh, I have a lot more power with Amazon than I did when I was in the big box chains. I can buy ads. I set my own price. I can put my books on sale, and even make my ebooks free. And so can millions of other authors.
This has allowed Amazon to take this practice of imposing fees to new levels. It has, for instance, added fees for “services” like warehousing and shipping. More problematic yet, these fees are often arbitrary and unexpected.
Haven't warehousing and shipping always cost publishers money? That's what they paid distributors for.
But here's the tidbit Authors United left out: when Amazon created the Kindle, publishers no longer needed to pay a distributor for warehousing, no longer had to pay for shipping, and no longer had to pay for printing ebooks. Publishers kept that money, as extra profit, rather than split it with authors.
Now Amazon wants to charge publishers for these servies? Awesome! Talk about getting a dose of your own medicine.
For example, Amazon frequently surprises publishers at the end of the year with a sudden demand to pay a flat fee equal to a percentage of the previous year’s sales (It was this issue of fees that lay at the heart of Amazon’s dispute with Hachette). Amazon also charges different companies different size fees for the same services.
Dear Mr. Baer, my friends don't give me money. I want them to give me money, but they won't. Can you force them to give me money if I evoke nebulous references to freedom of speech and the Sherman Act?
Amazon backs its demands with punitive actions that reveal the extortionary nature of these schemes. If publishers don’t pay Amazon’s levies, Amazon slows or stops the sale of their books. One Amazon executive described the retaliation to author Brad Stone in blunt terms, “I did everything I could to screw with [the publisher’s] performance.”
Let me get this straight. Amazon sells so many books, it makes higher demands on its suppliers. The suppliers don't like these demands. Amazon exerts pressure to get what they want. Rather than leave Amazon, the supplier gives in. Obviously the supplier is making enough money to value the Amazon sales over the extra charges.
What's the problem here?
Stone reported that the typical hit taken by a publisher that refused to pay these fees was a 40 percent decline in sales. Since almost no publisher can survive that steep a decline in sales, almost all choose to pay.
So Amazon is responsible for so many sales they want more money? Isn't that the point of capitalism? Isn't that the essence of most contract negotiations, both sides wanting better terms?
Do you pinheads really think government intervention will improve things? Who will pay for this intervention?
I have an idea! How about the government controls prices instead of Amazon, and then applies a 25% tax to all ebooks and paper books to pay for it!
I'm a genius.
A third way Amazon disrupts the traditional economic system of publishing is by using its monopoly to promote books that it publishes instead of books offered by other publishers. In other words, Amazon simultaneously provides essential access to the market and other essential services to authors and their publishing partners, and then exploits this control – and the information it has gleaned from their sales – to compete directly against these same authors and publishers.
Apathy, laziness, and existence-bias prevented the Big 6 from creating their own online store and ebook reader and mining customer information. They had an oligopoly for decades, and instead of innovating, they chose price gouging.
Here's a tip for authors. If you feel your legacy pubbed books are competing with Amazon published titles, leave your publisher and sign with Amazon.
Amazon launched its publishing business in 2009. The corporation publishes books, novellas, short stories, long-form nonfiction, and journalism through publishing imprints such as 47 North, Montlake, AmazonCrossing, AmazonEncore, Powered by Amazon, Amazon Children’s Publishing, Little A, Grand Harbor Press, and Thomas & Mercer. And it does so through operations like Kindle Direct Publishing, Kindle Singles, CreateSpace and its other self publishing platforms.
I was the first legacy pubbed author that Amazon published, via AmazonEncore, with Shaken. I remember talking at length with Amazon about them starting other imprints. I've since been pubbed by Thomas & Mercer, and AmazonCrossing (I was also the first Amazon author pubbed in Germany, and my German titles have sold over 180,000 copies.)
Amazon is easily the best publisher I've ever worked with, and I really hope I played a small part of their continuing expansion into new genres and territories, because working with legacy publishers sucked, and this alternative is great for authors.
Of course, most bookstores boycott my books because Amazon is my publisher, but I can live with that.
Unless.... do you think it would be helpful to whine to the Assistant Attorney General about it?
