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Perhaps we were different long ago. Perhaps we used to revere capitalists who found ways for consumers to save money. They trimmed inefficiencies from the system. Often, we believe they did so by creating jobs and vibrant economies — because we grew up in the aftermath of a major upheaval like the industrial revolution, when all the laws and social norms had largely been settled.

Now, it seems that companies deliver efficiencies on the backs of towns and people — low wages and long hours for the people, devastated town centers and local economies for the towns.

According the the emerging narrative, instead of businesses building up economies and towns in the ways they used to, they’re seemingly tearing them apart. Major business initiatives and construction projects like data centers take only 50 people to run rather than 500 or 5,000, a scale that makes functioning local economies impossible. Hub-and-spoke systems flatten organizations and distribute them broadly, spreading workers far and wide. Work-from-home and other distributed office arrangements scatter workers and families inconsistently.

These forces have led to activism against fast-growing companies capable of leveraging information systems and global systems in ways their competitors have a hard time matching — Wal-Mart, Google, Starbucks, McDonald’s, and Apple immediately come to mind.

One of the more recent additions to this list of fear and derision is the once-beloved Amazon.com, the little bookselling underdog that has become an Internet behemoth over the last decade. Now, with bookstores crumbling, the reactionaries are mounting a PR campaign to take back the past, with the New York Times’ art department contributing this:

The subject of this backlash is Amazon’s latest price-busting strategy — use their Price Check scanning app in a retail store, buy the item(s) at Amazon, and get $5 off your next purchase. Local retailers suddenly became very nervous, as they were going into battle with an army while Amazon was going into battle with an air force. The attack from above seemed unfair.

While any retailer protesting competition strikes me as indefensible (even with the Amazon tax controversies in effect), the complaint by Richard Russo in the New York Times is particularly strange. Russo notes early that Amazon excluded books from the price war, but then goes on to interview independent bookstore owners, famous authors, and the Authors Guild, justifying his focus by noting that bookstores sell other things (DVDs, CDs, novelties) that Amazon included in its retail assault. So it’s OK for bookstores to attack music and movie stores, but not for an online store to attack bricks and mortar? As you can see, the logic is faulty at multiple levels.

While the whining from publishers and their defenders was quick and constant, the response was equally quick and clear, as covered on O’Reilly Radar:

PaidContent ran a piece entitled, “Stop Freaking Out About Amazon’s Price Check App,” which reminded people of a few key components of the current retail environment:

  • Pricing comparison apps aren’t anything new, for Amazon or others. I’d add to this reminder that the potential for apps like these was imagined more than a decade ago, and was intended to include not only relationships with single retailers but also local options, like the store down the street. This is a clue to real-world retailers about how to handle the current and future retail environment — compete!
  • Big-box retailers are most at-risk because they’re selling commodities at competitive prices. As the author writes, “. . . can you really say in your heart that you are upset that someone might buy their Blu-Ray player on Amazon instead of at Best Buy?”

Forbes is, surprisingly, damning but realistic (I’d expect them to praise brazen capitalism a bit more cheerfully), entitling their article, “Amazon’s Price Check May Be Evil But It’s the Future.” The article also smartly notes that the controversy is probably driving wider adoption of the Amazon app, inadvertently playing into Amazon’s strategy. After all, who is going to boycott a free app that gives you $5 for using it? Amazon couldn’t have purchased better advertising.

But back to the misplaced publisher/local bookstore concerns, which are addressed head-on in a Slate piece entitled, “Don’t Support Your Local Bookseller,” with the subtitle, “Buying books on Amazon is better for authors, better for the economy, and better for you.” The author, Farhad Manjoo, returns us to the Richard Russo piece in the New York Times, writing:

Russo hangs his tirade on some of the least efficient, least user-friendly, and most mistakenly mythologized local establishments you can find: independent bookstores. Russo and his novelist friends take for granted that sustaining these cultish, moldering institutions is the only way to foster a “real-life literary culture,” as writer Tom Perrotta puts it. Russo claims that Amazon, unlike the bookstore down the street, “doesn’t care about the larger bookselling universe” and has no interest in fostering “literary culture.” . . . That’s simply bogus. . . . no company in recent years has done more than Amazon to ignite a national passion for buying, reading, and even writing new books.

Manjoo’s piece is full of great insights — local bookstores aren’t “local” by and large; low prices support buying and reading books, but local booksellers have higher prices which diminish book buying and by extension reading; and since when did your local bookstore provide publishing services for your latest novel or potboiler?

The Price Check app Amazon has rolled out has little to do with books or publishing, but everything to do with the future of retailing. Yet the misplaced fear and loathing emanating from authors, publishers, and their apologists only shows how reactionary and ossified our industry remains — we apparently don’t want to sell more books at lower prices to readers who are hungry to become readers again in large numbers.

Instead of Price Check, Amazon should have rolled out an app named Reality Check.

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Kent Anderson

Kent Anderson

Kent Anderson is the CEO of RedLink and RedLink Network, a past-President of SSP, and the founder of the Scholarly Kitchen. He has worked as Publisher at AAAS/Science, CEO/Publisher of JBJS, Inc., a publishing executive at the Massachusetts Medical Society, Publishing Director of the New England Journal of Medicine, and Director of Medical Journals at the American Academy of Pediatrics. Opinions on social media or blogs are his own.

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Discussion

65 Thoughts on ""Hating Amazon Is Not a Strategy" — The World Reacts As Amazon Opens a New Front in the Pricing Wars"

I have a long list of reasons not to like Amazon. Among them are: 1) its coercive tactics in threatening to delist publishers from Amazon if they did not choose Amazon’s POD vendor, Book Surge; 2) its refusal to pay over $240 million in back sales taxes to the State of Texas even though it maintains a physical presence in the state with a warehouse in Irving (which it claims to be owned by a subsidiary–nice dodge!); 3) its effort to force publishers to price all ebooks below $10 (when the costs of publishing ebooks does not materially differ from the cost of producing print books); its refusal to check with smaller publishers about using chapters for Search Inside the Book, claiming this to be “fair use” (even though it cleared permission with the largest publishers, which have legal counsel that can afford to sue). Need I go on? I buy nothing from Amazon on principle unless it is the only place I can get something and need it quickly.

