Wednesday, August 19, 2015

Zombie Publishing Memes #1 - Amazon is a Monopoly

This is the first in an ongoing series that Barry Eisler and I are writing. When we talk about zombie memes, we’re referring to arguments that just won’t die no matter how many times they’re massacred by logic and evidence. Because we’ve been shooting down so many of these memes for so long, and because they just keep reanimating (often repeatedly from the same people), we thought it would be useful to create an online source for easy (and time-saving) reference.

We’ll be tackling these memes one at a time over the course of the next few weeks and then publishing a free downloadable compendium, so if you’ve encountered a zombie meme yourself and don’t see it listed here, please mention it in the comments. And if you’re aware of articles on these or related topics, please refer us to them so we can include links. The complete list of zombie memes we’ve addressed so far appears at the end of this post.

Amazon is a Monopoly.

This meme is incoherent, mistaken, and perverse.

Incoherent, because the “evidence” of Amazon’s monopoly power is always that Amazon is hard on its suppliers, not on its customers (no one can argue with a remotely straight face that Amazon is anything other than exceptionally customer-centric). If the evidence is that a company is squeezing suppliers, it might be evidence of something called monopsony, not of monopoly.

Mistaken, because Amazon has numerous competitors, including Apple, Google, Walmart, Barnes & Noble, Books A Million, Kobo, Smashwords, Scribd, Oyster, and more than 2000 independent bookstores (with new indies opening all the time, and sales at indies strong).

It’s important to remember that US antitrust laws were adopted to protect not competitors but competition. Monopolies (and monopsonies) are not themselves illegal -- what is illegal is abuse or unfair acquisition of monopoly power. Ultimately, antitrust laws are intended to protect the consumer, and it’s difficult to argue that low prices, innovation, and an ever-expanding variety of products are bad for consumers (though valiant efforts are constantly made).

Indeed, the best anyone seems able to come up with in support of the monopoly accusation is what Amazon might do in the future, rather than anything the company is actually doing today. The possibility that a company might one day become a monopoly and abuse its power is no more a crime than is the possibility that a person might one day acquire a gun, might one day get angry, and might one day use the gun in anger to kill someone. Outside Minority Report, the law just doesn’t punish hypothetical future crimes.

Perverse, because it fails to point out there actually is a monopoly in publishing -- or call it a quasi-monopoly, or oligopoly, or cartel. This is the New York Big Five (the cartel is right there in the name). The Big Five actually was prosecuted by the Justice Department for price-fixing under the Sherman Act. The Big Five settled; Apple fought and then lost. For any lawyers out there, note that price fixing is per se illegal under the Sherman Act. Meaning it is the very definition of abuse of monopoly power.

Of course, even if we didn’t know about the per se price collusion, we might surmise by its singular lack of innovation that the Big Five is functionally a single entity. Until Amazon pioneered online bookselling, digital books, and self-publishing, the Big Five was content to subsist on monopoly rents, developing nothing new or disruptive in generations.

In describing the Big Five as a cartel, by the way, we don’t mean to be insulting. We doubt even OPEC looks in the mirror and sees a cartel. Most likely, OPEC perceives itself as a humble organization beneficently managing prices for the good of society overall. This is just human nature, and there’s no reason to believe the Big Five views itself less attractively than does any other cartel.

Moreover, the Big Five has always itself functioned as a monopsony, abusing its author suppliers. How else to explain the forever-term contracts, the twice-yearly annual royalty payments, the lockstep low digital royalties, the outlandish rights grabs and draconian non-compete provisions? Could practices like these persist except by the abuse of vastly asymmetrical take-it-or-leave-it power exercised by a Big-Five controlled system against authors?

One of the more curious aspects of the “Amazon is a monopoly” charge is that it’s rarely made by anyone who’s a lawyer or economist, and indeed the people making the claim almost never bother citing relevant law or even economic theory. Instead, what seems to be happening is that certain people find Amazon both powerful and frightening. They therefore dislike Amazon and know Amazon must be bad. And what do you call a bad company? A monopoly.