Amazon has enjoyed a rapid success in its publishing venture. Even though many authors and readers refuse to deal directly with Amazon’s publishing arm, one reporter recently found that 25 of the top 100 books sold by Amazon on a particular day were published by Amazon.
Unlike traditional publishers, Amazon, for the vast majority of books it sells, invests little or nothing. It plays virtually no role in editing, designing, or vetting the books for accuracy and quality.
Wow, you guys really know nothing about Amazon Publishing. You haven't got a clue how titles are chosen for promotion, how various Amazon imprints and departments work, how many Amazon employees work on each book, or how much it costs. Yet, in the same letter, you crow about your publishers being venture capitalists who invest in authors.
Newsflash: Advances are so 2010. They're a high interest loan which you have to keep paying back, forever. Going with AP, or self pubbing, gives you higher royalties, more money, more freedom, more chances at promotion (either solo or with Amazon), and much less hassle and stress.
But keep thinking that your publishers are worth the 75% you pay them. Keep selling your ebooks for $9.99 while I make more than you selling for $3.99. Keep bashing Amazon. Keep clinging to your sinking ship. I'm not writing this blog to convince you of anything. I'm writing to inform the newbies.
Amazon uses its dominance to promote books in which it has an ownership stake, and thereby to divert profits in the book business away from outside publishers and authors into its own vaults.
Now, finally, something I agree with.
I was recently in the M&M's World in Chicago, and I was shocked that they were selling only M&M's and M&M's-related merchandise. Where were the Snickers? Where were the Clark Bars? And don't even bother looking for Twinkies, or anything Hostess; it ain't there.
It sadly reminded me of the time I went to Legoland and couldn't find any Hot Wheels or Barbies. I mean, can't the government step in and make them sell every toy every made, without favoring one over the other?
These three practices of loss-leading, fee collecting, and direct publishing form a unified business strategy. The quasi-permanent loss-leading of best sellers has weakened and bankrupted many rival book retailers, concentrating Amazon’s control over the book industry. The levying of fees for marketing and other “services” allows Amazon to claw back from the publishers much of the cost of selling their books below invoice price. The direct publishing of books enables Amazon to advance its own product through preferential treatment and aggressive marketing.
I like the "claw back" wordage. Like publishers are poor little victims rather than the arms of multi-billion dollar conglomerates.
As expected, Authors United makes claims without sources or data. No list of rival book retailers bankrupted by Amazon, or proof it was Amazon that did it (hint: it wasn't. It was customers changing their buying preferences.) No link between Amazon's capitalistic practices and anything illegal. No proof that this letter, wasting the Assistant Attorney General's time, is justified. No good points made, or conclusions proven.
Just whining. Entitled, pathetic, whining.
And it just keeps going...
The ultimate result is to extract vital resources from the industry in ways that lessen the diversity and quality of books. As George Packer explained, because of Amazon, “money for serious fiction and nonfiction has eroded dramatically in recent years; advances on mid-list titles—books that are expected to sell modestly but whose quality gives them a strong chance of enduring—have declined by a quarter.”
Again wrongly equating publishing with diversity and quality.
Amazon has allowed for greater diversity. And unless there was a third party study about the comparative quality of self-pubbed books and legacy books, or unless Authors United has shown it has read every book on Amazon, this boast about quality is just that; an unsubstantiated, bloviated bit of self-aggrandizing hot air.
In a well-documented trend,
That we aren't going to document...
publishers have responded not just by cutting advances, but by publishing fewer titles and by focusing more on books by established bestselling authors and celebrities. Some authors who would otherwise be published can no longer attract the financial support they need to write their books.
Authors United is made up mostly of novelists, no?
Name a single novelist who got an advance for a first book they hadn't written yet. Aren't first novels written on spec?
Personally, I don't need an advance. I start earning money 30 days after I publish.
As for non-fiction authors who once sold books on the basis of an outline or proposal; the rules have changed. That happens when a disruptive technology like ebooks change an industry. Many don't like it, but progress marches on just the same. Happily, there are still ways to get that venture capital, via crowdfunding venues like Indiegogo and Kickstarter.