You left out poor working conditions for warehouse workers, ripping off app developers by not letting them price their own products and giving away those products without the developer’s permission, deleting purchased eBooks off of Kindles…

Ever been to a printer? Warehouse working conditions can’t be much different, except you probably don’t get crushed by a runaway paper roll weighing thousands of pounds. Ever ripped off an author with a low-percentage contract? Oh, sorry, that’s always. Ever enforced IP restrictions? Yes, but not as efficiently as Amazon can thanks to the network effect.

Amazon grew tremendously, adding 15,000 jobs during just a part of 2011. There were bound to be problems — bad supervisors they needed to weed out, employees who thought it would be “cake” and it wasn’t, etc. But let’s get real. FedEx, UPS, USAir, Apple — all of them work their people very hard. And why did Google build the Googleplex? To keep their employees from leaving work. Sure, it’s a gilded cage, but it’s still a cage.

From retail to wholesale, work is often hard, demanding, demeaning, and difficult. Big name employers like Amazon can get media attention, but don’t pretend for a moment that they’re working people harder than Holiday Inn works its cleaning staff, IHOP works its waitresses and waiters, or FedEx works its delivery people.

So you’re saying that many wrongs make a right? We shouldn’t care about the welfare of our fellow humans because abuse is widespread? Work is hard, so the safety laws we have in place can be ignored?

And for the record, no, I’ve never ripped off an author with a low-percentage contract. Scholarly book publishing is a low-margin niche business, and while authors may not be paid an enormous sum, their share of revenue is reasonable. If I’m making a 5% overall profit on a book, is an 8-12% royalty a ripoff?

I’m saying that if you’re targeting one employer who works people hard, that’s targeting, so let’s call it that. And it raises the question of what bias is leading you to ignore the “plight” of nearly every other fulfillment, warehouse, retail, and service industry worker in the world. I’ve never worked harder than when I worked in restaurants and retail — and the factory workers, EMTs, construction workers, and service people in my family work really hard in relatively tough conditions.

And if you can tell me that every author enters a book project expecting 10% on their book, I’ll take that shot back. My experience is that every author enters with a much higher percentage in mind, and feels a little diminished by the end.

Yes, we should target any employer who breaks the law. If that’s somehow unfair, then I guess I’m unfair. Let’s get rid of OSHA and all safety or health regulations. People should just suck it up and work harder.

And clearly you have not published much in the world of scholarly books. My authors were never terribly interested in the royalties, and were not writing their highly technical low circulation books because they expected to get rich from them. In this type of publishing, the royalty is often seen as a pleasant bonus, rather than the motivation for the book. In the ten years I spent in the science book world I never received a single complaint or intimation from an author that my not-for-profit publishing employer was unfairly exploiting them.

I’m not saying anyone is breaking the law. I’m saying that work is often hard, that some managers need to be replaced (which can lead to stories in the news), and that most jobs require long hours, back-breaking effort, and often are under less-than-ideal conditions. We could talk about the slow erosion of unions and this being the upshot of that. My point was that crappy work experiences are legion, and Amazon is probably along the median or perhaps slightly to one side to the other, but not an any extreme.

I haven’t done as much in book publishing as you, but the few times I’ve worked with authors on books, they’ve been disappointed by the contracts, which have been typical. Maybe it’s because I brought them over from other areas of publishing so they were new to books, but that could also mean that you were riding horses somebody else broke.

I think we have a responsibility to spend our money wisely, and that goes beyond merely seeking the lowest price for an item. If one disagrees with the way a company treats employees (hiring them on as “temps” then firing them right before they qualify for benefits, then re-hiring them to keep from paying for health care as an example) then one shouldn’t patronize that company. If the profits from a company go to support causes against one’s beliefs, then, again, one should think twice about buying from that company (which pains me greatly as I do love Chick-Fil-A’s sandwiches). Amazon has raised my ire for a variety of reasons, big and small picture, and thus I no longer purchase from them.

As for book royalties, perhaps the people you’re dealing with have an unrealistic picture of the market and the economics of how things work. For an 800 page work detailing the intricacies of the mechanisms of cellular signal transduction, there’s a huge amount of technical editing that needs to be done and a very limited audience. If you’re only going to sell 500 copies of a book, how much can an author realistically expect to make?

Or including books in their rental program without the permission of the publishers or copyright holders…

Kent, I think this is a shallow, surface reading of the sentiment here.

This is not about publishing and bookstores, but bookstores are on the frontline as far as being the next likely extinction. A few years back, this could have been written by musicians about losing your local cd store, or Quentin Tarantino on losing your neighborhood video rental shop. What this is about is the crows coming home to roost after decades of a selfish, materially-driven society. We’ve made “having more stuff” our societal priority, and particularly getting that stuff at lower prices has been emphasized. We do have lower prices these days, but the question is now being asked about the real costs beyond the monetary ones.

You may be right, Amazon and its ilk may be the next evolutionary step and inevitable, but does that automatically make them a good thing that should be supported and welcomed? As Clay Shirky often points out, life after a revolution is not necessarily better than life before one.

Which is more important–low prices or community, employment and distribution of wealth rather than more concentration? This is just part of the ongoing national debate about our economy, about the 1% and the effects they’re having on the rest of us (as an aside, my favorite comment on the Occupy movement came recently from John Waters, “I love that they have no demands—that makes grown-ups so mad.”).

You quote an article asking whether we should care if someone buys a device from Amazon or the local BestBuy. The answer is obvious. BestBuy pays taxes in my community, pays salaries in my community, employs my neighbors, (hopefully) pays for their healthcare and anchors the local mall, feeding shoppers to the other local stores nearby. When I spend with Amazon, where does my money go?

It certainly doesn’t come back to my neighborhood, nor do the jobs that have been offshored in order to keep those prices low. I’ve studiously avoided shopping at WalMart because of their poor labor practices and the way they’ve dismantled communities, but if one takes that stand, is it possible to justify shopping with Amazon (who have their own labor practice issues and community disruptions as well)? Any company that makes WalMart look like a valuable supporter of one’s hometown has to raise some eyebrows, right?