A good example is this piece by Matt Stoller, who writes for Salon. In a near 3000-word post arguing that Amazon is a monopoly, Stoller fails to cite any antitrust law. His argument instead rests on his claim that “Amazon is a tyrant, it rules through terror.” This is a strange claim. We suppose it’s possible there are polls demonstrating that the majority of Amazon’s customers shop there because they’ve been terrorized into doing so, but it seems more likely that people shop at Amazon because they like the store’s price, selection, convenience, etc.

Note too, that in lieu of citing any legal basis for his “Amazon is a monopoly” claim, Stoller refers to an equally bombastic and legal-reference-free New Republic article for support. The tendency of some writers to draw support for the validity of a zombie meme by citing previous manifestations of the same meme might offer some insight into the resilience of zombie memes generally. Zombie memes are based on emotion, not on evidence or logic (in fact, they are contravened by evidence and logic). It may be that finding other people who share your fears and prejudices has the effect of validating and reinforcing those fears and prejudices. After all, it’s easier to ignore evidence and logic when you can point to other people who seem to be feeling the same things you are.

For another illustrative example of the inability of people propagating the “Amazon is a monopoly” meme to support their position with references to any relevant laws, we recommend this Paul Krugman piece arguing that Amazon is a monopsony hurting America, authors, and readers because it “has the power to kill the buzz,” and our discussion of it and related matters here.

Negating many of these monopoly claims, and citing US anti-trust precedent, Randall J. Morris has a thoughtful piece that shows how Amazon is in no danger of being sued by the DOJ.

The coherent (though far less scary sounding) version of the “Amazon is a monopoly” argument would be that Amazon has become a kind of utility -- an essential public service, such as electricity and water, for which consumers have no alternative and which therefore must be regulated by the government. While an “Amazon is a utility” argument would at least make some sense in a way the “Amazon is a monopoly” argument never has, it would still be mistaken. Even assuming that books are as essential to life as water and power, if the electricity company cuts off someone's power, that person will have no choice but to sit in a cold, dark house. If a book isn’t available in Amazon, it can instantly be obtained from almost any other bookstore, whether in person, by download, or by mail order. People buy books at Amazon not because they have no choice, but rather because they like the choice Amazon provides them and choose to shop there despite the presence of other available venues. The same can’t be said for, say, water and power. So even the “Amazon is a utility” argument, while somewhat more thoughtful and less incendiary than the “Amazon is a monopoly" version, remains at odds with reality.

Ultimately, the “Amazon is a monopoly” meme is attractive to some because it seems to paint a veneer of objectivity and reason over what is fundamentally a subjective emotional reaction. So just as the US and UK governments tend to call all people they dislike (even journalists) terrorists; just as some people opposed to Obama call him a Marxist/Socialist/Muslim/Kenyan/Anti-Colonialist because they find these labels presumptively bad; so too, in a corporate context, do Amazon detractors reflexively attach the bad word monopoly to the objects of their fears and prejudices. In another culture, this mindset might produce accusations that the hated party is a witch, or an extraterrestrial, or possessed by the devil, or in the grip of a psychological disorder (Google “Snowden Narcissist” to see a pristine example of the “I don’t like what he did so he must have a psychological disorder” reflex). The dynamics are broadly similar; in a corporate context, the reflexive verbal manifestation of hatred and fear just comes out “monopoly.”

Previously addressed zombie memes:


J. R. Tomlin said...

You forgot the new meme: Amazon is a big meanie-head to its highly-paid technical employees.

Randall J. Morris said...

Whether a company is a monopoly or not is a legal matter... one that's already been decided in federal court in this case. In 2013, BOOKHOUSE OF STUYVESANT PLAZA, INC. sued Amazon in federal court for the Southern District of New York alleging that Amazon was a monopoly and abusing it's power under Sections 1 and 2 of the Sherman Act (specifically targeting their ebook marketshare and use of DRM). Amazon responded with a 12(b) motion to dismiss (not sure which one but I'm guessing 12(b)(6)). The district judge dismissed Bookhouse's complaint. You can read his opinion here:,%20INC.%20v.%20AMAZON.COM

This case has now been cited in three subsequent cases as precedent, two in 2014 and one in 2015. So there you go.

