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.

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