It’s somewhat bewildering that I now find myself in the position of defending groups like Barnes and Noble–they were the villains who drove nearly all the great independent bookstores out of business. Now they’re all we have left. Which is better, a soulless, corporate bookstore or no bookstore at all? If you want to make this all about books, then James Grimmelmann points out a major flaw in Manjoo’s article:

The Worst Sentence I Have Read Today: “If you don’t choose your movies based on what the guy at the box office recommends, why would you choose your books that way?”

This isn’t about the the rest of Manjoo’s essay, or about Russo’s essay. It’s about a rhetorical question with such an obvious comeback that it’s embarrassing. I couldn’t tell you how many books I’ve bought and loved based on a recommendation (in person or via stocking and shelving choices) by an independent bookstore clerk. But it’s a lot.

I can walk into a bookstore (or a music store if I can find one) and nearly always discover something new, a book I’ve never heard of or a new band. That never happens when I go to Amazon. I’ve found their recommendations to be completely useless, either things I already know about or things in which I have no interest. Their reviews are flooded with shills (a growing industry apparently). I miss the recommendations of my local knowledgable record store owner and video store clerk. Just as scholarly journals serve the purpose of vetting research reports and saving time and effort, these people provided a similar service for books, music, movies. Can you honestly suggest one has value and is irreplaceable but the others aren’t?

If all your local electronic stores go out of business and your laptop cord breaks, what are you going to do? Right now you can run to BestBuy and you’re back in business. Take them away and you’re likely ordering it online, paying through the nose for overnight shipping and are out of touch with the world for 24 hours. Hope those weren’t important deadlines. If I invite you over for dinner tonight and you want to bring a gift, how will Amazon help you there? A world where we must order physical goods in advance from afar is a world with far less spontaneity.

More and more people are noticing these declines in quality of life. Our local toy store went out of business this year and I’ve heard many parents lamenting this. A relative lost her local bookshop, the place that gave her such great recommendations on kids books to send out as gifts. Neither store could compete with Amazon’s prices. We save a little money, but we need to be aware of what we’re sacrificing. If we take away all the retail jobs in our local areas and decimate our local tax base, where does that leave us? A retail clerk job may not be all that fulfilling, but that money is important for your local teenager, senior citizen or just average person trying to make ends meet.

And as publishers, how supportive should we be of a company that’s trying to put us all out of business? Amazon appears to want to take on the mantle of being a publisher (and being the only publisher to tell the truth), yet at the same time they’re not interested in providing much of the value that we publishers claim to add. If every author self-publishes directly to the Kindle, what will you do for a living? Why shouldn’t the publishing industry be angry and upset? We need to feed our families too.

Ironically we were writing at the same time.

Your post describes the symptoms of the economic breakdown that my comment describes.

To put it another way, humanity invented business as a mechanism to serve its purposes, and discovered free-markets as a means to optimize that mechanism. However, it has now optimized itself so well that its purpose – its own survival – dominates and humanities purpose has become “serving the needs of businesses”.

Sorry, a book from 2002 about the “costs to community”? Before Facebook even appeared? Not generating any face validity for me, especially when what’s killed community more than anything else has been the automobile — from malls to commutes to driving everywhere, we never see each other except in cars anymore. If someone in our neighborhood (a fairly tightly knit neighborhood compared to many) gets a new car, the rest of us are confused for weeks afterward. Who is that person?

I’ve found the current incarnations of technology actually restores some community aspects the car has largely obliterated, but in a new way, from Facebook giving us local news through natural community chatter to text messaging linking us with typed gossip to e-cards to phone snapshots to multiplayer word games to Xbox Live — and so forth. If you think hanging out at the local bowling alley or diner was any better, I know people who still do the equivalent, and they tend to descend into an insular and unpleasant type of community, one that reminds us that the term “community” can also shelter more unpleasant reasons people get together.

More reading of more books by more people means a more literate community. I can’t tell you how many times I’ve swapped “what have you read lately?” with people and instantly downloaded a sample to my Kindle, then ended up buying the book. I don’t need a local bookstore. I actually can use my community.

How will the members of your community pay for those lovely technologies (or put gasoline in their cars) if all of the jobs in the community disappear? Who will pay for upkeep on the roads, the wires that bring electricity and connectivity to your homes?

I can’t believe how many times I have to say this — the problem is NOT ONE COMPANY. It’s a taxation and regulatory environment that rewards greed, encourages reckless speculation, and marginalizes the majority of the population. If Amazon were hugely profitable AND all of its executives were taxed at the rates prevalent in the 1960s, AND capital gains were taxed at historical levels, we’d have a few major benefits very quickly — lower government deficits, business development at all scales suddenly appearing more attractive than stock market or financial speculation, capital formation on both a local and national level, etc.

Job growth is actually occurring in the private sector. It’s the government that is shedding jobs (partly because of wars ending finally, but also because of disconnected Congressional leadership and “small government” movement, as if “small government” isn’t code for “big business”).

Amazon is behaving rationally given the macro-social and -economic conditions. Change those, and they’ll change their behavior. As the tweet said, hating Amazon is not a strategy.

Agreed, the problem is not one company. That, as stated above, is a simplistic and shallow reading of the rising backlash. I don’t blame Amazon in any way for behaving as they do–maximizing profits at all costs (while staying on just this side of the law/passing over that line if the gain outweighs the penalties) is the duty of a corporation. The question is not whether Amazon should be doing what they do. The question is whether this is good in the long run for consumers and local communities.

Refusing to spend money on companies that do not contribute to your local community is indeed a strategy.

It’s a weak strategy. Also, you don’t know how many people in your community are part of Amazon’s affiliate programs, sell things through Amazon, or publish their own books through Amazon. Amazon’s support of your local community may be greater than you believe.

So you’re advice then is just to lie back and think of England? Sorry, I’m more interested in raising awareness of the true costs paid, and working toward a societal change in values as our quality of life continues to decline. In the meantime, I won’t support the companies contributing to what I see as the problem.

