Amazon and the marketplace of ideas
I agree with most of the points made in co-blogger David Post's excellent critique of Franklin Foer's attack on Amazon. As David points out, Amazon's efforts to squeeze suppliers in order to cut costs end up saving consumers money. And there is no evidence that Amazon has somehow monopolized the market for either e-books or hard copies, given that both can easily be purchased at numerous other websites, including those of publishers themselves.
But the debate over Foer's article has largely neglected one even more important benefit of Amazon's efforts at cost-cutting. By reducing the price of new books, it facilitates the spread of ideas. Thanks to Amazon and its various imitators, books can now be bought more cheaply and quickly than at any time in human history so far. Moreover, the search technologies developed by Amazon greatly reduce the costs of finding new books that might interest readers. That, too, expands our access to the marketplace for ideas.
One of the nightmare scenarios posited by Foer is that Amazon might push prices so low that it will end up "deflating Salman Rushdie and Jennifer Egan novels to the price of a Diet Coke." I for one would be thrilled to see that happen. It would mean more people can read more good books than ever before. I will be very happy if someday it becomes economical to sell my books, for the price of a Diet Coke too. That means a lot more readers for my ideas.
Foer worries that Amazon's efforts to cut payments to suppliers might threaten "the advances that publishing houses pay their writers," which he describes as "the economic pillar on which quality books rest, the great bulwark against dilettantism." Even if Amazon causes advances to decline, authors may still be motivated to write good books by the prospect of royalty payments from the large markets that Amazon and other similar businesses help them access. But if Amazon's prices fall too low to incentivize authors to keep producing quality books, that in itself would stimulate an increase in prices—either by Amazon or its competitors (who would be happy to step in if Amazon fails to adjust to the new reality). Similarly, labor shortages in other markets stimulate increases in wages and benefits, which in turn leads more workers to enter the field in question.
In reality, of course, there is no evidence that falling prices have deterred authors from writing "quality books." Admittedly, quality is hard to measure. But it seems highly likely that the number of quality books published today is greater than in the pre-internet age—in part because the possibility of reaching a much larger audience increases the incentive to write and publish them. That certainly seems to be the case in the fields that I follow regularly, such as books on constitutional law, property, and political participation.
In a New York Times op ed otherwise strongly supportive of Amazon's position in this dispute, Joel Nocera expresses concern that Amazon's practices might be bad for authors:
Let's be honest here: The intelligentsia is focused on Amazon not because it sells pinto beans or toilets, but because it sells books. That's their business. Amazon is changing the book industry in ways that threaten to diminish the role of publishers and traditional ways of publishing. Its battle with Hachette is a battle over control. It's not terribly different from the forces that ultimately disintermediated the music business.
As an author, I'm rooting for Hachette. The old system—in which the writer gets an advance, and the publisher markets the final product—works for me, as it does for most writers of serious nonfiction.
I don't doubt that some authors of "serious nonfiction" prefer "the old system." But some of us hold exactly the opposite view. By lowering prices and search costs, Amazon and other similar websites have enabled our books to reach a much larger audience than they likely would have otherwise. All my recent books involved negotiations in which I pushed hard to get the publisher to set a lower price, so that the book can reach more readers. When Amazon or Barnes & Noble discounts the prices of my books or offers a cheap Kindle or Nook e-book, I am happy to see it. In one case, I even successfully pushed them to lower the price of the Kindle version. For authors whose main reason to write books is to reach readers and influence public debate, Amazon's efforts to lower prices are a feature, not a bug.
I don't have anything against authors who instead prefer bigger advances and higher prices, or publishers who believe that higher prices are the right business model for them. They aren't inherently worse people than those on the other side of the dispute. But for the vast majority of readers, who are neither authors nor publishers, Amazon's cost-cutting is a real benefit, because it both saves them money and enhances access to the marketplace of ideas.
Obviously, Amazon has not pressured publishers to cut prices out of noble intentions, but in order to increase its own profits. They believe they can make more money by selling a larger number of e-books at a lower price than by selling a smaller number at a higher one. Amazon's motives are no more exalted than those of the publishers who oppose its practices. Both sides mainly want to make money. But Amazon's motivation is irrelevant to the ultimate result. To paraphrase Adam Smith, it is not from the benevolence of Amazon that we expect cheap and easy access to good books, but from its regard to its own interest.
CONFLICT OF INTEREST WATCH: As David notes, Jeff Bezos of Amazon owns the Washington Post, with which the Volokh Conspiracy is affiliated. But we also have complete editorial independence from the Post/em>, and I do not clear the content of any of my writings at the VC with anyone at the Post (or Amazon, for that matter). My share of the advertising revenue from this site is only a tiny fraction of my total income, and in fact less than the (also modest) amount of money I get from royalties paid by book publishers.