Readers are presented with fewer books that espouse unusual, quirky, offbeat, or politically risky ideas, as well as books from new and unproven authors. This impoverishes America’s marketplace of ideas. One wonders if Common Sense
would have found a publisher in the current environment.
One knows there was certainly no common sense in this letter.
As for Common Sense, I wasn't aware Thomas Paine got an advance for it.
And in the current environment, Thomas Paine wouldn't have to find a publisher that he'd eventually abandon because said publisher probably stole from him. He could self-publish, and keep 70%.
John Rossman, a former Amazon executive, has said that Amazon executives understand full well that their position as a rich monopsonist affords them unparalleled leverage in the American book business. Amazon, he says, is “looking for every dollar they can to feed into their other businesses. To achieve that end, Rossman says, Amazon “is able to have a race to the bottom that most other companies don’t want to have.”
Which benefits the consumer, and results in more money being spent on more things. Sounds awful.
Common sense tells us that Amazon’s hinderance of books published by particular companies harms the interests of readers, as “consumers” of books. Common sense also tells us that readers are harmed when Amazon’s actions cause a decline in the availability of well-crafted, carefully edited books.
No, it doesn't.
But I see what you're doing. Instead of providing examples of those things, you're pretending they're true without having to prove them.
Common sense tells me you're full of shit.
There is yet a third way in which Amazon’s actions harm readers. There is no reason why the traditional structure of publishing, in which publishing houses provide authors with capital and services, cannot co-exist with self publishing.
You mean, like it currently does?
On the contrary, an ideal situation would be one in which readers can decide for themselves how to find the books they like, without the interference of a data-rich, self-interested, all-controlling intermediary.
Good luck monetizing that ideal situation. I'd love to see your business plan.
Yet in the real world, the exact opposite appears to be happening. Amazon’s position as a monopolist seller of books and its access to enormous quantities of data enables the corporation to manipulate the choices readers make. Amazon actively steers readers towards some books – such as those from which it stands to earn more money – and away from others.
Oh my God, that sounds like.... ADVERTISING! Someone think of the children!
The most basic way Amazon manipulates a specific reader is to “price discriminate” by offering discounts and promotions that may lead a particular reader to buy one book and not another.
Next thing you know, this new, nefarious scheme will catch on with other retailers. Maybe they'll start putting certain products on "sale." Then they might go so far as to "advertise" these "sale" products using periodicals, direct mail, coupons, pop ups, sidebars, or TV.
How do we stop this horror?
Amazon also uses many other marketing mechanisms as well as its search engine to steer readers towards some books and away from others. Amazon represents its rankings, recommendations, bestseller lists, and “Customers who bought this book also bought...” statements as objective and neutral. They are not; all these services, including Amazon’s search engine, are for sale, and the corporation encourages publishers and authors to pay fees for higher rankings.
In the letter, the above is attributed to "Packer, New Yorker." I assume from this article, as it was cited earlier. Yet Packer doesn't mention rankings, bestseller lists, or "Customers who bought this" as for sale by Amazon.
Does Authors United know something that no one else does? Or are they making shit up?
If Amazon and Bezos aren't selling book ranking or bestseller list slots, that's libel. And I'd guess George Packer could also sue for being misquoted.
If Amazon is selling those things, well, why shouldn't they be able to? Point me to a law against it.
This letter no doubt took a great deal of time for Authors United to write. Couldn't they have come up with a few links showing that selling slots on a bestseller list is illegal?
One of the prime negotiating points in the Hachette/Amazon dispute was how much more money Amazon could extract from Hachette to make sure its authors were being favored instead of disfavored.
Citation? No? No link? No proof? And if true, how is that different than any other retailer?
In the past, Amazon has admitted to charging different customers different prices for the same books based on what it knows about their demographics and on-line habits. More recently, one price tracking firm estimated that Amazon changes the prices of all of its goods, including books, some 2.5 million times per day.
You guys are asking the Assistant Attorney General to investigate Amazon, and you think mentioning Amazon is doing all it can to sell stuff is evidence of wrongdoing.
