Amazon Is NOT the 'Putin' of Books!

The online powerhouse is being compared to thugs because it wants you to pay less for ebooks.

This article ran at The Daily Beast on June 5, 2014.

Can you believe those…those…those…sons of bitches at Amazon? After launching almost 20 years ago and making virtually every book—new, used, dead-tree, electronic, audio, and I’m guessing any day now, olfactory—available to everyone in America at good-to-great prices, the company’s true character now stands revealed. It’s not pretty, folks. Despite a huge market share, Amazon apparentlystill wants books, especially the e-books that everyone agrees are the future of the medium, to be cheaper than what publishers and big-name authors want you to pay for them.

Just who the hell does Amazon think it is? Maybe a bare-chested tyrant who used to work for the KGB? Amazon is “like Vladimir Putin mobilizing his troops along the Ukrainian border,” a proprietor of an “e-book discovery site” tells The New York Times. “A bully,” offers Richard Russo, the novelist and president of the Authors Guild (which knows exactly how to bully mere “writers”). Amazon, says author James Patterson, who published 13 detective books last year, is waging “war” and doing unspeakable things for which “the quality of American literature will suffer.” No, wait. That’s all wrong. Amazon isn’t like a Russian despot waging a war, says Dennis Loy, proprietor of the small publisher Melville House. It’s more like “the Mafia.”

What Loy calls Amazon’s “extortion” racket is its decision to make it annoying as hell to buy books published by Hachette, a French-based conglomerate whose imprints include Grand Central, Little Brown, Hyperion, and others. If you try to order new Hachette books, including titles from James Patterson and other best-selling authors such as Malcolm Gladwell (who likens Amazon to the biblical Goliath in this interview), the odds are high that Amazon will actually charge the publisher’s cover price and tell you it won’t arrive for several weeks. Even the electronic Kindle version! In other words, kind of what buying books used to be like 30 years ago.

It may even recommend you buy a totally different book before you head over to the websites for Barnes & Noble, Hachette, or even Wal-Mart. Yes, that’s exactlyhow the mob works (well, except for the Gold Box Deals and that original miniseries featuring John Goodman as a congressman).

Both Amazon and Hachette have signed confidentiality agreements, so the exact nature of the negotiations between the two companies is anybody’s guess. But it’s clear that they are duking it out over the future price of e-books (a market that Amazon, more than any other single company, made viable with its cheap, user-friendly Kindle devices and cross-platform apps). “Inside the publishing world,” reports The New York Times, “the consensus is that Amazon wants to offer deep discounts on Hachette’s electronic books, and that the negotiations are not going well.”

Hachette is the first major publisher to be engaged in this sort of wrangling, but it won’t be the last. If you had heard of Hachette before this latest brouhaha, you are either an author with a very good agent or you followed that fascinating federal lawsuit settled a few years ago. You know, the one about how five of the six biggest publishers on the planet conspired with Apple and Steve Jobs to fix e-book prices when the iPad was first coming to market in 2010.

Jobs wooed publishers who hated Amazon’s devotion to selling virtually all new e-books at what one executive called “the wretched $9.99 price point.” They were leaving money on the table, kind of like how iTunes does by selling hit songs for the same price as songs that nobody wants. It just didn’t make sense, the publishers figured, especially since Amazon was often losing money on each sale.

Traditionally, a bookseller such as Amazon would buy a paper-and-glue title at around half the publisher’s suggested retail price. The seller’s per-unit profit varied according to whatever price she set and how many copies she moved; that was also the basic formula for many commercial e-books, so Amazon could be underpricing itself just like it did when it steeply discounted its sales price for certain books. Retailers cut margins on sales all the time for all sorts of reasons: to build market share, to reduce inventory, to stave off competition, and more. By keeping prices low, Amazon was hurting everyone but the reader.

Because Amazon has emerged as the single-largest seller of traditional and e-books, its policies are hugely influential in setting industry-wide prices and practices. Which incidentally are far from what most people, and certainly most economists, would consider monopoly levels. Currently, Amazon accounts for about 41 percent of all new books sold, and two-thirds of new e-books.

