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Monopolies and Amazon

April 17, 2012

Amazon wars have inspired much excellent discussion of late. Is Amazon our next Great Satan, the media Walmart? Is there a “right” or “good” way to offer and consume literature?

The idea of media monopoly interests me. I grew up in an IBM family, alongside their rival Ma Bell, and my children grew up on Microsoft PCs. I recall the great lawsuits, including Bill Gates’s famously unhelpful testimony. Year after year, I warned my publisher about Amazon, only to be told, “They’re really going bankrupt.”

Let’s unpack some things.

Monopoly. What is a monopoly? The clearest kind of monopoly is a literary author.  We all agree, for example, that George R. R. Martin is the only source of Game of Thrones books. When too much time lagged between books of the Thrones series, fans blogged in outrage how unfair it was to put them off so long. An author, especially a living, breathing author with copyright, is a monopoly.

Is Amazon a monopoly?  That’s what publishers claim. But if so, it’s a precarious one. Today, anything can sell from anywhere. The best-sellers–even mid-list authors–can set up shop instantly and sell from their own website.

Maybe we need another lawsuit-of-the-decade, like the ones I grew up with.  Or maybe, if Amazon is really that bad, they could get outcompeted soon, like MySpace and Yahoo.

Publishers.  What is a publisher?  The first thing I recall hearing from my fellow writers, when I made my first sale a hundred years ago, is “Beware the publisher.” Publishers were the source of all necessary evil. “Don’t let the publisher rewrite your book!”

Yet today, we defend the poor hapless publisher from the technology of the twenty-first century? And bemoan the lack of editing of self-published books?  As Spock used to say, “I can’t believe my ears.”

Publishers perform a valuable function for authors–more than we usually give credit for. But the big New York publishers have always been behind the curve. My first book was shipped to Hong Kong for typesetting.

Today, if publishers are dying, why are there so many new small presses? If it weren’t for small press and eBook, most of my titles would be out of print.  There is no more dreaded “out of print” today.

Greedy consumers.  What is a greedy consumer? According to lots of Amazon consumers, no eBook should sell for more than ten dollars. Perhaps encouraged by Amazon, but these are real readers’ voices.

What I hear readers saying is that, instead of painstakingly selecting a few promising books to buy, the reader wants to buy a thousand books–as much as a device will hold–then select them to read whenever. This may not be the 20th century view of books–nor the Renaissance view, nor the Medieval view, nor the library of Alexandria–but nor is it evil. It’s just the 21st century view. That’s our contemporary reader, like it or not.

It seems to me that both authors and publishers need to find new ways. It won’t be easy; when text went from papyrus to codex, much of the ancient libraries were lost. But it had to happen, or else books today would still be rolled up in a monastery, unread by most.

  1. paws4thot permalink
    April 18, 2012 7:50 am

    You’ve been reading Charlie’s last blog entry, and at least some of the comments, right?

    • April 18, 2012 8:33 am

      Yes, that was great, and I thought there was room to refocus the discussion from a different angle–the viewpoint of “small authors” and “small publisher.”

  2. April 18, 2012 8:36 am

    From John Ordover:
    Publishing is simply following the standard economic pattern for all industries – First there are hundreds of different companies, then dozens, then oligopolization kicks in and the number drops to a handful; that goes along for a short while until smaller, quicker, leaner companies with lower cost structures and overhead who are willing to embrace new technologies come along and suddenly there are hundreds again. It’s standard in most industries – it’s what happened to American car companies (trace them from their start) – first a lot, then fewer, then a handful, then when the foreign manufacturers recovered from WWII enough to compete there were suddenly a whole bunch of small, limber companies out-competing the oligarchy. And so it goes. 🙂

  3. April 18, 2012 8:38 am

    From Chris Kearin:
    As Leon Wieseltier says in today’s Times, “People who know how to publish books are in danger of being put out of business by people who don’t but think they do.” In a way that’s not fair — there are in fact a number of small independent presses that are breaking new ground — but many of those presses are only kept afloat by subsidies and grants, and there certain kinds of books — serious biographies, history, even some novels — that can only be supported by a company large enough to underwrite a substantial investment in an author that may not be repaid for a decade or more, if ever. That’s the kind of publishing that’s in danger of disappearing. Even the university presses are pulling back, what with budget cuts, the disappearance of bookstore markets, etc.

