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.
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.
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...
Uh...
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...
Um...
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?
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.
Objection, supposition.
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…
Um…
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.”
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.
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?
Or not.
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.”
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.)
Fail.
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?
Posts
