I recently shredded Authors United's letter, intended to be sent to the Assistant Attorney General at the end of the month, probably by FedEx. But Salon has served up a floater so now I can shred Preston's own words.
Salon: The group Authors United came together last fall during the fight between Amazon and the Hachette publishers. Now, one of its founders, thriller writer Douglas Preston, is speaking to the Department of Justice about larger abuses by the online retailer, who he says has established something like monopoly power in the book world. Preston sent a letter on Monday to fellow authors, explaining: “The settlement of the dispute did not change the fundamental problem: That one corporation now dominates the book market in the United States. We believe Amazon has used its power in ways that harm the interests of authors, readers, booksellers, and the publishing industry as a whole.”
Joe sez: If my publisher couldn't close a deal that prevented my books from being sold by the largest bookseller on the planet, I'd be miffed at my publisher. It's bad faith. Hachette had a contractual responsibility to sell to as many markets as possible on behalf of its authors.That's why authors signed with Hachette. If Hachette was pursuing its own needs ahead of its authors' needs, Hachette authors should have sued them for breach of contract.
But instead, Preston (who has made a mint through Hachette) thoughtlessly defends his corporate master, because he wants to continue to get gigantic advances from them. I don't fault him for that. But don't claim it's for some grandiose, universal good.
Amazon does not harm authors. It sells more books than any other retailer. It pretty much single-handedly created the ebook market. It has allowed more writers to earn money than ever in the history of writing.
It does not hurt readers. It offers the widest selection, fastest delivery, and lowest prices anywhere on the planet, and has brought books to many who don't live near bookstores.
It has hurt competitors, but that's legal, and pretty much the point of capitalism and a free market.
It has also hurt publishers, but who cares? Other than authors getting multi-million dollar contracts?
Salon: We spoke to Preston from his home in Maine. The conversation has been slightly edited and condensed.
Why don’t you start by telling us about the letter you’re sending to the Department of Justice and what motivated it.
Preston: It arose out of the Amazon-Hachette dispute and the way Amazon treated its authors. A lot of what they were doing was unfair, outrageous, harming authors, and harming the whole publishing ecosystem. We consulted with some antitrust lawyers, and they told us about some ways Amazon was skirting the edge of antitrust violations.
Doug, Doug, Doug, I'm really getting tired of the same bullshit talking points.
Amazon tried THREE TIMES to take authors out of the firing line during the negotiations with Hachette. When Amazon contacted you, proposing a solution, you refused to listen.
Preston: The thing that said that was most interesting and surprising was that never in American history had any corporation achieved monopoly control over a vital marketplace of information.
Amazon is not a monopoly. Repeatedly whining that it is one doesn't make it so.
Last year I interviewed lawyer Paul Biba:
Paul: Amazon is not a monopoly. There are plenty of competitors in the book and ebook arena - B&N, Kobo, Smashwords, etc. If Amazon were a monopoly it would have put these guys out of business. A monopoly is NOT illegal. The illegality comes in GETTING the monopoly. If you get a monopoly by legitimate pricing techniques, unique product, good customer service, etc. then that is just fine. If you get the monopoly by predatory pricing or other illegal activity then that is what is illegal, not the monopoly per se.
Predatory pricing, to make it simple, is when you price a product so low that it drives competitors out of business. Generally, that means pricing below your cost. To be honest, this doesn't happen too often because doing it hurts the seller who has to have pretty big coffers to sustain it. Amazon is clearly not engaging in predatory pricing because one can see many other sellers selling the same stuff at similar prices. To be "predatory" Amazon would have to sell most, or all, of its books and ebooks at prices so low that no other company could possibly compete. This is clearly not happening.
On the whole predatory pricing is not a viable antitrust theory any more. This is because the Supreme Court has set a very high bar for proving it (because by lowering prices the consumer is actually benefited) and, as a practical matter, not many companies can afford to do it.