    • April 18, 2012 8:43 am

      Yes, it’s a tough time for university presses. But–based on my intimate experience with a nonprofit academic press–these publishers need to change even more than the New York ones.

      When Michael’s epic translation of a Latin poet couldn’t find a university press, it got picked up by a small press that did a wonderful job:
      And it got plenty of attention from reviewers; it’s now considered the “standard” translation.

      The university presses have to engage readers now, and make sure they’re producing quality stuff. They can no longer subsist on unthinking acquisition policies by a few university libraries.

    • April 18, 2012 7:56 pm

      Hi Joan,

      To politely disagree, I read that comment (““People who know how to publish books…”) differently. Borders ran into trouble when it was acquired by KMart and then spun off with a bunch of KMart executives. All of the big six are small subsidiaries of multinationals, and they’re expected to perform, regardless. This is supposedly one reason we’ve seen the bestseller at all costs attitude take over publishing.

      One can argue that books are just enough different that they can’t be sold as widgets. Certainly, the audience for each author is different, although there are large overlaps. Thus, an MBA who comes in to improve a publishing company by imposing whatever he learned in business school can trash a publishing house by being clueless (I’m being sexist about this type of bull-headed attitude, sorry). It certainly looks like that will happen to at least one of the big publishing houses at some point in the near future.

  4. Frank Caesar Branchini permalink
    April 18, 2012 12:11 pm

    Monopolies are never a good thing for consumers. But there is a reason why Amazon is dominating the marketplace. I was raised in family that valued education and reading. I am a voracious reader and I love books. I have been shopping at Barnes & Noble since they opened near my house and I realized how much time I was spending there when I walked in one day and several staff people greeted me by name. I used to buy most of my books there but I no longer buy anything other than magazines. They are putting all of their emphasis on their e-reader and they have cleared out at least one quarter of their books. They don’t have the selection that Amazon has and they can’t compete in price. Sooner or later (I predict sooner) they are going the way of Borders.

    I know there are advantages of e-readers but there I have two good reasons for avoiding them.

    1) I am already having problems with my eyes from looking at a computer screen. My eye doctor wants me to reduce the amount of time I spend looking at a monitor. And this makes me worry about children who are being pushed to use electronic devices rather than actual books. You heard it here first. I predict an epidemic of young people with serious vision problems.

    2) I have books that I have had and cherished since I was a child. If you have an e-reader from Barnes & Noble what is going to happen to your e-books if they go out of business? What will happen to anything you are using an e-reader to access when the technology changes? Anything that you can’t download and save will likely be inaccessible sooner or later.

    As for Walmart, I refuse to shop there because of their labor policies.

    • April 18, 2012 8:03 pm

      The book business is changing so fast, it’s hard to be sure, but this is what I see from here.
      The e-readers are getting so much better, they will soon be easier to read than paper. In fact for many of us they already are. My sons only read eBook, especially my older son who is visually impaired and needs increased font size.

      I don’t think “out of business” will be a problem because the files are all convertible now (though it’s a nuisance; most of us don’t know how.) In fact, from an author’s point of view, the more fundamental issue is that “copyright” is meaningless after a year or two. My recent book is already pirated out there on “Torrent,” for those who know and care how to get it. We are reaching the point where every text is out there forever. What we sell, when we sell a “book” is convenience and comfort for a reading experience. This is a problem, but it has nothing to do with Amazon or monopolies–the opposite, that anyone can post anything, like they do with music.

      • Frank Caesar Branchini permalink
        April 18, 2012 8:37 pm

        How is an e-reader screen easier on the eyes that a computer screen. Aren’t they basically the same?

        • April 18, 2012 10:52 pm

          I’m no expert, but there are many different screen technologies. Some no longer scan across like the old CRTs. Some are backlit, others not. Some are high contrast, others low contrast. To my eyes, a large LCD screen or a well-lit Kindle look much like paper.