Randall J. Morris said...

In addition to my last comment, let's add the Second Circuit case PEPSICO, INC., Plaintiff-Appellant, v. The COCA-COLA COMPANY, Defendant-Appellee. You can read the opinion here:

Notably: "Absent additional evidence, such as an ability to control prices or exclude competition, a 64 percent market share is insufficient to infer monopoly power. See Tops Mkts., 142 F.3d at 99 (holding that "a share between 50% and 70% can occasionally show monopoly power," but only if other factors support the inference); ALCOA, 148 F.2d at 424 (L.Hand, J.) (expressing doubt that 64 percent market share is enough to constitute a monopoly)." In 2013, Bookhouse alleged that Amazon had a 60% market share. It fails under Coca-Cola unless they can also prove an ability to control prices or exclude competition.

Jill James said...

As an author I love my monthly deposit in my bank account from Amazon but as far as shopping there, they are usually my last choice after trying locally to find something. Granted, they are my first choice for ebooks since I have a Kindle, but I check as well since I have a Nook too. For physical books I use my local Barnes & Noble or grocery store. So I'm thinking, for me, not a monopoly.

Mark Asher said...

Seems to me it's not about being a monopoly now, but about where Amazon is headed. They already are the 900 pound gorilla, but if Nook and Kobo fold because they are out-competed by Amazon, where is ebook competition going to come from?

I believe the fear is that as Amazon gets more of a stranglehold on the ebook market, they may exert more pressure on suppliers to sell at lower prices and take a smaller percentage.

I think the marketplace is better served with active competition. It doesn't seem like things are going that way.

MrTroy said...

Seems to me it's not about being a monopoly now, but about where Amazon is headed.


I think the marketplace is better served with active competition. It doesn't seem like things are going that way.

That may be true, but still has little if any relevance to anti-trust. Unless Amazon is illegally reducing competition, perhaps through some combination of its patents, exclusive contracts, hosting services etc* there's no story here other than Amazon is legally beating all of its competitors. Sure, it would be nice for Amazon to have competition to ensure that the bar keeps being raised (by Amazon or whoever else steps in), but Amazon has no legal or moral obligation to encourage such competition.

Fortunately, we see new services pop up in various parts of the book market several times each year, and Amazon competes with each in turn; would Amazon offer a book subscription service if Oyster and Scribd didn't exist? Innovation isn't dead yet, and contrary to your last sentence shows no sign of petering out.

Anonymous said...
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Russell Phillips said...

In response to Mark Asher:
I believe the fear is that as Amazon gets more of a stranglehold on the ebook market, they may exert more pressure on suppliers to sell at lower prices and take a smaller percentage.

I think you're right that people are afraid of what Amazon might do in the future. They might do bad things in future. So might Kobo, or B&N, or Apple, or Google. In fact, Kobo already has. In 2013, Kobo removed a whole load (possibly all) self-published titles from their store, without any warning or explanation:

shugyosha said...

Mr. Phillips, is that info still valid? Back in 2013 I could buy most books from Kobo. It's changed a lot. Maybe being boight by rakuten, I don't know.

On the other hand, amazon IS a monopoly... Of readers. One reached through sheer ability. And that hurts.

Take care.

Russell Phillips said...

shugyosha: Sorry, I didn't make myself clear. The removal was temporary. IIRC, my books (non-fiction, military technology & history) were missing for about two weeks. I don't know how long others took to be restored. I assume the books that caused the moral outrage in the first place were never restored, though I've never tried to check.

C.E. Kilgore said...

Thoughts from an indie-
Is Amazon an eBook monopoly? No. Could they become one? Yes. Would it be by their own doing? No.

The problem isn't with Amazon. The problem is with the competition, or lack there of. Let's face it - no one does eBooks like Amazon. Nook is dying. Kobo has always been the 'Meh, I guess since it's there...' choice, Smashwords is behind the times, Google Play is developmentally challenged (I've never seen someone make loading an eBook so unnecessarily complicated nor have the worst sales tracking from a company that invented Google Analytics...), and iBooks is awesome but you need either a Mac or an aggregate to get onboard. Then there's the small potatoes like Scribd, Oyster, etc... The thing is - No one makes it as easy to upload your book, distribute your book or advertise your book as Amazon.