I would categorize Amazon as a typical large business that uses normal, everyday business practices, just like the businesses I have worked with all my life. What makes Amazon unusual are two things: first, they are so good at what they do. Second, in the publishing area, what they do is so different from that the publishing industry has done over the centuries that it is a complete mystery to those involved in the industry. I am continually amazed that the publishing industry is astonished by Amazon's activities. I've been to enough conferences with the top execs of the publishing companies to see that they somehow think that the publishing business is a special, unique thing that is unlike any other business in the world - and should be treated as such. Amazon doesn't buy this and so it has become the publishing industry's bugbear.
Joe sez: Also, Amazon doesn't control any so-called "marketplace of information", because they don't control the Internet and don't own every bookstore in the world.
Books are not special snowflakes, Doug.
Preston: Even before there was no antitrust law at all, when the first telegraph wires were being strung across the continent by Western Union, the Congress in 1866 passed the Telegraph Act to keep one company from monopolizing this means of communication.
Joe sez: The telegraph was a utility. Amazon is a retailer. They aren't comparable.
Preston: Since the 20th century, the Congress and the courts have been absolutely diligent in protecting against monopoly in newspapers and radio and even the book business. And yet, here one corporation has achieved monopoly control of the book market. Amazon’s control of the entire book market is about the same as Standard Oil’s when it was broken up into 34 separate companies.
Joe sez: Let's look at the US Department of Justice's ruling on the Standard Oil case:
"The evidence is, in fact, absolutely conclusive that the Standard Oil Co. charges altogether excessive prices where it meets no competition, and particularly where there is little likelihood of competitors entering the field, and that, on the other hand, where competition is active, it frequently cuts prices to a point which leaves even the Standard little or no profit, and which more often leaves no profit to the competitor, whose costs are ordinarily somewhat higher."
Doug, show me where Amazon charges excessive prices where it meets no competitors. Then show me some competitors it drove out of business.
Wait... you can't? Perhaps because Amazon isn't a monopoly, or engaging in illegal business practices that drive competitors out of business? There are still a lot of bookstores, both online and physical. In fact, haven't you heard? The number of indie bookstores is growing.
Preston: This is very concerning. Even if Amazon were a benign corporation, this would be very concerning, but we’ve all seen that it’s not at all a benign corporation.
Salon: Tell us a little more about what you mean by that.
Preston: Starting with the smallest and weakest publishers, since about 2004, whenever they get into a commercial dispute with a publisher, they take it out on the author.
Joe sez: No, Doug. When Amazon has a commercial dispute with a publisher, they take it out on the publisher. The author who signed a deal with that publisher may suffer because of their publisher's bad negotiating skills, but Amazon is not directly targeting authors.
Preston: They make the books harder to sell, they claim “shipping delays,” say the book isn’t available – in every way mess with the book’s sales. Because Amazon is so powerful, they can actually destroy a publisher by doing that. This has happened to dozens and dozens of small publishers over the last 11 years. It’s just one way Amazon has harmed the publishing eco-system.
Joe sez: First, name these dozens and dozens of publishers Amazon allegedly destroyed.
Second, tell me how, by destroying a publisher, the author is also destroyed. You mean the author can't find another publisher? Or self-publish? Amazon somehow prevents that?
Preston: And over this time period, Amazon has been demanding a larger and larger percentage of the sale price of a book. What that does is suck money out of the publishing ecosystem, to Amazon, which has caused a lot of publishers to take fewer chances with midlist authors, to drop midlist authors, and so a lot of voices have been silenced by this removal of money from the publishing world.
Joe sez: Doug, publishers are middlemen that take a much larger chunk of an author's money than Amazon does. And if Amazon really is destroying the corrupt, archaic, lazy bullies who have run the paper distribution cartel for decades, giving them the ability to screw thousands of authors... well, they deserve an award.
Salon: Defenders of Amazon will said, “They have a large market share because they’ve worked for it fair and square.” You call it “unprecedented power” in your letter. How do you respond to people who say, “They’re good at what they do, they’re convenient, they know their audience… That’s why they have a dominant position in the marketplace.”