No, my advice is to take this energy aimed at companies (symptoms) and aim it at government policies (root causes). Better taxation, regulation, and leadership in the civic sphere will lead to fundamental change. Otherwise, you’re just going to move the problem around.

To compete, you must compete. Being angry and upset isn’t a strategy, either.

If our strength isn’t in commanding a place in the distribution system, then it’s something else. Amazon’s strength is commanding a place in the sales and distribution system, and they’re performing a vertical integration around books. It does have the potential to hurt publishers who sit still or go reactionary. But if we move, change, and compete, they have a harder time. Let’s all invest in perfecting the Espresso Book Machine so local bookstores can print books in 45 seconds and the machine doesn’t break down all the time!

Amazon keeps doing smart things, though. One of these was to partner with Penguin on a contest to cultivate new voices. Smart. What have we done lately that’s as smart and creative?

You can despair all you want about the changes Amazon’s effecting, but most of them seem to be the result of smart retailing, smart business, smart publishing, and smart systems.

And as someone just wrote in a tweet yesterday, if you don’t know how to get serendipity from the Web, you’re not using it correctly.

Nicholas Carr’s response to that serendipity statement is worth a read:
http://www.roughtype.com/archives/2011/12/the_serendipity_1.php

Now, first of all, I hadn’t even realized that there was a correct way to use the Web. I wish someone had explained this to me years ago, because I’m sure it would have saved me all sorts of time.

It goes on from there with some lovely imagery…

Yes, well, Nicholas Carr and I don’t usually agree, so this adds to that trend.

I find Twitter and Facebook to be great sources of serendipity. I’ve found both music and books that way. Amazon’s recommendations aren’t great at the top level, but go down into an item, and often you find some interesting branches. The iPad while watching TV is an amazing extension into serendipity. I probably buy less these days in some ways, but spend less time shopping for it, evaluating it, AND am happier with what I ultimately buy.

There are people who are better at shopping than I am. I often feel overwhelmed and lose my task-oriented nature, which is the retailer’s dream situation — it’s why retail spaces are chock full and chaotic; they want you to lose control. At this point, I’m impulse shopping. We may call it “serendipity,” but is it just impulse shopping we’ve rationalized to seem more sophisticated?

Er, I think Carr’s post is meant in jest (and I love the idea of a Gilliam-esque “Serendipity Machine”).

Though I have the opposite reaction you do to online recommendations, as they inevitably fail me. I may just have odd tastes though. I would never suggest that because you get something different out of it than I do that you are somehow using it wrong.

I think you are right on the specific that these is no reasonable objection to the app. No business “earns” a premium on a transaction if that transaction would not have occurred at that premium price had the customer been better informed. Facilitating that information flow is a sound free-market action. The response of the businesses should be to match the Amazons price. “If Amazon has it cheaper, you can buy it here, right now, with no shipping cost, at Amazon’s price, and we will give you $5.” (and then they should re-price everything so they don’t have to pay the $5).

However there’s a much bigger picture to worry about.

Assuming you are comfortable with the thinking technique of “outlier analysis”, consider an extreme outlier thought experiment. Suppose that someone invented a combination of machines/robots/computers and whatever that could provide everything that humans needed without any incremental human effort. That is the extreme limit of the optimizations you refer to. Surely such an invention should be the ultimate human achievement – freeing humanity to do whatever it is they want to do, instead of spending almost all of life producing the means to survive.

But under our economic system such an invention would be a catastrophe. A few people would own the patents, capital etc of the invention and therefore would claim all the profits from the invention. Every means of production that requires human effort would be out-competed, so everyone would be unemployed. The owners of the invention could have anything they wanted, and could sell to the rest of us, but only until we had depleted all our capital/savings and taken on debt to the limit. Then there would be no customers, because there are no employees. And everyone would be destitute.

That is extreme science fiction, but there are now so many technologies that are a reasonable approximation to it that we should be worried about it. And the symptoms that our economy shows are consistent with the results of the thought experiment. Income is concentrating into increasing few people’s hands. We have an increasing number of people whose employment “we don’t need”. The economy needs them to be “consumers” but their capital has been depleted and they are out of their depth in debt.

Look at our own industry. A few hundred of years ago the creation of a copy of a book required a scribe to copy it letter by letter. Creating a copy for every human would have consumed almost every humans effort. Today I can create and store one copy of a ebook for every human being alive using the computer I am using now (that spends 99.9% of its existence idle, waiting for me to press a key) and do it without effort or cost. The incremental cost of electronics is such that we could equipment every person in the world with an ebook reader for less than Americans spend on … (you choose … silly bands? Porn? A small war?).

But our economic system would does not permit the zero-incremental costs to percolate down the consumers benefit, as free-market economic theory says it should. It fails because the markets aren’t free – they are controlled by the successful players, and because our economic system has no good way of dealing with zero-marginal cost goods (and it never did).

Consider your business, Kent. Technologically, the results of scholar research can be distributed to every human who wants it at zero cost, but your job is to prevent that happening. Your job is to ensure that you can obtain the maximum price for the subscription to your journal, regardless of what value you add to the results of the scholar research. You do it by circumventing the free market. You seek a monopoly on the publication of an article. You construct “a brand image” (which is means to convince a consumer to pay more for the same thing – just like the absence of Amazon’s app). I suspect this is why you so vehemently object to “Open Science”. I am NOT saying you don’t add value (and I am not saying I wouldn’t do the same thing in your position). But your added-value is concealed in the monopoly rent you charge for the value of the research that you did not do.

This is what our economic system requires us to do in the face of these magical inventions that remove the need for human effort. Our system is broken.

I don’t agree that “our system is broken.” I’ve been contemplating a post about how everyone’s blaming technology for the economic problems, when actually it’s been lax government regulation, witless taxation policies, polemical right-wing deceptions, and passivity within the body politic that has led us to this, not Google, Amazon, Facebook, UPS, or Apple. The Amazon tax situation is a symptom, not a cause. Our system is changing, but our politicians and governing entities have been falling down.