The aggregate Draft2Digital is about as good a comparison for easy upload as you can find - but they are just the aggregate that tries to save you headaches from Kobo, iBooks, and Nook individual dashboards (which are so painfully frustrating) And they don't have access to Google yet (probably because Google has no idea what they are doing...)

I am totally against Amazon Exclusivity and it being a requirement of KU - but I also have a couple of my books in KU right now because it works. I make money. Yes, I make money at all those other places, but when you combine them all together, I am still making significantly less than I do at Amazon (10% vs 70% (& 20% form AllRomance). And it's not because Amazon is a bully, or cornering the market or putting its thumb over Nook or iBooks. It's because the competition sucks for ebooks. Seriously. iBooks shows the most promise (with Kobo at least trying to improve while Nook slowly cuts off its limbs one by one in some sort of horror show). Is Amazon perfect? Heck no, but they're doing many things right.

All Romance eBooks - I derive about 20% of my income from them per month. But, their non-romance counterpart, Omnilit, has far less revenue. It's great for Romance writers (and if you are not on All Romance, you should be), and has been a mainstay in the Romance reading world for a very long time. Do I expect them to be around forever? I hope so, but they need some updating (which they are working on!)

Amazon's Scout program makes it easy for newbies to give the whole trad-pub contract thing a whirl and has a far-higher conversion and success rates than others, like the now-defunct Harper Collins Authonomy. Amazon's Marketplace Ads (which has its bugs, trust me) is able to leverage Amazon's already powerful marketing niches. Amazon's KU program (while lacking in big names because of Exclusivity) is still more successful that Oyster and Scribd, who have been doing it far longer. Amazon's Kindle has always been a good, affordable eReader, with decent (but not awesome) aps for any device.

Should we fault Amazon for doing so many things right when the competition keeps doing so many things wrong? No. Does having sucky competition in the eBook market make Amazon a monopoly? No. Does it make it a hard thing to compete with? Yes. Do I wish there was more competition? I...don't know, to be honest.

As an independent author, it's already a lot to manage. Would it be easier if Amazon became >the< place for eBooks? Heck yeah, and one can argue they already are. If I didn't have readers who have asked me to have my books available outside of Amazon, I probably wouldn't. I'd probably be all in KU. It's easier for me, the author, and it would be better for my readers who could chow down on all my titles for 10$/month. Would that make me less money and is KU's subscription service viable (with the new per-page thing)? I think the jury's still out on that.

Alan Spade said...

"Would that make me less money and is KU's subscription service viable (with the new per-page thing)? I think the jury's still out on that."

And that's the most important thing right now. We can debate endlessly about Amazon being a monopoly or not. But we indie authors must be practical.

The fact is that KU is not sustainable. It is subsidized by Amazon's other profits. It could be sustainable, but the authors would have to be paid less.

And the exclusivity deal of Amazon? It's in fact a fool's bargain at many levels:
- a great majority of authors don't benefit from it because of the competitivity of the marketplace
- authors who have a strong marketing brand like Joe are helping Amazon in making a subscription service more valuable than the traditional system of sales. Which will be, in the end, highly detrimental for all authors.

Let's face it: in what world does a borrow weigh more than a sale? Response: in Amazon's world, because subscibers are able to download many titles, and each borrow counts as a sale in ranking. Which is incredibly unfair and twisted.

That is sheer madness, because we all know that Kindle Unlimited is not sustainable by itself. Amazon makes you live in an artificial world, detached from any economic foundation.

C.E. Kilgore said...

"Let's face it: in what world does a borrow weigh more than a sale? Response: in Amazon's world, because subscibers are able to download many titles, and each borrow counts as a sale in ranking. Which is incredibly unfair and twisted."