Preston: Everything you said is true: Amazon is very good at what it does, it presents a warn and friendly face to the public, it’s one of the most admired companies in America. John D. Rockefeller was one of the most visionary businessmen of the 19th and early 20th century. And because of his efforts, the price of kerosene and petroleum products went down by about 50 percent. But along the way he completely destroyed hundreds, maybe thousands, or smaller businesses through extremely aggressive tactics.
So just because a company’s actions result in price-cutting doesn’t mean it’s good for our company.
Joe sez: "Our company"?
Holy Stockholm Syndrome. Did Doug even recognize the Freudian slip there?
And that was the oil market: We’re talking about a vital informational market. Amazon, by its actions, has been interfering with the free flow of ideas.
Joe sez: Are you noticing the buzzwords? "vital information market", "free flow of ideas", "marketplace of information".
I wrote about this last year in my post The Name Game about the disingenuous use of words Preston and his pundits were using during their press junkets:
Amazon is not a monopoly. But people know monopolies are bad and illegal, so the term keeps getting used.
Publishers don't create culture. They don't create anything; authors do. But Authors United want you to believe publishers are indispensable. And they aren't.
Books aren’t commodities. Well, yes, they are. They’re bought and sold, after all. AU wants to say they aren't, that people recognize the importance of literature and are above crass, plebian capitalism. But publishers print prices directly on book covers -- if that’s not a product, what is?
Writing is a job. It isn't some special calling for the elite. It isn't some form of magic where the shaman practitioners must be deified. I'm a writer, and damn lucky to be one, but I'm no better than someone who makes toasters on an assembly line.
Authors aren't being targeted. Amazon's goal isn't to put books in their crosshairs for systematic termination. In fact, Amazon has tried, three times, to compensate authors for the duration of the negotiations. Hachette no longer has a contract with Amazon, but Amazon is still graciously selling Hachette’s titles. If Amazon truly wanted to leverage Hachette into signing a new contract, it could stop selling all Hachette titles. But it hasn't done that.
Amazon isn't delaying Hachette titles. It simply isn't stocking Hachette books, and why should it when there is no contract in place?
There isn't any boycott or sanction. Hachette books are available elsewhere. Amazon isn't blocking any sales.
Amazon isn't reducing book discounts. They're pricing books according to the prices Hachette itself stamps on books. They aren't refusing preorders, either. Is it a smart practice to sell titles that haven't been released yet when there is no surety that they'll ever be able to fulfill those orders if they can't come to terms with Hachette?
Amazon isn’t punishing writers who are helpless. Writers are only helpless in that they signed a contract with a publisher who refuses to negotiate with Amazon because the publisher wants to protect its paper oligopoly by keeping ebook prices high. Amazon isn't negotiating with writers, it is negotiating with Hachette. Writers are collateral damage--and writers put themselves in harm’s way by signing with a member of a cartel with a specific agenda.
Look at these words again: reducing, refusing, boycott, sanction, blocking, delaying, targeted, commodities, culture, democracy, monopoly, punishing, helpless. They’re all being used to deliberately mislead.
And now we can add all of this crap about Amazon blocking the flow of information. Blocking information is bad! Nobody wants that!
(Well, unless it's the Authors Guild, who wants SOPA to come back.)
Preston: During the Hachette dispute, the New York Times has been able to show that Amazon exercised content control – sanctioning some books that had a certain political event, and not sanctioning books by very powerful politicians and not others. That’s very concerning.
Joe sez: See? Sanction. Sanctions are bad.
But Amazon didn't sanction anyone, and the NYT didn't show anything of the sort. But if you repeat a lie as truth often enough, maybe people will start to believe it.
Salon: Are there misconceptions about Amazon? How does the average American view the company, and what are they missing?