Isn't it the opposite? Don't you want Amazon to do all it can to sell your books to consumers who are looking for your type of book? How is that bad?
Whether the company still engages in such “first-degree” price discrimination among its customers is hard to determine without better access to internal records. What we do know is the corporation’s detailed knowledge of the buying habits of millions of
readers – which it amasses through a minute-by-minute tracking of their actions online – puts it in a powerful position to use such “personalized” pricing and marketing to influence the decisions of readers and thereby extract the most amount of cash possible from each individual.
Contrast that to your publishers, who know exactly jack shit about the readers they sell to.
We believe this combination of vast market power, access to vast amounts of data about its customers’ personal preferences, and a direct financial interest in steering readers to certain books and away from others, calls for regulatory scrutiny.
Dear Mr. Baer, today I went into a Best Buy and saw a large Xbox display. This lead me to buying an Xbox over a Playstation. Please investigate Best Buy.
When a monopolist promotes different books to different readers, and uses invisible algorithms to steer readers away from certain authors and toward others, it means many customers simply never see books that might interest them. This violates their right to sift freely among a full spectrum of ideas and information.
Dear Mr Baer, after buying my Xbox I went to my local public library and saw a display of books about my town. This steered me away from books about other towns, violating my right to sift freely among a full spectrum of ideas and information.
Please target a drone strike at my library.
This is true whether the discrimination is managed by a human censor, a human merchandiser, or a human-engineered algorithm.
Dear Mr. Baer, after the library debacle, I was driving home and heard a radio commercial about Baskin Robbins ice cream. But at the same time, I passed a billboard showing Miller Lite beer.
Since I'm unable to make any decisions for myself, and don't have an ounce of self control, making me helpless prey for even the vaguest of suggestions, I was compelled to eat an ice cream sundae from Baskin Robbins while simultaneously chugging a Miller. My tummy didn't like it. Without government intervention, this could happen again. Do something.
Amazon sees more of the commercial information that flows through our book market, and knows more about the whims, habits, political, religious and cultural beliefs of individual readers and authors, than any other company. The corporation has the ability to make use of that information to promote its own interests in ways that are opaque and unaccountable. Amazon has the ability to promote or destroy a book in the national marketplace for any reason it chooses, and nobody outside the company can know why or how—or even that it was done. Thanks to the corporation’s prowess in acquiring and managing “big data,” Amazon’s ability to supervise and manage the actions of authors, publishers, and readers is growing at a rapid pace.
This kind of myopic hysteria reminds me of the subliminal message scare of 1958. In a nutshell, a market researcher named James Vicary supposedly inserted subliminal ads into a movie for Coke and popcorn, and the concession stand saw increased sales. This lead to lots of people freaking out, and subliminal ads being banned.
It turns out Vicary lied, and subliminal ads don't work.
Online behavioral targeting is still relatively new, and its effectiveness is unknown. Authors United would apparently have you believe that Amazon is the NSA of retailers, learning your every secret, then exploiting those secrets to sell you things, Svengali-like, against your will.
No retailer can force you to buy anything. But I'd argue that many consumers, me included, like being shown items that could potentially interest me based on my previous buying habits. I don't consider this an invasion of privacy. I consider this helpful.
Sometimes Amazon shows me stuff I have no desire for. Other times Amazon makes recommendations that I appreciate. The same way a sommelier makes wine recommendations based on what I'm eating, or after what I tell him I like. Or a car dealer shows me vehicles that fit my list of criteria.
This isn't brainwashing. This isn't managing my actions. It's salesmanship, one of the oldest professions. And most customers like it.
Our concerns about Amazon’s manipulation of book sales mirror the U.S. government’s concerns about the ability of internet service providers to control the flow of information across the internet. These were made clear in the Federal Communication Commission’s recent decision to guarantee “net neutrality” and in the Justice Department’s concerns that if Comcast were allowed to acquire Time Warner Cable it would become an “unavoidable gatekeeper for internet based services.”
The Internet is a utility. Amazon is not.
Similarly, our concerns about Amazon mirror the European Commission’s fear that Google is abusing its position as the dominant search-engine to direct people away from the products of competitors towards products it directly owns.