And in many other industry worlds, as well. Kindle Unlimited is a choice, just like movies going to rental DVD or Netflix or Amazon Prime is a choice. You don't have to put your books in KU. You could go all in at Kindle without going all into KU. But, KU can be a good jumping-off point for a series or a new author - it's a way for someone who either doesn't want to pay 5$ (or can't) for your book, to try it, and if they like it, they can buy the rest of your books (if you don't put them on KU).

In a way, it's like a new kind of digital library, especially for us Indies, in which we are paid per page for someone checking out/borrowing our book. Does this mean we have to put all our books in the library that anyone can checkout for free? No, and I don't think it's meant to be used that way. KU books seem to do best when they are new - like traditional sales, they peak and then fade off. This is why libraries are constantly swapping out old content (that doesn't include classics) for new content. KU is the new digital library card, and until actual libraries make it easier for us to get into their catalogs (currently, your main option is SELF-e), it can be a good, viable option for getting your book in front of readers who may otherwise pass it up. And like libraries, it offers exposure and can lead to recommendations to people who are not on KU or who would rather buy the paperback than go to the library.

I also think it's time we get real about eBook pricing. An eBook is not a book. It is a digital image of a book. There is no materials cost, no print formatting, no wrap-around cover, no distribution costs, etc...

Readers will never treat eBooks the same way, or with the same value, as traditional print books. It can't be easily handed to someone, passed down, lent out, shelved on a book case, etc. Often, you read it and then forget it's on your device. You are, in a sense, borrowing a digital copy of a book. Your entertainment can last 30mins or a few days (for a really good book). When I see authors (especially indies) pricing their eBooks at 9.99... I want to wonder just what they are thinking?

Alan Spade said...

"When I see authors (especially indies) pricing their eBooks at 9.99... I want to wonder just what they are thinking?"

I've done that. For the sake of experiment. I've also tried every other prices between 0.99 and 9.99 -- also experimenting.

And now, I've put my first novel on permafree and the second one can be downloaded for free by subscribing to my newsletter (here's the link to prove my word: ) And I've not yet written the third!

But I'm staying out of KDP Select.

I am not a musician, but if there is one looking at this comment, I would like to know if he's paid more when a song of his band is listened or when it's downloaded as an MP3 on Spotify?

Because, Amazon puts us in a position where our "song" is worth more for us when it is listened than when it's bought and downloaded.

So, no C.E., it may not be the same ranking system on Spotify and other businesses which are really comparable to Amazon and subscribed ebooks.

I would agree to some of your points though, C.E., if they were no exclusivity clause. Then I could put some of my books on KU. As you said, it's not intended for all our books. I wouldn't even need an incentive to do that: for me it would be better if the authors were being paid exactly in proportion of what the subscribers bring to Amazon, not subsided by Amazon.

You want to make your living on real economics. Not fake ones. Because if you do that, the money poured can stops at any time.


Another insightful well-reasoned argument Joe. I wish I could just call the Big 5 and their constituencies are simply bonehead reactionaries, but that would just make me a bonehead reactionary. Let it be sad that their actions are reminiscent of many who have gone extinct in the light of technology and evolution. Keep up the good work guys!

Barry Eisler said...

Mark Asher said:

"Seems to me it's not about being a monopoly now, but about where Amazon is headed..."

As Joe and I say in the post:

"Indeed, the best anyone seems able to come up with in support of the monopoly accusation is what Amazon might do in the future, rather than anything the company is actually doing today. The possibility that a company might one day become a monopoly and abuse its power is no more a crime than is the possibility that a person might one day acquire a gun, might one day get angry, and might one day use the gun in anger to kill someone. Outside Minority Report, the law just doesn’t punish hypothetical future crimes."

Mark said:

"I think the marketplace is better served with active competition."

Agreed, it would be a fine thing if the Big Five would compete more and complain less.

Matt said...

I get the author's points. Only one sentence poked me like a thorn on an otherwise rose of a post:

"(no one can argue with a remotely straight face that Amazon is anything other than exceptionally customer-centric)"

The author isn't necessarily implying Amazon is customer-service-centric. In fact, a nice, hyphenated compound word to describe Amazon is "consumer-centric". (Splitting semantic hairs, I know, I know. But in my head "centered on consumption" is a wee bit different than "centered on customers".)