Preston: Amazon is like any other corporation; it has two goals. One is to increase market share, and the other is to increase profits. So anyone who thinks that Amazon is their friend is deluded. Is Exxon the friend of everyone who fills up their tank with gas? I don’t think so. Anti-trust laws are to prevent the natural growth of companies to grow to a monopoly status, and then use that monopoly power to stifle competition. And that’s what Amazon has been doing.
Joe sez: Nope. Anti-trust laws are 100% okay with the natural growth of companies. See Biba's words above.
And Amazon isn't stifling competition. Competition abounds. B&N. Smashwords. Kobo. Scribd. Oyster. Over 2000 indie bookstores (a number up 27% from 2009.) Who is being stifled?
Preston: Another thing that Amazon has done is to use books as a loss leader – to acquire customers and sell them consumer good at a higher margin, like televisions and shoes. They sell millions of books below cost, acquiring customers with good data, good demographics, to sell them other stuff with more money. That has really damaged the publishing industry.
Joe sez: First of all, loss leaders are legal, and many retailers use them. Second, the publishing industry isn't a retailer, and not in competition with Amazon. If Amazon does destroy the publishing industry, it doesn't violate any anti-trust laws.
Salon: What happens if Amazon continues to move forward this way with no opposition? What are the real-world consequences?
Joe sez: Um... low prices on a large selection of products, coupled with excellent customer service? You know, like Amazon has been doing for the last 20 years.
Preston: I think Amazon is going to continue capturing more and more of the book market – that’s only going to increase. And Amazon will continue to use its overwhelming market power toward those two goals – increasing market share and increasing profits. Amazon is a barely profitable company, and Wall Street clearly expects Amazon to make big profits sooner rather than later.
Joe sez: I agree. It's been 20 years. Any minute now, Bezos is going to raise prices on everything and focus on profits.
Any minute now...
Preston: Amazon stock is soaring, and the only way those investors are going to get a return is if Amazon starts making big profits. So what is Amazon going to do when it acquires an even larger market share? To increase its profits in the book/publishing universe.
Joe sez: I'm clueless when it comes to the stock market, but isn't it possible to make money on stocks without being paid dividends? You know, buying low and selling high? Isn't that how a lot of stockholders make money?
Salon: Companies make money all the time – that’s what they do. What do we have to worry about it Amazon keeps growing? What do we lose as they get bigger?
Joe sez: We lose the bloodsucking publishing industry. I won't be attending the funeral.
Preston: I think what we lost most of all are a vigorous diversity of debate in country. The most important and nuanced debate we have in our democracy is generally in books. Newspapers, radio and TV are fine, but books are where the big ideas are developed with complexity. That’s what were gonna lose.
Joe sez: Wait, what was that? I missed it because I was in the middle of a deep discussion with my copy of Green Eggs and Ham.
Joe: So would you, could you, on a boat?
Green Eggs and Ham: I would not, could not, on a boat.
Joe: I see your point, and appreciate the discourse.
Joe sez: Okay, debate over. I'm back. I see Doug is still pushing that meme about Amazon destroying books, even though it sells more books than anyone else. And Amazon, which allows anyone to self-publish and list their books, is preventing big ideas (buzzword!) by allowing anyone to self-publish.
Green Eggs and Ham: I will eat them in the rain!
Joe: We're done with that joke. Go eat somewhere else.
Green Eggs and Ham: But what about the vigorous diversity of our debate?
Preston: According to George Packer in the New Yorker, publishers are retrenching, taking fewer risks, [signing] fewer midlist authors, taking fewer risks with nonfiction.
Joe sez: Doug, for the love of all that's good, stop confusing the publishing industry with the people who actually write the damn books. You know. They're called "writers". There's a buzzword for you.
Preston: A lot of authors who would have been published 20 years ago are not being heard – publishers are going after the big bestsellers and celebrity authors. They’re getting much more attention from publishers rather than a more diversified list. That’s a real impoverishment of the intellectual life of our country.
Joe sez: Well, I'm certainly seeing a real impoverishment of intellectual life, but I'm not looking at Amazon when I see it...