As of right now, July 13, 2015, there has been no resolution to the EC's complaint. It revolves around Article 102 of the Treaty on the Functioning of the European Union that prohibits abuse of a dominant position. Google allegedly put search results that benefited Google ahead of results that Google's secret algorithms generated. There's an example here.
The problem is that Authors United isn't sending a letter to the European Commission. It's sending it to the US Assistant Attorney General. The US doesn't have a direct corollary to Article 102. And I have yet to see Amazon do anything as blatant as the Google example above. Where are the screen shots? Where are the links? Where is the proof that people are being directed away from what they search for?
Also, as Passive Guy just pointed out in his link to the Sherman Act, anti-trust laws were enacted to protect competition, not competitors.
Reread that, Authors United. Our Government expects, and endorses, competition, but does not believe weak competitors should be shielded simply because suck.
PG also imparts this bit of wisdom:
Amazon is not a competitor to authors. So why is Authors United, a handful of authors who are unrepresentative of authors as a whole, complaining about Amazon? PG says never seems to occur to them that, if a genius organization with Amazon’s corporate values had never come into existence, book sales would almost certainly be much lower than they are today. Amazon has made books far more accessible via both price and online convenience to average American consumers than they were before Amazon. Amazon Publishing notwithstanding, Amazon is not a serious competitor to traditional publishers. The publishing industry was in a long-term consolidation phase before Amazon became a power. The creativity generated by dozens of US publishers was rapidly disappearing into the maw of huge corporate conglomerates before Amazon. Does anyone seriously contend that traditional publishing is more creative and vibrant today than it was in 1960s when major publishers released books by John Updike, Harper Lee, Günter Grass, John Steinbeck, Henry Miller, J.D. Salinger, Aleksandr Solzhenitsyn, Mary McCarthy, Saul Bellow, Ken Kesey and Frank Herbert? (And that’s just fiction in the first half of the 1960s).
Amazon routinely engages in other actions that may violate antitrust law. These include: Buying out competitors. Amazon has acquired many of the largest companies that once competed with it in the sale of physical books and e-books, the printing of books, the resale of used books, and the gathering and curating of reader reviews. The list includes Goodreads, AbeBooks, BookSurge, LibraryThing, Bookfinder.com, and The Book Depository.
Okay, so Amazon buys companies and then closes them? Absorbs them? Links to them?
Or does Amazon pretty much leave them alone?
Book titles in Goodreads link to over a dozen retailers, plus libraries, the majority of which are not Amazon owned.
Abebooks, Bookfinder, and the Book Depository all seem to function as their own companies. They link to Amazon, but also to other retailers as well, and anyone looking at those sites would be hard-pressed to find any Amazon influence.
I speculate that Amazon consulted its antitrust lawyers before each acquisition. And I don't recall the FTC attempting to block any of these deals, as they had interfered with B&N acquiring Ingram, mentioned above.
Amazon also relied on an aggressive acquisition strategy to capture and consolidate control over the e-book market by buying two of the most developed and user-friendly formats, Mobi and Stanza.
When you innovate, and other companies are innovating as well, you have three choices. You can innovate independently and make sure your patent doesn't infringe on other patents, or license those patents, or buy them. This isn't against the law.
Exclusion of Competitors. Amazon has used its control of the book market to force book publishers to publish their e-books on a format owned by Amazon, rather than on one of the many competing, open-source e-book formats. This despite the fact that many of these formats predated Amazon’s “Kindle” format and, arguably, are superior in quality.
Proprietary formats aren't illegal. Ask Sony, who did it with Betamax, DAT, lrf files, and Memory Stick Duo, to name four. History doesn't bode well for exclusive formats. In each case, Sony came in second place, or failed. VHS beat Beta, CD beat DAT, epub and mobi beat lrf, Micro SD beat Duo.
Amazon's insistence on mobi and azw formats is Amazon's legal prerogative. But it isn't pernicious, like the DRM publishers insist on adding to their ebooks. There are many programs that allow a person to convert mobi files to epub--unless those files have DRM that the publishers insist upon.
