In 1983 Ben Bagdikian wrote “The Media Monopoly,” whose argument is that the wave of mergers and acquisitions in the media world was putting access to the world’s news and information into the hands of a small number of gatekeepers. These gatekeepers were huge media companies (Gannett in newspapers, Time Warner in magazines and movies, and so forth), whose declared objective was to deliver profits for shareholders, not raise the level of discourse for the society at large–even though many of the people who work for these organizations are hard-working and highly principled.
This is a good book and I recommend it even now (it has gone through several editions and is still used in undergraduate journalism courses), though its argument increasingly looks quaint. Today’s gatekeepers are no longer the big media companies (defined as organizations that invest in and distribute content: books, magazines, television, journals, movies) but the huge technology companies that have learned how to profit from others’ content: Amazon, Google, Apple, Facebook. Unlike the gatekeepers of old, however, who were characterized by editorial decision-making, the new gatekeepers control access through an abstract network of relationships, some of which qualify as what economists call “network effects,” in which the value of a product or service increases as more people use it. A rose by any other name . . . is still a gatekeeper.
These thoughts are prompted by the recent drubbing Apple took at the hands of our ever-vigilant Department of Justice. Apple was convicted of colluding with 5 book publishers to raise prices for ebooks, a conspiracy that targeted the aggressive discounting by Amazon at the expense of consumers.
Before going any further, I want to express my view of the matter directly: whatever Amazon’s growing influence, collusion is collusion, and violating anti-trust law is not the way to expand the diversity of channels for news and information. Some people who were siding with Apple in this matter point to Amazon’s dominant position and stop there, as though the ends justify the means. It may be ridiculous to talk about book publishers having any power in the marketplace as it is constituted today, but powerless though they are, they should not collude.
If we were once concerned about the power of Gannett (who?), what are we to make of Amazon, which, depending on who’s counting, now has around 60% of the domestic ebooks market and between 20-30% of the print book market? When you get outside the trade publishing segment, those numbers move around. For some university presses Amazon’s share is around 50% of all books sold. Ebooks today are about 25% of all trade books sold, a number that reaches 60% for such segments as young adult fiction. Academic books today are still largely a print business (90%), but that is changing rapidly. As more and more books are consumed in digital form, Amazon’s overall market share for books will continue to rise.
How did Amazon get so big and powerful? A personal anecdote to help understand this phenomenally successful company. Recently I awoke in the middle of the night and couldn’t fall back to sleep. Rather than lie there until dawn, I picked up my iPad and went to the Amazon Kindle site. After browsing the store for a few minutes, I selected a novel a friend had recently recommended to me. Using Amazon’s patented “1-click” ordering system, I purchased the book and began to read it. I fell asleep about an hour later.
How good is Amazon? Unbelievably good. Like a few other tech companies, Google in particular, what they do verges on magic. Amazon was able to serve me as a customer in minutes while I was lying in bed in the middle of the night. The number of things that Amazon does brilliantly is simply astounding, and many of these things did not exist before Amazon invented them. Whoever thought that we would routinely give out our credit card information online or that we would look forward to coming home to see an Amazon carton on the front stoop? Amazon got big and powerful because they are very, very good at what they do.
Amazon is not a gatekeeper in the sense of someone who says yes or no to something. Although Amazon has a small publishing operation, the company’s instincts are not editorial. And here is the core problem: we have a vocabulary to talk about access to information that stems from the print era. This is an aspect of what I call the Editorial Fallacy, the idea that the key business decisions for a publishing or media company are based on editorial selection. Editors once did indeed rule the roost (“content is king”), but now the leaders are technologists who think like economists.
Amazon is not a gatekeeper who tries to keep me out; Amazon is more of a concierge that wants to keep bringing me in–over and over again at the hidden expense of silently dissuading me from going elsewhere. And so I have an Amazon account where I can see all the books in my personal library. Nothing to stop me from buying a book from the Apple iBookstore or Barnes & Noble’s online store, of course, but then I would not have all my books in one place. If I subscribe to Amazon’s loyalty program Amazon Prime in order to get streaming videos, I then discover I get free shipping on print books. Nothing to stop me from buying a book at my local independent bookstore, but with free shipping, why wouldn’t I simply shop at Amazon? If I go online to find out something about a book I soon discover that Amazon’s book descriptions are typically the best to be found anywhere. Now I have decided to purchase the book and there is nothing to stop me from purchasing it anywhere. But with Amazon, one-click ordering is on the same page as the book description, so why not do it the easy way, why not simply order it from Amazon?
These features and the lock-in they provide are not simply an accidental byproduct of Amazon’s outstanding customer service but are an essential component of Amazon’s strategy. Take, for example, some of Amazon’s B2B tricks. A publisher that is having a dispute with Amazon about one thing or another may find itself punished by Amazon, which removes the “buy” button for the publisher’s books. Think about that. You are a consumer, who begins a book search on Google. Google provides you to a link to the Amazon site, but when you get there, you see a description of the book, but no way to purchase it. I call this bait-and-switch (DOJ, are you listening at last?), a kind of consumer fraud. The book publisher, however, understands that it is necessary to do business with Amazon and on Amazon’s terms; thus they are forced to capitulate.
Or Amazon promotes a program for self-published authors, offering to pay a high royalty. The catch is that if Amazon finds the books available for a lower price anywhere else, Amazon has the right to lower the price of the book (and the royalty that comes with it); theoretically the price and royalty could drop to zero. This means that the self-publishing author cannot in fact (though she can in theory) make her work available on other sites because the prices can keep ratcheting downward. I call this restraint of trade (DOJ, are you still not listening?), but for many people it seems simply like a matter of personal choice. Amazon is a great company with a bad character, and bad character is not against the law.
I don’t support the notion that if you don’t like the way the marketplace is treating you, you should just lobby to change the law. And certainly many publishers would like nothing more than to have Amazon hobbled by a regulatory agency in order to serve their business interests. They do not have my sympathy. My concerns are twofold. The first is the same one that Bagdikian articulated long ago, and if anything the situation is more serious now than when that book was first published. But my other concern is that we are fighting new battles with old weapons. It is not access or biased editorial gatekeeping that are the problems today. The problem is a gentle lock-in, a tendency for users to support ongoing industry concentration without anybody invoking the dark threat of censorship.
So let’s chip in and send the DOJ a copy of a different book, “Information Rules,” which explains the business strategies of operating in an information economy. You can even buy it on Amazon.