The biggest issue I have with Amazon's customer service is purely anecdotal and, annoyingly, takes song form in my head: Amazon customer reviews, once I ran from you--now I'll run from you. this tainted love you've given ... (How many times have you clicked on a link to a book accompanied by 5 glowing, little yellow stars only to peek inside the book and wonder, "How in the hell ...")

I know, I know, Amazon recognizes the problems with its review system and has taken/is taking steps to fix them, but what was a major component of Amazon's early success is now one of its pitfalls.

John Brown said...

Randall J. Morris,

Thanks for data! Awesome.

Terrence OBrien said...

The fact is that KU is not sustainable. It is subsidized by Amazon's other profits.

Where do we find the figures to support that idea?

Shelly Thacker said...

Go Joe and Barry! Okay, since you're taking requests, here's another zombie meme in desperate need of a sharp stick to the head: "Indie authors don't make any money, except for a handful of outliers." Please kill that one and burn it with fire.

Thanks for performing this valuable public service!

Lawrence De Maria said...

Joe Konrath said...

Good article, Lawrence.

Mark Asher said...

Barry Eisler said:

"Agreed, it would be a fine thing if the Big Five would compete more and complain less."

I don't think complaining hurts competition in anyway, so if there are issues to be aired. complain away. There's no shortage of fisking of complaints, apparently.

What we need are people who are not exclusive Amazon defending this. I would think all suppliers (writers) would like to not be penalized for wanting to be on multiple platforms.

I would also think that readers would benefit if their purchase choices were not limited by hardware platform. As a read it would be better if I could get any ebook on my Kindle, Nook, or Kobo, without feeling like my choice of hardware limited my selection. I don't think Amazon is reader-friendly in this regard. If they were, let me buy and read an ebook from Amazon on something other than a Kindle or Kindle App without jumping through hoops.

It's a business, though, and Amazon is looking to corner the market. I get it , but I don't feel like it's friendly to me as a reader.

Silas Payton said...

Zombie Publishing Meme #2: Indie/Self-Published books are crap compared to traditionally published books. Please go to town on this one!

Mackay Bell said...

Another Zombie Publishing Meme is that self-publishing is just like the Tragedy of the Commons and therefore doomed:

Alan Spade said...

@Terrence: simple logic:

- there are 1,1 million subscribers in KU, which means $10,98 million
- the KU monthly pool was $11,5 million in July
- you have to take into account Amazon's share and KU operating costs
- a book of 200 pages borrowed in KU brings about $1.12 to the author: to "spend" her $9.99, the reader just have to read nine books in a month. I don't know the average number of pages read on KU, but I'm sure these are heavy readers

Even without my two latest arguments, Amazon is spending more then it earns with KU. Besides, we know that Scribd had to expel its romance novels because the readers of romance read too much. This is another indication that KU subscribers are heavy readers, who want a ROI.

Dion McTavish said...

Makes perfect sense to me.

William Ockham said...

Just a couple of quick points (I'm on my lunch hour). We don't really know how many paying KU subscribers there are, unless Amazon has announced that while I wasn't looking. Even so, I'm pretty sure that Amazon is "losing money" on KU. I put that in quotes because it's a little bit like saying that Microsoft is losing money by giving away all those Windows 10 upgrades. One way to look at KU is to think of it as a customer retention and engagement mechanism. Amazon understands the lifetime value of a customer. Programs like Amazon Prime and KU don't have to make money if they have the side effect of keeping customers happy and engaged with Amazon.

That's why I think the people who get fixated on the compensation mechanism for authors with ebooks in KU are missing the point. Amazon is going to set the compensation rate high enough to make it worthwhile for most authors to stay in the program. There's nothing nefarious or mysterious about it. Yes, you have to trust Amazon to some extent, but if you think about it, you are already trusting them to pay you fairly anyway. The reason that I think the apocalyptic fears that a lot of writers have are silly is that it just doesn't make any sense for Amazon to do those things. They are achieving their goals without engaging in behavior that would harm self-publishers as a whole. Of course, any change they make is likely to harm some self-publishers or at least help some more than others. If there are plausible reasons for Amazon's actions based on their announced public strategy, assuming they make changes because they are out to get short stories, erotica, or some other group seems a bit much.