My experience has been that running these “magical inventions” takes a lot more personpower than running the old “non-magical inventions” like printing presses or mail lines. A few operators could create thousands of copies of a printed artifact and ship it pretty efficiently, with few hands touching it. The value chain for online is pretty long and extensive. The manufacturing and assembly process for an iPad involves a lot of different industries and skills, from the gorilla glass Corning makes for it to the aluminum case (miners, extruders) to the chips to the magnets.

The problems of unfair taxation, anemic governments (both as a builder and as a regulator, at the federal, state, and local levels), and class warfare (where it’s clearly a segment of the rich and their hangers-on against everybody else currently) — Amazon and others make the need to address those problems all the more urgent, but it’s not Amazon’s fault.

I assume by “more personpower” you mean a small number of smart people versus a large number of people (often doing manual, menial, nasty jobs requiring brains to be more dead than alive). I agree totally – that’s what is great about technology.

And the manufacturing process for an ipad involves a lot of work and lots of traditional manufacturing, but a miniscule fraction of the work that was required for a mainframe (a thousand times less powerful) 30 years ago. Remember “core memory” when each bit (literally 1 bit) of memory was a hand-wired electromagnet?

If our isn’t broken, which part is working correctly? Government? Taxation? Free-market?

I don’t “blame” technology for anything. That’s like blaming a rock; or blaming gravity for a rock falling on your head. It just happens. We supposedly-smart humans are to blame for our own fate.

Again, this begs the question, “Is Amazon’s market power a bad thing?” Books are becoming cheaper and more available, selling more copies with authors and publishers keeping about the same percentage. Reading is now advertised as “cool” on TV with Kindle ads, and, in response to Amazon’s leadership, Nook ads. More authors can publish their books through Amazon and similar online sites, and make money doing so. Authorship is thriving — from self-published authors to National Novel Writing Month (a clear line can be drawn from the popularity of this to the support Amazon’s success has given authors) to book clubs.

Exactly what ailment are we trying to cure? Change? Good luck with that.

You seem to be arguing in favor of the dissolution of the publishing industry, something of a change from your usual stance that your own work has value. The argument here is that we are heading toward an unsustainable point, as Amazon gains more power, as prices are artificially forced to drop (so Amazon can use books as loss-leaders to sell other items), the less likely it is that the publishing industry will continue to survive and that this will in some way harm literature.

Low prices are nice to have. But as I have repeatedly noted, they create costs in other areas. The balance here, where one places value, is up to the individual. I’d rather read a good book than a cheap book.

I think the real trend has been that prices for e-books are rising. As far as prices, if Amazon can take the 40% margin required to sustain a consignment-based bricks-and-mortar supply chain and replace this with a 7% margin, essentially removing 33% waste from the system, what earthly force can resist that? The last line of the post invoked the phrase “reality check.” This is business. As a writer without an agent taking a cut and a retail outlet taking too much of a cut, I and many other self-published authors are keeping more of the money our books generate. This is probably encouraging a lot more writing and publishing, and we’re getting some awfully nice books from it (and some awful ones, but so it has always been).

I do not follow your “low prices = greater costs in other areas.” So there was some ideal point balancing supply and demand which created an economy that was self-perpetuating and required nothing but maintenance? And we missed that magic point? And now we’re paying the price? I’m sure that a bookstore paying minimum wage to seasonal workers was just the perfect economic model. I remember stripping covers off remainders, recycling unsold magazines, and so forth. The waste and inefficiency wasn’t admirable, and the jobs were menial.

I think the net effect of Amazon on publishing has been positive — more readers, faster access to more content, reading and writing more central to our lives than 10 years ago, better margins for authors willing to play where the puck is headed, etc.

Kent, you haven’t addressed the complaints I have against Amazon, such as its threatening to delist publishers that don’t use its owned POD subsidiary, ignoring small-publisher complaints about its use of chapters in Search Inside the Book without permission, etc. You’re ok with these heavy-handed tactics?

I really don’t know enough about those to argue one way or the other. Can you point me to a resource on the POD item? All I can find seems to indicate it was about minimum pricing, not POD vendors. I published my book through other POD outlets, and Amazon has been happily selling them.

As for “Search Inside,” I do think authors are overly sensitive to SEO tactics like “Search Inside the Book,” which drives sales. I think the same about Google Books, which had the potential to drive a lot of sales and seemed reasonable and modern rather than overbearing and scary. Fighting that one was another “publishers don’t get it” moment for me. What do you want, authors? Sales? Then let the finest retailers on the planet teach you a thing or two. The retailers to learn from are not your local bookstores.

Here is a source on the POD incident: http://antitrust.booklocker.com/. As for Search Inside, it’s not that we publishers have a problem with it as a tool for marketing; indeed, we support it. But, unlike Google, which licensed the right to display up to 20% of a book from publishers, Amazon did not ask permission to do so from the smaller publishers; it did ask permission of the big boys, probably because Amazon worried about being sued if it didn’t. That treatment of the less powerful is just the kind of high-handedness that Amazon has been engaging in more and more. You either do it Amazon’s way, or you get penalized in some way or other. As a publisher, I resent that kind of discriminatory treatment.

Low prices = costs in other areas.

As an example, let’s look at WalMart. They move into a town and offer vastly lower prices for products than the local Mom and Pop stores. The costs of those low price include:
Human suffering as family businesses shut down.
Increased costs for health care as WalMart does not cover the costs for their employees.
Decreased property values as downtown becomes a ghost town.
Decreased property values as families move out of the area as they are no longer able to find work.
Decreased value for consumers as suppliers to WalMart are forced to reduce the quality of their products in order to meet WalMart’s increasing demands for higher margins.

Those may not matter to you, as you got a really cheap deal on a pair of jeans. But that’s small picture, short term thinking.

Family businesses in our town have changed, but many are thriving, mostly restaurants. Our paint store does really well because the owners are so good. Our mechanic, the same. Opticians, dentists, day care, delis, salons, etc., are all thriving. Those are things Wal-Mart can’t touch. Yes, our little boutique toy store is gone, but a gourmet coffee shop rushed right in and is doing well. Wal-Mart can’t do everything, but it does change things. To think that change won’t happen, and to not be prepared for it or anticipating it, that’s small picture, short-term thinking.