Such leveraging of control over the e-book format seems to have been specifically designed to hinder competition in the e-book market by other companies, including Barnes & Noble, Microsoft, Google, Apple, and Sony. The fact that these large companies are failing to compete with Amazon is a comment on Amazon’s concentration of power in the market.
Sure, the one and only reason companies can't compete with Amazon is because of Amazon's power. Rather than the other stores and readers being inferior, or customer preference.
Nothing forces people to shop at Amazon.
I love how Authors United keeps stating unsupported speculation as fact. Large companies can't compete, so it must be because Amazon is too powerful! That's a fact because I said so!
Free Riding on Competitors. Amazon designed its “Price Check” app to encourage readers shopping at a physical retailer to scan the books they want and send that information to Amazon, and to instantly purchase that book from Amazon’s store.
Doing so helps Amazon spy on the prices charged by independent bookstores. It also enables Amazon to “free ride” off the value-added services provided by those book retailers. Amazon benefits when book stores suggest what books to read, host authors and spotlight their works, or simply allow shoppers to browse through many books, then uses special offers to lure readers to its website. Many bookstore owners have told us that customers will come in, get staff help to recommend or find a book, scan it, and then order it from Amazon—right in the store itself.
So here's another case of "let me get this straight". Amazon is showing customers they can get items for less on Amazon.com with this app, and competitors are responding with… complaints?
How about, you know, competing? Innovating? Cutting overhead and anticipating customer needs so you can lower prices yourself?
Do we want to subsidize the existence of companies that don't feel any need at all to give customers the best experience possible?
Misrepresentation. During the eight-month showdown with Hachette, Amazon claimed the delays in shipping the books of Hachette authors were caused by Hachette’s failure to ship the books to Amazon. As far as we understand the situation, it was in fact Amazon that allowed its stock to run out and refused to accept timely shipments from Hachette.
During that time period, Amazon had no contract with Hachette. Why would it warehouse the books of a publisher when it had no obligation to keep selling that publisher's titles?
Yet Amazon still offered those titles, even in the absence of a deal in place. Sounds like Amazon was being very generous.
It also seems that even when Amazon had books on hand, it continued to warn its
customers of one to four-week shipping delays. Amazon’s statements therefore appear to be clearly deceptive, hence in violation of the law.
It seems? Based on what? Did Authors United have access to Amazon's inventory? Did Hachette make some sort of statement regarding shipping delays that I'm unaware of?
Amazon has sought to depict its monopoly over the American market for books as a simple, natural, and inevitable consequence of new technologies. As Jeff Bezos put it in 2011, “Amazonians are leaning into the future, with radical and transformational innovations.” Amazon executives depict publishers and traditional authors, by contrast, as relics of the 19th Century, ignorant Luddites, or as former Amazon employee James Marcus put it, “antediluvian losers.”
Marcus is being kind. Publishers are archaic, lazy bullies who survived as long as they did because they had an oligopoly on book distribution, which allowed them to control what was published, and how much it cost.
Amazon executives say they are using these new technologies to level publishing’s “hierarchy” and to bulldoze away “gatekeepers” and other “middlemen” who, in their view, seek to retard progress.
As they should. These middlemen take the lion's share of the profit, for doing much less work than the author does. I should pay a publisher 75% of my ebook royalties, for my lifetime plus 70 years, because they edited my book and made me a cover? Give me a break. I can hire an editor and cover artist for sunk costs and keep 100% of my royalties, along with my rights.
But as we’ve seen, Amazon’s market share isn’t a predestined outcome of the digital revolution in book retailing and publishing. It is the result of specific, illegal, anti-competitive behaviors by Amazon, which has taken advantage of these new technologies to concentrate economic power and gain monopoly control of a vitally important, nationwide media market.
I'll fix the above paragraph so it's true:
Amazon created an online store that people wanted to shop at. Then they created the ebook reader and app people wanted to use. Then they fought to keep prices low. As a result, they've been ranked #1 in customer satisfaction for nine years in a row.
But a group of rich, whiny, entitled bestsellers don't like that Amazon is disrupting the industry, so they sign petitions and buy ads and bother the Assistant Attorney General because change is scary and they're about to get disintermediated out of their gigantic advances.