Unlike Putin annexing Crimea or the Mafia muscling in on, say, the bar and restaurant business, Amazon didn’t get that big by threatening violence or “scorched earth” (as one critic puts it). It got that way by relentlessly improving and diversifying its product offerings, customer service, and ability to sniff out what you might be interested in buying or accessing (the company’s uncanny success at this has freaked the shit out of its competitors since the company’s earliest days). Like every other legitimate business that must woo customers on a daily basis, it will wither and die the minute it stops giving us what we want at a price we’re willing to pay (does anyone still remember A&P supermarkets, which controlled its market like Walmart on steroids?)

Publishers and independent bookstores have a long history of being against booksellers discounting prices. In the 1920s and ’30s, the American Booksellers Association sued Macy’s for selling books cheaply, and Franklin Roosevelt’s National Recovery Act included anti-discounting provisions that were ultimately ruled unconstitutional. In the 1990s, the same ABA filed suit against Barnes & Noble and Borders for similar practices. So Hachette and the other publishers were all ears when Steve Jobs came a-calling with a surefire way to jack up e-book prices.

As The Wall Street Journal reported when the price-rigging case was settled in 2012, “The five publishers and Apple hatched an arrangement that lifted the price of many best-selling e-books to $12.99 or $14.99, according to the suit. The publishers then banded together to impose that model on Amazon, the government alleged.”

On behalf of authors and publishers, Jobs unveiled what he called his “aikido move,” which would not only change price points but shift to an “agency model,” where the seller gets a commission on each unit sold rather than buying a certain number of units at a fixed price. “We’ll go to the agency model,” Jobs explained, “where you set the price, and we get our 30 percent [commission], and yes, the customer pays a little more, but that’s what you want anyway.”

That’s an interesting line that doesn’t seem to make it into all the love being showered on Hachette by its public champions: Yes, the customer pays a little more, but that’s what you want anyway.

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  • Pro Libertate||

    Amazon wants to get me stuff for less, so they're the good guys.

    Caption: "Look into the eyes of the Bezos and despair!"

  • Sevo||

    "Caption: "Look into the eyes of the Bezos and despair!""

    If ever there were a shot needing 'shopping, that's it!

  • UnCivilServant||

    I understand the totally legitimate desire of authors and publishers to squeeze every goddamn dime out of you, the reading public, whom we love so much.

    So you won't try to crack down on my shilling books in the comments section? I need to drum up sales.

  • UnCivilServant||

    Ever notice how the "Preview" and "Submit" buttons are reversed on the main new comment box versus a "Reply to This" link?

  • Brett L||

    Please. Until they give you two articles of your own a day, you're a piker around here.

  • Longtorso, Johnny||

    3 hrs until the announcement of the Amazon Phone.

  • UnCivilServant||

    I can't tell if that's satire or not.

  • Longtorso, Johnny||

  • Sticky Fingaz||

    So does Bezos still give any money to reason? I'm assuming the answer is "no" since that would make him 'Koch-linked' according to the PC fascists who would then openly talk about how it would it would be socially desirable to imprison or otherwise immiserate him...

  • ||

    Yes, or at least he did:

    Bezos, who was named one of Reason's "35 Heroes of Freedom" in 2003, has contributed money in the past to the Reason Foundation, the 501(c)3 nonprofit that publishes this website. Reason on the Amazon founder here.
  • chmercier||

    Amazon makes money selling used goods and new goods at a discount. A lot of independent shops (clothiers, book stores, record stores, etc.) use Amazon as a hub to sell their stuff.

    Obviously, letting people sell their stuff or buy it for less is very, very evil.

    Oh, right. Amazon haters are socialists and progressives. Any business that is not the government or omnicorp filled with socialist leaders is evil. Heh, forgot about that.

  • craiginmass||

    I love Amazon...

    What Bezos does (promote educational reform) with a tiny percentage of his money does not concern me - in fact, I welcome it!