See also here:
http://online.wsj.com/article/APcc3796f5261b47338a1151d3f8901885.html

here:
http://walmartwatch.org/blog/archives/10-28-11-walmart-news/

And here:
http://wonkette.com/458424/wal-marts-billions-and-the-art-museum-of-cruelty-a-christmas-carol

This is the same company that just announced it will no longer sell health care coverage to its hundreds of thousands of laborers who can’t get more than 25 hours of work each week, and has substantially raised the premiums on its already squeezed low-wage full-time employees. The average Wal-Mart employee makes less than nine dollars an hour, or $352.40 per week gross. It is no wonder that Wal-Mart leads the nation in having employees who require public assistance — welfare, food stamps, medical aid — in order to survive.

But hey, business is business, and low prices are the most important thing we can strive for. Go WalMart!

Wal-Mart should be ashamed. But we as a nation should also be ashamed — the richest nation on Earth, and we don’t have universal health care yet. And if the Waltons were taxed at a rate that was more reflective of a rational progressive taxation approach — that is, those at the top pay more because they benefit more from roads, fire stations, police, water, sewer, healthcare, and civil order — this wouldn’t be so egregious. Again, there are root problems. Let’s tackle those, not the symptoms.

I agree that we need to tackle the root problems, and one of the root problems is that we have a short-term thinking mentality, a drive to fill our lives with more stuff and a prioritization of lower prices over quality and no concern for the long-term fallout from gaining those low prices. That’s one of the root problems, the one addressed by the articles you’re covering in this post.

I don;t think you are getting my point, Kent. I refuse to do business with Amazon for the same reason that I wouldn’t return to a restaurant whose staff had treated me rudely. Amazon has treated many small publishers rudely, in the ways I have enumerated, and I choose not to patronize a company that deploys such tactics. I guess you haven’t been on the receiving end of Amazon’s blitzkrieg, have you?

“I’d rather read a good book than a cheap book.” Me too. This isn’t inconsistent with liking Amazon (as a reader). I often buy a print book rather than an e-book on Amazon and pay the extra few £ as I prefer the print format for book-length reading. But Good/Cheap is not an apt contrast – for example all out of copyright books are very cheap (free if e, v cheap in print) – and many of them are “good” by anyone’s definition. On the other hand, the latest Patricia Cornwell is not worth the £18.99 cover price or the Amazon discounted price – I would regard it as too expensive even at £0 as I value my time and don’t want to waste it reading such material.

It is inconsistent if we follow Amazon’s plans to their logical conclusion. Their goal is to replace the publishing industry with their self-publishing systems. These offer little of the value that current publishers do as far as improving the material through things like editing, copyediting, design, etc. You will have cheap books, to be sure, but the quality may suffer as well.

Not sure public domain books that were expensively produced and edited back in their day are relevant examples here.

Let’s first be clear we’re talking largely about mainstream fiction and non-fiction now, not scholarly works. Yes, Amazon is encouraging self-publishing, but that doesn’t mean that editors, copyeditors, or designers are less frequently employed in the creation of these works. Most good self-published authors use one or more of those professionals to help them create a finished work, and often these people are moonlighting from jobs in the traditional industry.

Just to close the door on the “self-published = lower quality” argument, here are some self-published authors you may know: Beatrix Potter, Herman Melville, Edgar Allan Poe, Richard Nelson Bolles (“What Color Is Your Parachute?”), Christopher Paolini (“Eragon”), Irma Rombauer (“The Joy of Cooking”), and William Strunk Jr. (“The Elements of Style”). More modern authors are also doing similarly well, but it’s unclear if they or their works will have an enduring legacy like these writers and/or works did.

Kent I’m fascinated that if I suggested scholarly researchers just self-publish their experimental results and we let “the crowd” filter through them, form communities and make decisions on what’s valid and important, you’d call me an idiot and point to the many pieces you’ve written about the value of a vetted literature. Yet for the world of books, fiction and non-fiction, you seem to be suggesting that this is the perfect solution.

What is the difference between the two where an unvetted literature is favorable for one but unthinkable for the other?

Personally, I see a huge advantage to a vetted literature in terms of time savings. I (like most researchers) don’t really have time to dig through an enormous pile of unreviewed papers (nor do I trust the mythical “crowd” to do a good job of doing this for me). And since my time is limited, the same applies to literature I read for pleasure, music I listen to, movies I (rarely) have the time to see.

Furthermore, can you achieve those same positive outcomes without concentrating market power in one abusive monopoly? Are monopolies good for creators and customers?

Amazon is not a monopoly, and they’re no more abusive than Wal-Mart or Target or FedEx or UPS or Virgin or Delta or Barnes&Noble or . . .

Companies want to get big, but here’s the US Top 20 by market capitalization:

    Exxon Mobil
    Apple Inc.
    Int’l Business Mach.
    Microsoft Corporation
    Chevron Corporation
    Google Inc.
    Wal-Mart Stores
    Berkshire Hathaway
    Procter & Gamble
    General Electric
    Johnson & Johnson
    AT&T Inc.
    Oracle Corp.
    Pfizer Inc.
    Coca-Cola Co.
    Wells Fargo & Co.
    Intel Corp.
    JPMorgan Chase
    Merck & Co.
    Cisco Systems

A pretty diverse group, and each has plenty of competitors. Big doesn’t equal monopoly. And big on this scale doesn’t include Amazon.

Perhaps you’re unfamiliar with antitrust actions taken against many of those in your list. But you’re right, big doesn’t necessarily mean monopoly, nor does a monopoly require a particular size. And to be more accurate, a monopoly is not an illegal thing to have, nor does Amazon have one. Yet.

But that’s the logical conclusion here, isn’t it? Amazon continues to dominate the physical and eBook market, continues to sign exclusive deals with authors and continues to sell books at below-cost until they’re the last outlet standing. With only one bookseller on the market, will that be a good thing for content creators or for content purchasers? Is it wrong to try to support booksellers other than Amazon solely to create competition in the market?

