As the Amazon Hachette contract dispute enters its Nth round this week Charles Stross weighed in and he is perturbed. Mr Stross is published by Orbit Books (a Hachette imprint) so naturally he is a tad biased in how he views the current situation.
Nevertheless, I think he missed a few important details.
Amazon’s strategy (as I noted in 2012) is to squat on the distribution channel, artificially subsidize the price of ebooks (“dumping” or predatory pricing) to get consumers hooked, rely on DRM on the walled garden of the Kindle store to lock consumers onto their platform, and then to use their monopsony buying power to grab the publishers’ share of the profits. If you’re a consumer, in the short term this is good news: it means you get cheap books. But if you’re a reader, you probably like to read new books. By driving down the unit revenue, Amazon makes it really hard for publishers—who are a proxy for authors—to turn a profit. Eventually they go out of business, leaving just Amazon as a monopoly distribution channel retailing the output of an atomized cloud of highly vulnerable self-employed piece-workers like myself. At which point the screws can be tightened indefinitely. And after a while, there will be no more Charlie Stross novels because I will be unable to earn a living and will have to go find a paying job.
Mr Stross neglects to point out that Amazon’s future plans also include outsourcing their anti-piracy efforts to the NSA. Amazon will weaponize their delivery drones and pursue a permanent solution to the piracy issue.
Amazon also plans to outsource their author management division to the CIA. All authors who sell through Amazon will be shipped to Guantanamo Bay, where they can be kept in a controlled and productive environment (you should see the specs for the electro-shock collars) and receive regular beatings so they know their place.
Seriously, does anyone know when Mr Stross stopped writing fiction in his books and started writing it on his blog? I ask because the dystopia he describes is not just implausible; it is impractical.
Mr Stross glosses over a number of points, including that if Amazon had a monopoly or monpsony, they would likely be sued by the DOJ. He has also mistakenly implied that Amazon uses DRM for its own means, when in fact it is optional on ebooks and in fact it is the publishers who require the DRM.
I would also suggest that you consider the possibility that the current ebook platforms are Android, iOS, and everything else – and not Kindle, iBooks, etc as Stross assumes.
It is far too easy for readers to install a second and third reading app on their device, thus circumventing the Kindle lock in. There are hundreds of millions of tablets and smartphones out there that aren’t locked in to Amazon, and I think the value of these devices as a pool of potential customers is underrated.
And finally, Mr Stross neglects to take his dystopia a step further and consider what would likely happen after Amazon achieves a monopoly. Pando Daily played out the scenario a couple months back:
As an example, imagine a Bezosian fantasy in which Amazon did in fact manage to close down every bookshop around the world and drive out of business every competing online retailer. Jeff Bezos honks with glee as his plans come to fruition and starts to demand vast margins from the publishers simply because he can. Is there any shortage of capital for someone to try and enter that business? No method by which someone could lash together a website and hire UPS to do the deliveries? Imagine that Amazon starts trying to charge 70 percent margins on books: Seriously, how long do you think it would be before there are a half a dozen people clutching VC checks with the aim of gnawing on some of that monopoly profit?
Because people can still enter the business, Bezos cannot exploit that monopoly that he’s created. He’s got to continue to act as if there will be competition to ensure there isn’t any. That is, you can’t exploit a contestable monopoly.
Hat tip to Chris Meadows for writing about this very topic back in March.
In short, that last stage of forming a monopoly, exploiting market control for financial gain, is probably outside of Amazon’s reach.
But Nate, what about audiobooks? Amazon is already behaving monopolistically in that market; they lowered royalty rates several months ago.
This is true, but Amazon doesn’t have a monopoly in audiobooks. Sure, Audible is the leading retailer of digital audiobooks, but as a reader reminded me only last week physical audiobooks are nearly as big of a niche in the US as downloadable audiobooks (or so says the AAP). Also, Amazon still has competitors in the digital audiobook market, including Random House Audio, Audiobooks.com, and Downpour.com.
You don’t have to deal with Amazon/Audible (and I don’t, thanks to their DRM issues).
Really, it comes down to a situation as simple as that. If you don’t like how Amazon is doing business, don’t deal with them. Shop elsewhere and sell your content elsewhere.
Yes, that will likely hit you in the pocketbook, and that actually brings me to another way in which Mr Stross is wrong.
If Amazon were really successful in its economic exploitation, they would engender a situation where creators would suffer no loss from avoiding Amazon entirely. You can be sure that Amazon is aware of this possibility, and that it will act as a check on Amazon’s actions. They will never push their demands past the point at which creators see a greater benefit from saying no.