An American Editor

December 29, 2010

Question of the Year: Does Amazon Have Too Much Power?

Amazon is probably the largest bookseller, dollar-wise, in America and the world. Certainly, it is the largest ebook seller in America. And Amazon has spread its tentacles so that it is not only a bookseller, but it competes with publishers as a publisher.

Amazon has positioned itself so that, with the exception of the big publishing houses like Hachette, Simon & Schuster, and Random House, authors and publishers believe their books must be available for sale on Amazon or they will never make it. I have yet to hear of anyone cry, for example, that the failure of Barnes & Noble or Sony ebookstores to carry their ebook is a crisis. But we do hear and feel that panic when it comes to Amazon.

The result of this concentration of power is that Amazon is given the opportunity to censor. I grant that Amazon is free to decide what products it wants to sell or not sell; after all, it is not a governmental agency that must be neutral in the marketplace. But saying that begs the question because by agreeing with that proposition (i.e., Amazon is free to sell or not sell a particular book or genre of books), we are also saying that Amazon is free to dictate what an author writes, a publisher publishes, and a reader reads — at least if you are an author or publisher who believes that not being sold by Amazon is tantamount to writing death or a consumer who believes that the only place to buy a book is from Amazon.

Amazon’s Kindle has changed the worlds of reading, writing, and publishing. Although the change has been largely for the good — more books are being sold (and hopefully read) — there is also a dark side to the Kindle world. The dark side begins with a proprietary format that is designed to lock the average consumer into buying books only at Amazon. (Yes, I know that one can strip Amazon’s DRM and then convert the book to another format using readily available free tools; but most consumers do not do this and do not want to be bothered having to do it, thus the success of the Kindle. The Kindle is the market leader not because it is the best ereader but because of the ease-of-use with the Amazon ebookstore.) 

The dark side spreads to the way the device is designed; that is, it is designed to encourage users to be connected to Amazon’s servers and to automatically download updates. The problems with being connected and updates are that they allow Amazon to track the consumer’s buying habits and give Amazon access to the Kindle’s content, enabling removal or disabling at Amazon’s whim. Although a lot of Amazon fans say that Amazon will do no evil, that is really more of a wish and a prayer than a fact. Amazon has always put Amazon’s interests ahead of everyone else.

A more important dark side, however, is that Amazon uses such vague terminology that what was acceptable for publication and sale at Amazon today, may not be tomorrow — and there is little (actually nothing) that the consumer, the author, or the publisher can do about it. The only publishers with power in this battle are the big 6 publishing houses which between them publish probably 75% of all best-selling, money-making, books and whose refusal to supply Amazon with books could seriously affect Amazon’s bottom line (which is why 5 of the big 6 were able to force Amazon to accept the agency model).

In recent weeks more than one author has noticed the disappearance from Amazon of their books. The given reason was that the books violated Amazon’s terms of service but no explanation of what the violation actually was was forthcoming. Authors were left in the dark and consumers who had purchased the titles suddenly no longer had access to them (and apparently were not given refunds by Amazon).

For these shenanigans, I do not blame Amazon: instead, I blame the authors and smaller publishers who will do anything to be listed on Amazon and who then turn a blind eye when a fellow author/publisher’s books are dropped for some vague reason. The survivors hope that their turn will not come.

I also blame the consumers who are too lazy to do 2-click buying and will only shop at Amazon; consumers who are unwilling to spend a nickel more on a book at another store because Amazon is the lowest priced. Some day, in the not too distant future, that consumer attitude will haunt the consumers because as competition to Amazon disappears, the need/desire for Amazon to increase profits will raise its head and those low prices that everyone wants to grab today will no longer be available.

Once Amazon sees a decline in the growth of Kindle sales, that is, the point at which it realizes it has reached 99% saturation of its ebook market, I expect to see Amazon begin raising prices on ebooks. With millions of locked in customers, a simple 10-cent increase would generate millions more in profit, which Amazon shareholders will be expecting and demanding.

The Amazon success story in ebooks is much like the biography of a lemming.

10 Comments »

  1. [...] reposted with permission from An American editor [...]

    Pingback by Question of the Year: Does Amazon Have Too Much Power? — December 29, 2010 @ 10:31 am | Reply

  2. At the risk of sounding over-optimistic one might ask,given the economies of e-publishing,how difficult would it be for us publishers to undercut or at least match Amazon? Like the big publishers I imagine they will keep to a set margin overall underpricing best sellers but leaving the field open to what might re-emerge as a mid list.

    Comment by Ib Bellew — December 29, 2010 @ 10:56 am | Reply

    • It is not the price that is the problem but the central distribution. Any publisher can now undercut Amazon’s price but creating a central place for people to shop is what is the “magic” of Amazon.