    However, if he decided - like the Kochs - to go "dark" on us and claim he was going to start and finance and run dozens of organizations with the primary goal of getting rid of the democRATS, then I would be a bit more concerned.

    But here is a guy who fought (in the end) FOR an even handed tax on internet sales.

    Here's a list of their partners. Notice those like:
    "Raises awareness about women’s education, health, protection and economic issues and provides concrete steps to fight gender-based oppression. "

    Good for him. He supports helping minorities, the poor, inner city youth, teachers, early childhood development, etc- AND, he "taxes" all your purchases and books to do it (money doesn't come from the sky).

    I'm all for it. The question which should concern libertarians is why he gives to democRATS and 2.5 million to the largely democRAT effort to legalize gay marriage. That's a lot of dough....

    I've heard him described as a "libertarian democrat", which puts him about exactly where I am on the political spectrum....

    So, get back to me when he starts up all those dark money campaigns and spends 100's of millions setting up a scheme...like your masters, the Kochs.

  • JWatts||

    So Libertarian writer Nick Gillespie writes a positive article about Amazon and Jeff Bezos. Who you describe as a ""libertarian democrat", which puts him about exactly where I am on the political spectrum....".

    And your response is:

    "So, get back to me when he starts up all those dark money campaigns and spends 100's of millions setting up a scheme...like your masters, the Kochs."

    Doesn't it occur to you that:
    a) If the Koch's were as evil as you say they are, and
    b) They were Reason's masters.

    Then they wouldn't write such a glowing article about a "libertarian democrat"?

  • craiginmass||

    So if GW Bush was as bad as we say he is, Clinton would not have worked with him in some international efforts?

    I'm chiming in here and agreeing that Amazon are largely the good guys. They are NOT Koch Industries nor WalMart. Amazon empowers the little guy (like me!), which is the big difference. They don't abuse me - in fact, they give me much more than they need to in a "free market".

    I'm pretty much for 90% of what they do. I'm also in agreement with 1/3 of what a pub like this may write - but at the same time, it's scary to know that it's just another tentacle of a big populist monster trying to keep a large echo chamber going.

    The Kochs are scary. Really. Now (today) they are trying to dump Midwestern GOP legislators who support renewables. Why? Well, it's not because of a "libertarian" stand. God knows they have no problem taking tax credits, government contracts, etc. for their own profits! What they are scared of is that someone may disrupt the energy biz.

    That's plain paranoid...and it's not good.

  • rudehost||

    Are they trying to dump legislators who support renewables or legislatures who want to tax me to give a welfare handout to a crony corporation making solar panels? There is a difference and I have a feeling the Koch's aren't doing anything to prevent anyone from freely running a renewable energy business. If all they are doing is preventing rent seeking and graft they are doing the right thing.

  • craiginmass||

    While, of course, they take vast tax credits themselves....

    That's not cool in any book.

    If they want to stop claiming all the oil tax credits on their corporate returns and stop receiving government contracts, then they have a leg to stand on.....

    Oh, and Koch is not just fighting against incentives - they are doing a number of things including:
    1. Financing and disseminating untruths about renewables (propaganda).
    2. Threatening lawmakers who favor goals of a % of renewables.....(incentives or no incentives).

    Etc.

    Scary. Now you know why we call those who support such politics "regressives"

  • kbolino||

    I've heard him described as a "libertarian democrat", which puts him about exactly where I am on the political spectrum....

    From the posts of yours that I've seen, you have not once taken a position that merits the qualifier "libertarian" or otherwise places you outside of the mainstream Democratic platform. What is a "libertarian Democrat" to you and how does your political affinity reflect that?