Alan Spade said...

When you change a system that was clear and provided confidence to an obfuscated one, it is normal that you spread distrust.

When you offer some special advantages to authors and not others, you spawn division.

When you give more value to a borrowing system that is less rewarding for authors than sales, it's a mean to give less money to self-publishers as a whole.

It's not fear. The harm is already done. It was already done with the first version of KU.

Savvy authors know that even if Amazon loses money with KU, the changes are in fact beneficial for Amazon, and not for the authors.

William Ockham said...

@Alan Spade

I am not sure how to respond because I don't know what you are concerned about. What system "was clear and provided confidence"? Nothing about KU is obfuscated. The future is uncertain about every business deal in publishing. At least with KU, the end is always near.

What special advantages are you referring to? Amazon can't spawn division when unity is an absurdity. The idea that self-publishing creates a group with common interests is silly.

Your sentence about 'a borrowing system' makes absolutely no sense to me. Maybe if I understood that one, the rest would make sense. I have read your comments here and I assume there is something that you think is obvious that I am missing. Why would Amazon's interest diverge from authors? It is possible, but I see no evidence of that today.

Alan Spade said...

@William: a simple question: do you know what will be the page rate for August in KU?

I bet you don't. Because nobody does. It depends on a variety of factors (number of page reads, number of titles and authors, amount Amazon is ready to pour).

With KU, the rule will change from month to month. That's what I call obfuscation. You can't be sure of anything from month to month.

The normal system of sales is clear. It still exists. But it is no longer the dominant one, as the previous blog post of Joe demonstrates: he had had more borrows than sales in July.

This tendancy will only increase, because we all know that the heavy readers who have subscribed in KU borrow more ebooks in a month than the other people who are limited by price and are not heavy readers.

"The idea that self-publishing creates a group with common interests is silly."

Of course it isn't. We have a common interest. We all need that Amazon's competition thrive in order to put our ebooks there. Being dependant on one retailer alone is absurd and dangerous, even if I have to acknowledge that it's more simple for the authors.

But the easiest way is not always the better way.

I name "borrowing system" a system where the authors (and books) visibility is based mostly on borrows rather than on sales. Imagine Amazon's KDP is a train. The locomotive of this train, what drives sales, is now borrows.

Not exclusively, because you can get sales because of books you put for free (you put number 1 free and you have a sale on number 2 when enough people download the first one, provided they like it).

But imagine you are an author. You have the choice of being paid (not much) for an ebook that will deliver a visibility far greater than the visibility of a free book, because that ebook available in KU is listed under the paid tab.

The paid tab on Amazon gives you better credibility than the free tab. For authors who are savvy marketers, that's a no brainer: each time your ebook is borrowed on KU, your ranking improves, and Joe demonstrated he had much more borrows than sales. It's natural: you borrow more when you just have to pay $9.99 a month to do that.

This greater visibility of the ebooks borrowed add up for all the authors who go exclusive with Amazon. That means that the ebooks that will increasingly ranked in the top will be KU ones. But the payment for these ebooks is lesser than with the classic system.

So, yes, the indie authors become increasingly competitive, and the trad published ebooks will suffer a lot more. But the amount sacrificed by the authors will be staggering.

And of course, these ebooks that will increasingly get to the top are KU ones, so the indie authors not participating in KU are screwed big time.

Amazon's interest diverge from authors, because Amazon has us ensnared into our own trap. We indie authors used to compete with trad pub with cheaper price. But now, Amazon makes KU authors competing with non KU authors with cheaper prices, and by accelerating the race to the bottom, Amazon makes its store increasingly attractive to heavy readers.

So, it's good for Amazon because these readers will also spend their money elsewhere on Amazon.

That's the big problem in dealing with the everything store: Amazon uses the indie authors' ebooks as loss leaders.

Amazon lose money with KU, but authors will be more and more fighting for crumbs, and not for real money.