      Comment by americaneditor — December 29, 2010 @ 3:51 pm | Reply

  3. It’s my understanding that many people have purchased the kindle out of curiosity, as with other ereaders, and that many of those ereaders still have alliances with printed books. And, as the point is made above, the barriers to entry into the ereader market is lowering continuously for publishers. It’s a fallacy to think that just because any type of shop offers the best deal at the moment that another won’t come along and pull the rug out. What is a worry is Amazon abailty to stay just ahead of the curve, get surfing I say …

    j

    Comment by jin graham — December 29, 2010 @ 12:19 pm | Reply

  4. The reason we must fear government monopolies and true (ie, governmental) censorship is simply that our governments, of whatever form they may take, are so hard to avoid. If the government of your nation says you may not say “Boogledorf is a dirty rat-fink,” then you have a much more difficult choice to face (“Should I emigrate? Should I face prison? Should I shut up?”) than if a retailer tells you it will not sell your new book, Boogledorf is a Dirty Rat-Fink. Then your choices are easier: “Should I sell it at these seventy-eleven other places, or should I cave in and not sell it? Um, yeah…”

    Granted, Amazon is huge. Granted, they have a lot of clout in the marketplace. But they’re not a government, and they’re not a monopoly. To make matters even better, people are beginning to see their other choices and options, and are beginning to take them. As more and more authors are shut out of the Amazon market jungle, more and more authors will begin to sell in other places. Buyers will find them, they will vote with their money, and ultimately perhaps Amazon will begin to adapt.

    In the long run, Amazon not selling a book is really no worse a problem than a small-town hardware store that doesn’t sell your favorite brand of work gloves, and the answer is the same one: things will be sold if people want to buy them, and they will be sold where people want to buy them.

    Levi

    Comment by Levi Montgomery — December 29, 2010 @ 3:00 pm | Reply

  5. It is silly to worry about Amazon when Google is by far the biggest book infringer on Earth. The book scanning project alone, has illegally scanned over 14 Million books, virtually all of them in-copyright and the vast majority in-print. This is criminal copyright infringement on an unheard of scale, so why are voices not being raised, asking the FBI/Justice to indict Google’s heads for copyright piracy? And we should be even more worried since Google has openly stated its intention to “scan every book on Earth” and to supplant Amazon as the world’s biggest publisher and book-seller.

    Want to write something useful? Make up a form letter for us to send to Justice Dept. demanding that Google, and especially it’s two crooks-in-chief, be indicted for criminal copyright infringement.

    Comment by Judith Samsen — December 29, 2010 @ 3:30 pm | Reply

    • As a consumer, I don’t care if Google violates every copyright law. However, as a consumer, I should care whether I am bestowing too much power on Amazon (or Google or Apple) such that they can dictate what I can read or not read.

      The ones who need to be fearful of Google’s copyright violations are the copyright holders, in many instance the big publishing houses. I think they are in position to fight their battle should they choose to do so. Authors who own their copyright need also be concerned and supposedly groups like the Author’s Guild are fighting for them. But no one fights for the consumers as a group.

      Comment by americaneditor — December 29, 2010 @ 3:55 pm | Reply

  6. [...] This post was mentioned on Twitter by Kindle Today, David Jedeikin. David Jedeikin said: Amazon: the pluses and minuses http://bit.ly/holKr0 #amazon #publishing #kindle [...]

    Pingback by Tweets that mention Question of the Year: Does Amazon Have Too Much Power? « An American Editor -- Topsy.com — December 29, 2010 @ 6:53 pm | Reply

  7. [...] An American Editor wonders if Amazon has too much power. [...]

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  8. You’ve written before that Amazon is the online-bookstore equivalent of WalMart, and I think that’s an apt comparison here. On the business side, Amazon, like WalMart, has an amazing amount of power to change the way all businesses work.(Cf. WalMart and RFID tags.) If Amazon demands that all pBooks or eBooks that it sells have characteristic Z, guess who else has to deal with characteristic Z? Every other bookseller on the planet. Because Amazon makes publishers so much of their money, they (the publishers) are to a certain extent bound by the whims of the Amazonian bigwigs. The things publishers do to placate Amazon may be detrimental to other, smaller booksellers, but they have little choice.

    On the consumer side, Amazon is just like WalMart. People can complain about the low wages and poor healthcare coverage given WalMart employees, the excruciatingly long wait at the checkout lines, and the freakishness of its late-night patrons til the cows come home, but still people go there in droves because it’s convenient, it’s what they know, and they have the lowest prices around. Similarly, the average Kindle owner won’t stop buying eBooks from Amazon on principle just because one of the books he bought disappeared from his Kindle, or because Amazon has refused to carry the newest books written by some author he’s never heard of. Amazon is just too convenient, too familiar, and too inexpensive.

    Comment by 4ndyman — January 4, 2011 @ 2:22 pm | Reply


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