        • paws4thot permalink
          April 19, 2012 7:32 am

          Short answer “no”.

          Longer answer – “E-ink” like on a monochrome Kindle forms a pattern of light and dark dots similar to the way dot matrix and inkjet printers work (sizes of dots vary but the principle as to how the characters are formed is the same) and only apply power to change the display when you press “turn page” whereas computer screens (irrespective of type; CRTs aren’t that different to flat panels in this respect) rely on having power applied to them to excite each pixel in turn making it glow for a short period.

  5. JonathanC permalink
    April 18, 2012 4:10 pm

    I think monopolies are a natural occurance and not especially ‘bad’. Like an alpha predator in an ecosystem. Are Lions bad? Monopolies also create special kinds of opportunity, such as when they attract regulation that forces them to give ‘little guys’ an extra chance. Or when they use their market power to offer a super deal. Could anger at big companies be simple jealousy, another natural occurance?

    • April 18, 2012 8:06 pm

      Where monopolies get bad is when they allow stupid and/or nasty ideas to propagate without competition. I can cite an number of horrendous monopolies, from Amazonian rubber along the Putamayo, to King Leopold’s Belgium, to, arguably, what’s going on in America’s prisons right now. Example: inmate gets raped by guard. Inmate can’t complain successfully, because guard’s supervisor supports the guard. Inmate punished for complaining. Note that said inmate is treated as a profit center for the company running the prison, and as long as he’s breathing, there’s no real problem (more men than women get raped in US prisons, though more women get raped by guards). We could also argue that the centralization of the meat-packing industry has led to monopoly-like conditions where massive cruelty happens, just because there is no one watching and no other choice for humane slaughter.

      So no, I don’t think the comparison between monopolies and alpha predators isn’t well informed, although I used to think the same thing. I’d suggest reading David Graeber’s Debt: The First 5,000 years for some alternative metaphors.

    • April 18, 2012 8:14 pm

      Jonathan has a point, although (sorry to quibble) “alpha predator” is rarely the “monopoly” in an ecosystem. An invasive “monopoly” species is usually bark beetles or kudzu vines.

      In biological terms, the hard thing is to distinguish between a stable monopoly (one that sustains diversity) versus a destabilizing monopoly (one that decreases diversity). Suppose 90% of photosynthesis is done by the leaves of Home Tree; then it looks like the tree has a near-monopoly on photosynthesis. But if the remaining 10% is shared by a hundred species of vines and orchids, that’s a stable system. On the other hand, if one kind of algae covers 90% of a pond, and all the other phototrophs die out, that’s a bad monopoly.

      So which kind is Amazon?
      Clearly, brick-and-mortar booksellers are going extinct. I don’t “trust” Amazon (or any other company–including nonprofits) but so far I see small presses and blogger-booksellers multiplying.

      • April 18, 2012 10:45 pm

        Um, even on that level, this is dead wrong. If you insist on equating capitalism and predation (and I think there are many, many reasons to question this, and not just on a social Darwinian level), then an alpha predator is a monopsonist, not a monopolist.

        A monopolist is a sole supplier, who can hence charge what he wants for his service, and can provide whatever customer care (or lack thereof) suits him.

        A monopsonist is a sole consumer of all the producers, which is what you’re talking about with an alpha predator.

        In both cases, they can cause a lethal amount of trouble if they aren’t stringently regularted, and still cause a lot of trouble even if they are regulated.

        As I noted above, there are some really good, practical reasons why most of us distrust unregulated monopolies. The syllogism “alpha predator=monopolist,” “alpha predators exist,” therefore “monopoly is good,” (presumably because nature is good) fails due both on logical and biological grounds. If nothing else, the key thing to remember is that, in a monopolistic (or monopsonistic system), we’re not the people running the monopoly. Instead, we’re its prey. What’s good for a monopoly isn’t necessarily good for us.