  • craiginmass||

    Libertarian Democrat=
    1. Anti-war to the extreme
    2. Anti-Security State
    3. Legalize ALL of it
    4. Incentivize good behavior and productivity
    (yes, that means Gubment does it, so it's democRAT)
    5. Spend on domestic programs which further education, human rights, equality and advancement of the society.
    6. Be very careful with money (in other words, throw banksters and pols who steal into jail).
    7. As in #4, institute common sense in gubment programs - example, restrict food stamps to mostly non-packaged foods and those with good value and nutrition. Do not pay people to have families - rather, make it the other way around.
    8. Reform immigration including a path to citizenship
    9. Reasonable gun control laws are A-OK with me - that is, closing loopholes like not having to report lost or stolen weapons, etc. - more $$ toward mental health registries, etc.
    10. Reform politics to take some of the money out of it - engender a system where more than two parties can easily play.

    I could go on, but those are some of my politics. I have voted for both Perot and Nader (and Obama) so you can take it from there.

  • Sevo||

    "6. Be very careful with money (in other words, throw banksters and pols who steal into jail)."

    Personally,l I think you ought to be in jail.

  • Chumby||

    4, 5, 7, 9 and 10 are opposite to libertarian principles. You also support the coercive tax system - that violates the NAP, the core of libertarianism. Call yourself whatever you want. But you can't be half pregnant.

    Regarding 6, would you throw politicians that lied on their resumes to get a better job in jail? Or ones that plagiarized recipes for inclusion in a Native American cookbook? Not that I'm honking of anyone in particular.

  • craiginmass||

    AH, you tell me the Core of Libertarianism while others tell me the Fiction Writer is not part of the Core, while the satirist Mencken is!

    You guys are slippery - I'll give you that.

  • Chumby||

    With the exception of yourself and Bill Maher, I'm not aware of any other people that have self identified as libertarian and reject the NAP.

    I like your poisoning the well fallacy at the end.

  • craiginmass||

    I'm sure many of Bezos efforts are also contrary to the Fiction Writer. After all, why does he have to spend money for gender equality? Silly stuff.

  • Brian||

    I love Bezos because I heard he likes dogs. And, I like dogs, too.

    Therefore, Bezos is a good person. Therefore, I like Amazon.

    I heard that the Koch's are kat people. I hate kats. Therefore, I hate libertarians.

    That's just how I roll.

  • Sevo||

    "However, if he decided - like the Kochs - to go "dark" on us and claim he was going to start and finance and run dozens of organizations with the primary goal of getting rid of the democRATS, then I would be a bit more concerned."

    Fuck you.
    He can send his money as he pleases and if he sinks you and your slimy friends forever, he'll get a standing O from me.

  • craiginmass||

    He sends me lots of money (I work with Amazon) and therefore I like him.

    Free Market, eh.....it's like a religion.

    Please don't cry. They deposit it right into my account numbers times each month (various income streams).

    As I said, I like Bezos. He's a real human being and not to be mentioned in the same page as the evil ones...

  • nancy4225||

    Start working at home with Google. It’s a great work at home opportunity. Just work for few hours. I earn up to $100 a day. I can’t believe how easy it was once I tried it out www.Fox81.com

  • Pulseguy||

    Amazon will be either 10% its size in ten years, or it will have gone under.

    It makes no money on massive, massive sales. It has a market cap of $350B or so, and is worth pretty much nothing.

    Another example of what a con the stock market is. Tesla is 'worth' about $40B and sells 4000 cars a year, and has yet to make a dime.

    Good cars, too.

    The baby boomers will, sooner or later, start cashing in their stocks big-time. When that happens the market starts to tank, and will continue to tank until the last boomer bites it.

  • craiginmass||

    You know, that's what all my friends told me and believed, and that's how they treated their money.

    I just took a look and I made cumulative returns of 250% in the last 10 years. I checked out my friends investments (mostly CD's) and they made about 60% total.

    Take that over twice the time period and that's why my buddy still wakes up in the morning and goes to the sale mines....

    Thanks for the financial advice - and, yes, I own Tesal and made some good bucks on it. I expect to make more in the future.

    (I don't own Amazon - but it's a fine company that will be here big time in a decade).

    OK, enough on this. Glenn Beck has some good deals on Gold for you.

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