As for Amazon being abusive, you might have to ask the smaller publishers they’ve bullied or the app developers who they’ve screwed over. Amazon has shown a strong tendency to throw their weight around.

Antitrust actions are accusations, and may result from being drummed up by competitors. Again, hating Amazon isn’t a strategy. If someone wants to create competition, do so. Amazon has had 15 years to get to this point, and much of the time people doubted it would ever matter much. They’ve executed a vision and strategy very effectively, and played for the long-term. You can try to support inefficient, backwards retail outlets for books, but they waited too long. There are TONS of innovations they could have implemented (investing in on-site book printing instead of waiting for an outside firm to fund it for them, creating delivery services locally for books, beating Amazon at its game, having online catalogs that are current and reliable). Instead, it’s been a huge “you snooze, you lose” lesson. Nothing more, nothing less. I’d love to have our local bookstore available for online ordering and think they could make one round tomorrow through town and deliver me a book instead of UPS (and maybe a cookie from their cafe, as a nice touch). Instead, I can’t even know if their online catalog is current — I have to get in my car, drive there, search, and often leave without what I wanted. They’re losing because they’re losing.

Amazon will have detractors. Some will be just sour grapes, some will have legitimate complaints. But let’s also look at the bright side — we thought books would just blink out of existence. Now, they’re more vibrant than they have been in a long time. There’s something pretty awesome about that.

Um, there’s a difference between a competitor raising antitrust accusations and a court of law finding a company guilty of violations (such as was the case for Microsoft, AT&T, IBM, Exxon Mobil).

I do expect others to compete against Amazon, but I don’t just want that competition to come in the form of lower prices. As you note in another comment, your local paint store thrives because of the superb service they offer. This is how you beat a behemoth. But that requires customers who value things like service and supporting their own community over the lowest price. If price is all that matters, you’ll only replace Amazon with someone willing to go further into the gutter.

And that’s really all I’m trying to say here. These articles are not stick-in-the-muds whining about books. This is part of a larger societal revelation that we’ve sold out much of our quality of life in order to have lower prices so we can buy more low quality stuff. I don’t think that’s a good thing. Do you?

I was saying there’s a difference between accusations and findings.

I agree, quality and service can trump pricing.

I’ve long felt that the drive to lower prices has big downsides. But let’s be clear — Amazon is allowing some pretty decent prices now that the e-book adoption curve is flattening out. Most e-books I’m seeing are $14.99 or higher now.

Well, those prices came as the result of a business strategy meant to lessen Amazon’s dominance (similar to the ones suggested in the Publisher’s Weekly article linked in another column), not out of any Amazon-driven strategy. And agency pricing is now under legal scrutiny, so it may fall by the wayside as well.

But I do agree that quality over pricing is a legitimate strategy. We’re seeing an increased level of computer users moving away (slowly) from commodity crap toward higher end better designed laptops (Dell dropped out of the netbook business this week by the way, stating that imitations of Macbook Airs are now the future). And to me, part of effecting that is making it clear to consumers what comes along with those lower prices (poorer quality, poorer working conditions, offshoring of jobs, etc.).

Starting a new comment thread to pick up on two comments. I need to see how to make these threads go deeper.

To Sandy Thatcher and his comment about not patronizing a restaurant because of a bad service experience and comparing that to Amazon:

“You’re mixing the retail and wholesale experiences here. Amazon has a GREAT retail reputation — fast shipping, low prices, great e-commerce, fantastic apps, etc. But they do beat their wholesalers senseless to get the best deals they can. Even a great restaurant does that, and you can bet the fishermen, farmers, and other wholesalers complain mightily but take the business. Such tough tactics may be “rude,” but they’re also business. Maybe it’s time for the sheltered small publishers to put on their big boy pants and deal. The best way to compete is to compete. The worst way is to sulk.

That said, if your friend is a farmer and the regional restaurant chain has beaten concessions out of him that has him wincing, you may not want to eat at the restaurant. I’m not sure that choice will amount to a hill of beans, because if the service, prices, and food continue to be knock-out, the restaurant will continue to dominate. To me, this returns to the main point — hating Amazon is not a strategy, just as not patronizing a restaurant because a few people are mad about being shoved around is not a strategy. As another thread noted, opening a restaurant with better service and food, and perhaps higher prices, might be.”

To David Crotty and his “filter the scholarly but not the popular” question:

“As Penn Jillette writes, ‘If every trace of any single religion died out and nothing were passed on, it would never be created exactly that way again. There might be some other nonsense in its place, but not that exact nonsense. If all of science were wiped out, it would still be true and someone would find a way to figure it all out again.’ Science is the pursuit of truth. Fiction, music, and the like are the pursuit of the imagined. Therefore, they’re far too subjective, and filtering can kill some great works and potentials. Misinformation in the scientific literature is far more risky to the pursuit of truth than a bad romance novel or derivative pop song is to our aesthetic sensibilities. And creative fields have completely different criteria for success than science does.”

Thanks for the new thread Kent.

So as I understand it, you draw the line based on whether the material is “scientific” versus “creative”, correct? Really, fiction vs. non-fiction. So that raises further questions in trying to pin down the Anderson Grand Unified Theory of Publishing:

1) What does this mean for non-fiction books? Should they receive the same amount of rigor as a scholarly journal article or can they be self-published and sorted out by the community?

2) What does this mean for humanities research, where some studies are subjective in nature? Should comparative literature studies or historical analysis for example just be self-published since they are subjective and low-risk?

3) While your suggestions addresses the question of verification (eliminating misinformation), it doesn’t address the question of time. Just as I don’t have time to dig through an un-reviewed scientific literature, I similarly don’t have time to dig through an un-reviewed fictional literature. I certainly don’t have time (nor any desire) to participate in online communities, to write reviews and have conversations with others. If we are claiming that having an editorial staff that stratifies the scientific literature for quality is worth paying for, why is that not worth paying for in one’s pleasure reading?

Non-fiction in the humanities is a gray area in the Anderson Grand Unified Theory of Publishing. Some great non-fiction has been self-published. Some terrible non-fiction (Ann Coulter anyone? Or is that not non-fiction?) has been traditionally published. Very hard area to generalize about.