  6. April 18, 2012 8:13 pm

    Here’s one way that publishing is changing: the slush pile has gone public, as printed in eBooks on Amazon. There are some fascinating new things that have come out of it (like the CompSci professor who set up a program to automatically write factoid-based books on obscure subjects using publicly available data), and some creepy things (people trying to sell Wikipedia articles as books, or ripping off writers and selling their books).

    But the major thing is that publishers are no longer the doorkeepers to the publishing industry, nor are editors. This model is dead, however the publishers feel about themselves. Considering how little I like in some fields (like science fiction, which mostly seems to be dominated by slasher porn disguised by random movie props), I’d say good riddance. The doorguards let in too much riff-raff recently.

    That doesn’t mean publishing is dead, by any means. I suspect that we’ll see a bunch of value-added publishing houses growing rapidly, where their business model is based on the value they add to works already published as, say, Amazon eBooks. Similarly, we may see a new breed of celebrity editors, the publishing equivalents of Simon Cowell, who turn unknown authors into stars through their skills. That could be good or bad, but it will be different, regardless.

    • April 18, 2012 8:27 pm

      There is always room for good editors. Editing is a different skill from authoring. (The skill sets overlap, but are not identical.)

      Is the public slush pile really that bad? Cream can still rise to the top. Books like “My Princess Boy” come out that no editor would ever pick.

      • April 19, 2012 1:12 am

        I don’t necessarily think this is bad. The only problem with the public slushpile is that it gives cover for scams. Otherwise, I think you’re right, that it will provide openings for books that most old-school publishers won’t touch.

  7. Frank Caesar Branchini permalink
    April 18, 2012 8:34 pm

    I meant to say one other thing about why Amazon is so successful and why Amazon is so very different from Walmart. Most businesses today, including Walmart, and particularly internet based businesses like eBay and PayPal, provide absolutely no customer service. Contact information is not available without searching through endless menus and too frequently customers with questions are simply directed to chat groups to ask for advice from other customers.

    I haven’t had a lot of issues with Amazon but when I have had the customer service number is easy to find and I’ve never asked for a customer service call and not had some one call immediately. The customer service staff are clearly not in India, they speak English, and I’ve found them to be uniformly helpful.

    Walmart stores are uniformly dirty. Staff people are hard to find and if you manage to find one, they are unhelpful. They don’t know anything about the products in the store, or where anything is. Sadly, this is typical of American big business.

    Best Buy is even worse. The last time I was in Best Buy I was there to purchase expensive electronic equipment. When I asked a clerk whether it had the features I wanted he said he didn’t know. When I asked if we could open the packaging to determine whether it had the features I wanted, he said no. Then he informed me that if I bought it and it didn’t have the features I wanted, and I returned it, there would be a fee for returning it, I left Best Buy and have not been back.

    • April 18, 2012 10:55 pm

      I agree Amazon customer service is surprisingly good. I don’t know how the workers are treated; reliable information on that would be interesting.

      • paws4thot permalink
        April 19, 2012 7:39 am

        I’ve heard that they’re treated quite poorly; what I genuinely don’t know is whether or not they are treated worse than staff in other similar type (not size but other companies do employ staff who’s sole function is to fill and pack customer orders) businesses.

  8. April 19, 2012 8:50 am

    The classic monopolies Heteromeles cites are rather old. The institutional examples (prisons, meat-backing) are horrendous but introduce other complicating issues.

    What about Microsoft, do we still hate them? Aren’t they the classic monopoly? Have they destroyed civilization yet?

    I don’t mean to defend big business, but these points interest me:
    (1) Should we care more about the bad effects of a big company than the degree of monopoly? Like BP, monopoly or not, has truly Satanic effects.
    (2) Are media monopolies “special” because the unfettered Internet gives everyone a shot at breaking them?

    • paws4thot permalink
      April 19, 2012 10:17 am

      Microsoft – Yes, and more so every time I use Windoze7 and Office 2010!