And Amazon has done all that by inventing this "borrowing system", a system where ranking is mostly driven by borrows.

In a real economy, ranking should be driven by sales. Amazon has instituted a fake economy. This is already detrimental for a lot of authors, and it will be increasingly detrimental, even for KU authors.

I hope it's clear, now.

Alan Spade said...

I've blogged about this (in English):

William Ockham said...

@Alan: Do you know how many units of your second book you will sell in August? How much will that story earn you over your lifetime? You are fixated on one variable in a complex equation. You believe (as I understand your position) that you are ceding control to Amazon if you don't know the value of that particular variable. My argument is the value of that variable is easy to estimate within a fairly defined range. The more important change to the equation that will eventually determine the lifetime value of that story is the increase in income you will see due to the increased likelihood of getting readers from KU. For most stories, I expect that the net change due to KU is strongly positive over the near term. I am not sure how you end up with the view that KU earnings are somehow 'not real'.

KU is driving up the consumption of and total spending on ebooks. It is also driving a larger percentage of the consumer dollars into the pockets of KU participants. KU only works for Amazon as long as those conditions remain true. I haven't always been sure of that. When the program was first announced, I was concerned about a number of potential downsides, but the evidence shows I was wrong. I would suggest that you not get too invested in your own position that you miss a great opportunity.

Assume you are correct. What are some measurable near-term indicators that you can predict which would support your beliefs and show people like me that we are wrong? Write those down and share them with someone privately. See if they come true. That is what I did when KU started. I still do this. The switch to pay per page read was a total shocker to me, but the previous model helped me understand the impact. Overall, the KU compensation scheme is the best thing for readers and writers since the Kindle itself.

Veronica said...

Some zombie memes

1. Amazon is evil (or has evil management) so you shouldn't publish with them - had this one on FB today.

2. self-publishing is just vanity publishing

Alan Spade said...

"I would suggest that you not get too invested in your own position that you miss a great opportunity."

Thank you for the advice, William. It's not only that I don't know the value of the particular variable, it's that I know how subscription services work, and I know Amazon gives for the time being earnings that are on another scale than the money brought by the subscribers.

This is what I meant by what you defined as "earnings are somehow 'not real'": I don't want to be a subsidized author, even if I know that in the beginning, there is certainly money to be made, if I get lucky and my books find their readers.

In addition, forgive me if I sound bombastic, but this money appears to me as a bonus for damaging, if not killing, the competition of Amazon. I know my little books aren't capable of that by themselves, but just contributing to that, even by a tiny fraction, would make me feel bad.

My reason tells me that I wouldn't help building a better future by contributing in making the competitors of Amazon what they already are to a large degree: empty shells.

Finally, as I said, the fact that borrowed books have so much weight since the creation of KU, even if they are not read, seems very wrong to me.

I know that nowadays, most of the business decisions are taken in a short-sighted basis, but I think this is one case where you have to go farther in the future. And I don't mean by that that we have to act out of fear of the future: just by analyzing the current state of the market, we are able to know what's going on. For the moment, the future doesn't look good for the competition of Amazon, but it's not by being a fatalist that I will help.

Joe Konrath said...

Anyone have any experience with

Speaker said...

I very much doubt that KU is losing money even at this stage of its development. In fact, I think it is the only subscription service that has a viable business model. The others seem to be paying the Big 5 essentially the price of a purchase or close to it for each borrow, which is totally unsustainable.

By the way, Joe and Barry. I regard this as a Zombie Meme (taken from Mobileread). I would greatly appreciate you giving it your attention,

Poster: But for best sellers for example they are not replaceable with other books. Especially not for peopla reading a couple of books per year.

Reply: Rubbish. I wonder if Joe Konrath is going to expose this old chestnut as a Zombie Meme. Perhaps it is true of you, and no doubt you are not entirely alone. But for most people the opposite is true. "Best Sellers" are replaceable by other tradpub books. They are replaceable by Indie Books. And they are replaceable by and competing with other forms of entertainment. Even more so among your hypothetical two books per year people, many of whom would probably much rather see the movie in any event.