In November 2013, U.S. District Judge Denise Cote, in finding that Apple and the publishers had colluded to raise the price of e-books, also issued a warning to Amazon. “This trial has not,” she wrote, “been the occasion to decide whether Amazon's choice to sell NYT Bestsellers or other New Releases as loss leaders was an unfair trade practice or in any other way a violation of law.”
We believe the time has come for the Department of Justice to follow through on that warning.
That's a warning? Really?
Perhaps I have a different definition of what a warning is. You know, a statement or event that indicates a possible impending danger or problem.
Cote's statement sounds more like a clarification. Perhaps because the defendants kept whining about how Amazon was using predatory pricing, and she wanted to address that non-relevant complaint. See? I can speculate too!
Amazon has captured more control over a vital medium of information in the United States than any company in history. It uses its technologically supercharged monopoly powers to manipulate and supervise the sale of books and therefore affect the exchange of ideas in America.
Incorrectly labeling Amazon as a monopoly apparently isn't enough. It is also technologically supercharged; the Iron Man of monopolies, cutting through competition with repulsor rays.
The hyperbole runs strong in the group.
The government has the responsibility to maintain an open, competitive, free, unsupervised, and undistorted market for books.
So United Authors wants the government to create an unsupervised market for books… by supervising the market for books. It wants to encourage competition by breaking up the Big 5's main competition. It wants a free market, as long as no company gets too large (hint: then it's not a free market, it's controlled.)
We know that among the traditional remedies to limit monopolies has been separation of business components. Whether that, or some less drastic
remedy, is called for here is obviously a matter that we entrust to your judgment.
How generous of them to entrust it to the government. Why doesn't United Authors step in and make up some penalty for Amazon, the same way it made up all the BS in this letter?
Our larger point is that we believe the Antitrust Division needs to reassess Amazon's overwhelming market power, bearing in mind the very special constitutional sensitivities that have historically been applied to any business that has established effective control of a medium of communication.
We believe the remedy should aim to accomplish several goals: to eliminate Amazon’s power to discriminate among authors and readers, whether through pricing, marketing, or the fees it charges for its service;
Translation: We don't want Amazon to control its own pricing or ads, and all of its services should be free.
to prevent Amazon from selling books below cost to acquire customers
for unrelated lines of business;
Translation: We want Amazon to sell books for what we decide they should sell for.
and to restore competition in self-publishing, by requiring the book-retailing arm of Amazon to compete with other retailers on a level playing field.
Translation: We can't compete with Amazon books on Amazon, so make it happen for us. And to make things truly fair, force all the other booksellers to carry Amazon titles because they're boycotting them.
Wait! Forget that last thing! We don't want that!
We believe these steps would restore freedom of choice, competition, vitality, diversity, and free expression in the American book market, while ensuring that the American people – as individual free citizens and as a democratic community – determine for themselves how to take advantage of the new technologies of the 21st Century.
And I believe the DOJ should investigate the Big 6 and their history of price fixing (what other industry prints prices on their product, but doesn't try to undercut competitors on price? Hint: cartels), identical unconscionable contract terms, stranglehold on book distribution, and general ongoing abuse of writers and readers for more than 30 years.
And I don't have to wrap myself in the American flag to make my points. The industry that Authors United defends greatly benefits the privileged few, and harms the majority.
Amazon does the opposite. It has leveled the playing field, reduced barriers to entry, given customers more variety and lower prices than any company in history, and allowed hundreds of thousands of writers to make more money than ever before, some for the very first time.
Authors United hasn't shown cause to investigate Amazon. They've only shown how narrow-minded, entitled, and whiny they are, while trying to pass off opinion as fact, ignoring opposing viewpoints, twisting information around even though this info has been repeatedly debunked, and crying for government involvement when Amazon's only objectionable action in this situation has been to disintermediate a bunch of greedy middlemen bullies.
Shame on you, Authors United. The defense of your corporate masters is to the detriment of your professional peers who earn much less than you do, and perpetuating this nonsense harms new writers looking for information on how to break into this business.
Did I miss any points?