      1) Are you trying to push my buttons? in the Gulf of Mexico BP were let down big time by their American sub-contractors and the lack of regulation and oversight by government. Do I have to point out how many of the components of the link we’re communicating over wouldn’t exist (at least in these forms) without a petro-chemicals industry?
      2) Show me a media monopoly first. I have access to 3 or 4 different providers of Tv news, radio news, local and national print news, drama broadcasts, sports broadcast, music broadcasts…

    • April 19, 2012 7:28 pm

      Old? We’re seeing increasing monopolies in meat-packing right now. Fifty years ago we had far more diversity in agriculture than we do now. We’ve got a system that’s far less sustainable than it was 100 years ago, and while it feeds more people, it’s increasingly fragile. Worse, we’re missing the alternatives that can take over when our current system breaks.

      As for a media monopoly, I’m not going to say that Amazon is on par with, say, King Leopold. It’s not. The point is that anyone who thinks that monopolies are good really should go back and see why monopolies have a bad reputation going back hundreds of years.

  9. Dave Z permalink
    April 20, 2012 12:33 pm

    Here is my personal perspective as a 21st century reader, combined with a speculative proposal for a future book distribution service.

    I have enjoyed at least one of your books through one or more of the following channels:
    – dead-tree purchase
    – dead-tree library loan
    – “pirated” e-books

    I am not comfortable with the erosion of civil liberties that is, I fear, an inevitable consequence of extending copyright law onto the web. Nor am I comfortable with the e-book terms of most current e-book publishers e.g. I would never purchase an e-book (or any other media) burdened with DRM, nor do I think current e-book pricing is remotely realistic.

    That said, I like to read and I would like to support my favorite authors so they can continue to write.

    All authors are now “competing with free”. It is possible to compete with free if you move past current business models and abandon the idea of copyright.

    Rather than selling books as if they were cars or hamburgers or other consumables, access to books could be seen more as a service to facilitate the exchange of literature, commentary about literature, and money among writers, editors and readers.

    Here is a sketch of one way to implement a post-copyright era online “bookstore”:

    I would happily pay a small monthly subscription fee (say $15 or so) for a “digital library card” that would give me full access to a vast library of high-quality DRM-free e-books. It’s important that the monthly fee be small, on the order of what many of us now pay for a Netflix subscription.

    The base-rate monthly subscription fee would cover some arbitrary maximum number of e-books per month, e.g. 20 books a month.

    The 20-book limit would apply only to books by living authors. Books by deceased authors would be in a separate, less- or un-restricted class. The whole purpose of the service is to enable the living to continue writing.

    — how to divide the monthly fee:
    25% of the monthly fee goes to the “bookstore” or “publisher” or “editors collective” or whatever the new service is called
    75% of the monthly fee goes directly to authors
    —-The author of each of the books I download each month gets a small flat fee on the order of one dollar. The remaining amount is divided among my personal selection of authors or author-groups whose works are represented in the “bookstore” (mystery writers, sci-fi, speculative-fiction …). That way, every subscriber can be a miniature patron of the arts. Like an author’s latest blog post or article? Re-read an old favorite and realize how much it changed your life? With this system, it’s easy to send an author some fiscal appreciation.

    In addition to the 20 book/month limit, the service would impose one additional kind of artificial scarcity :
    — a delay so that a book would be delivered 24 hours after ordering.

    To bypass the 24-hour delay and 20-book/month limits, a small per-book fee would be charged, in the range of $1 – $2, like a song at iTunes.

    The 20 book/month limit and 24 hr. delay are fairly gentle ways of motivating people to open their wallets.

    In addition, the site would provide a tip-jar so that, whether or not you have downloaded a book, you could contribute increments of $0.99 to your favorite author or author-group.

    This kind of system would be a resilient mechanism for encouraging the production of literature, even in a world where everyone has free access to everything. That world is the one we are now entering.

    • April 21, 2012 11:00 am

      Your model would probably work for me, since I don’t depend on fiction books for money.
      But what about authors like Charlie Stross who need to earn a living? It sounds to me like their income would drop ten-fold (from $10 to $1 per eBook). I doubt the general fee would make that up, since it would be distributed amongst so many authors.

      As for DRM, isn’t that on its way out already? Aren’t most formats able to be cracked? It little matters, now that we have easy tools to show where any text came from. We’re heading back to ancient Athens, where there was no concept of copyright since everybody knew who wrote everything.


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