That said, we all find ways to spend our time. Apparently, you and I spend a lot of time on comment threads.

I find new music through osmosis these days. I find new fiction and non-fiction similarly. There are still overview services in magazines, blogs, sites, etc. But again, the damage of a fraudulent paper is much greater than finding out an album has only 3 good songs.

“The best way to compete is to compete.” Let’s use this mantra and apply it to STM journal publishing. SPARC was set up to underwrite competition with the big STM publishers by encouraging the launching of OA journals. How has this worked out? OA publishing has made some significant inroads, especially with PLoS, yet what do we see happening now? The same big publishers are preempting OA for their own benefit and future profit. Financially, universities will end up in the same boat as they did with traditional TA publishing, though the burden will be distributed in other ways and not concentrated on libraries. Are you happy about that? I predict the same sort of thing would happen to any competitor that tried to take on Amazon; it would be preempted by being bought out or ground to dust by Amazon’s ability to sell at a loss until the competitor cries uncle and throws in the towel. You seem to be ok with the nasty way capitalism often works. I’m not.

“The best way to compete is to compete.” yes – but only if the mantra is extended to be
“The best way to compete is to compete on product/service and price.” — not on, for example, competing to buy a congressman to produce a law that favors you over your competitors, or you over your customers or suppliers. The problem with competition is that it includes competing to eliminate competition … nor just your competitors.

The “big picture” (yes I know I’m always looking for the big picture), is that we have a system of winners and losers where the winners get to re-write the rules, and they do so in their favor so they reinforce their status as winners. They rig the competition.

Again, that’s a root cause issue. Corrupt government is also pretty constant. It’s the degree of corruption that has gotten out of whack. There will always be corruption, but when it’s the prevailing tone and tenor, that’s when we get things like Citizens United, where money is speech. I really don’t think the Constitution of the US intended that. Activist judges indeed!

and of course it snowballs. The supreme court is chosen by the winners,. The citizens united decision will make sure that the winners win more. The people will never reverse the decision because the money will be against the reversal and the money will win. This positive feedback loop is now unstoppable.

This interview with Marc Andreessen is probably worth a read on this subject:
http://news.cnet.com/8301-1023_3-57345138-93/marc-andreessen-predictions-for-2012-and-beyond/

Andreessen points out the dire straits ahead for physical retail stores:

I think 2012 is the year that retail–retail stores–really starts to feel the pressure. And I don’t say that because I don’t like retail stores. I loved going to Borders. I thought it was a great consumer experience. And I was a huge fan of Tower Records.

But the economic pressure is huge as e-commerce gets more and more viable and as these category killers emerge in the superverticals. If I own mall real estate or retail stores in cities, or if I own chains like electronics chains, I’d be concerned…. I think electronics and clothes are going to be a real pressure point. Home furnishing is going to come under pressure. It’s going to get harder and harder to justify the retail store model.

From Kent’s point of view in this blog posting, this is about business and competition, and the stagnant bricks and mortars stores being pushed out in an evolutionary fashion. And he’s right, but the point I’ve tried to make in the comments is to consider the quality of life issues this progression brings about. Are you better off getting those lower prices if you live in a community with no retail stores and with rampant unemployment? This consolidation may be inevitable, but is it healthy for humans? Is this something we, as consumers, should encourage or resist?

Something else we’ve discussed here is the question of strategy, and how one can compete against the likes of an Amazon. Andreessen points out how some startups are looking to displace Amazon by providing a differentiating customer experience:

I like to say that the first generation of e-tailers was really good for nerds. Amazon for me is–I love it–it’s like the biggest warehouse superstore of all time. It’s just awesome, and I love wandering up and down the aisles and it’s like, ‘wow, look at that.’ If I do enough searches I can discover anything.

The new generation of e-tailers are much more appealing to normal people–people who like to go the mall, have fun with their friends and try on clothes and compare clothes, and go home and brag to their roommate what they got on sale, and all the rest of it.

Radio Boston had a great segment on this yesterday. Basically, competing means competing. One local toy store has an app that lets you check out while shopping, and it gives you a discount, too. They’re very happy with what it’s done for them. And it’s not that the local bookstore will go out of business if it’s truly earning your business. Some stores are doing quite well, but they’re being more “local” and innovating with e-books. More here: http://radioboston.wbur.org/2011/12/19/amazon-price-check

Thanks Kent, will listen to it when I get time. Competing does mean competing, but from a consumer’s point of view, we have to decide what we want, and that will drive the means of competition. We’ve emphasized lower prices as our priority, to the detriment of other things. The “save our bookstores” backlash here represents a group of consumers (and content creators) who are suggesting a different set of priorities. If those take hold, then we will see competition in areas like service and support of local communities rather than solely on price.

People do seem to like these services, and do seem to like shopping in person. But when push comes to shove, they’re still ordering from Amazon to save 50 cents. Having more stuff cheaper is deeply ingrained in our society.

Let’s not forget that e-retailers will continue to have a significant advantage over all bricks-and-mortar stores so long as Congress protects them from being subject to sales taxes. As the physical stores disappear, the pressures for earning taxes on sales from e-retailers will at some point lead Congress to end this discrimination. Alas, that won’t bring back the stores that have already closed, however. Personally, i don’t find shopping online a very enjoyable experience at all.

Remember, the state is imposing the tax, not the online retailer. And, if the online retailer doesn’t impose the tax, most states require their citizens to pay a “use tax” at the end of the year for online goods where taxes weren’t collected by the seller. New Jersey, New York, and Pennsylvania all require these use taxes to be paid at the end of the year. I’m sure you’re paying these taxes on all your online purchases (e-books, online subscriptions, etc.) at the end of the year, just to level the playing field. Right? It’s not always the seller’s responsibility to collect taxes. It’s always the citizen’s responsibility to pay their taxes.

But many states don’t, and besides, how many people do you really think are (1) aware of this tax and (2) actually pay it? I’ll wager the answer to those question is “very few.” I purchase hardly anything online, so don’t have to worry about it. I’m one of those who find a book on Amazon and then go buy it at a bricks-and-mortar store.

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