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Amazon Kill Publishing? Hah! And Again, I Say Hah!

So the news finally broke today that the long rumored Dept of Justice anti-trust lawsuit against the Price Fix 6 really does exist, and the DOJ is indeed suing the 5 publishers and Apple for colluding to fix ebook prices in the US market.

Surprise, surprise.

I haven’t covered this story in much depth but I have been reading all the hand-wringing coming from the legacy industry players like Scott Turow, Joe Wikert, and others. I’ve also been watching Twitter today as the news broke and many bemoaned the coming death of publishing as Amazon is released from the restrictions of agency pricing. So many of the tweets are based on half remembered, mis-stated myths about the ebook market that I cannot take it anymore.

Many things have been said about this story, but few of them are true. In this post I will correct that oversight. Here’s the big one:

Amazon isn’t going to kill publishing; they have in fact done more to create the new publishing industry than any of the 5 legacy dinosaurs being sued today.

I will work my way up to proving that premise, but first I will start on the smaller misconceptions. For example, there is an assumption made by many people decrying the end of agency pricing that Amazon can now do whatever they want with prices. Well, many appear to have forgotten that Amazon already could do that with a lot of the ebooks they sell because:

  •  Agency ebooks are not the totality of ebook market.

The reality of the matter is that the only publishers who got agency pricing were the ones big enough to bully Amazon into it. These are basically the few who are big enough that they could hurt Amazon by walking away. Everyone else gave Amazon the right to price the ebooks however Amazon wanted. That includes thousands of small publishers as well as hundreds of thousands of self-published authors.

And that leads me my second point, which is:

  • No one knows how many agency ebooks are currently on the market.

For the past week I have been asking around, trying to find out what percentage of the US ebook market was covered by these pricing restrictions.I did not find anyone who had been tracking this or knew of a way to find the numbers.

That means no one who has spoken out on this topic knows either the number of tittles or the dollar value of agency ebooks in the US market. No one who opposed ending the agency system has a single fact to back them up. (I really hope they don’t run their businesses in such a sloppy manner.)

  • If Amazon is out to destroy publishing, then where are the corpses of their victims?

Given that Amazon can already abuse many thousands of publishers and authors, I’m sure you can find hundreds of stories of Amazon crushing the will of the innocent. What, there are only a handful of stories, which stand out because they are uncommon? I’m sure that’s not right. Amazon is evil, so clearly they must be hurting everyone.

And that brings me to my final point.

  • Far from killing publishing, Amazon has created a whole new publishing industry.

Amazon has enabled literally hundreds of thousands of people to get their work to readers and get paid for it. No legacy publisher can make that claim, nor would they have even tried.

Are all the new authors good? No, but that point is irrelevant – unless you are willing to argue that everything put out by the legacy publishers  is also good. I am only crediting Amazon with creating the possibility; what everyone does with their opportunity is their business.

If anything, Amazon is out to kill legacy publishing. I am ambivalent to that; I don’t own any of the companies so I don’t have a horse in this race. My view if the Amazon-legacy  struggle would best be described as "root hog, or die".

And yes, self-pub existed before Amazon. You could even have submitted your ebook to Mobipocket or other ebook distributors. But you know and I know that self-pub didn’t become socially acceptable until Amazon launched the Kindle Store. That is when everything took off.

Now, I fully agree that Amazon is going to extract as much as they can from their dominant position in the market. But I also know that Amazon won’t be dominant forever. It won’t be too long before some faster, nimbler, and better competitor dethrones Amazon. It has happened before in other industries and it will happen in this one.

Update: This is an early response from Twitter that I thought summed my post up succinctly.

If you want to see how wrong current views are on Amazon’s dominance… rewatch "You’ve Got Mail" if you can stomach it.

And that is how I feel about the topic.

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Richard Adin April 11, 2012 um 3:01 pm

Nate, I do not know the answer to how many agency books there are, but Smashwords claims to have more than 100,000 titles, all of which are agency, and the last time I checked, which admittedly was years ago, the Big 6 were responsible for publishing half of all new titles published in the U.S. in any given year. Of course, part of the problem is that I do not know how many of the Big 6 titles are available as ebooks, but I would think it safe to guesstimate that at least 25% of all ebooks are agency books from all sources.

I happen to be opposed to ending the agency pricing system, although I do think that the Big 6 price their agency books too high. But I oppose it as a consumer and I think it is ludicrous to expect me to know the number of titles that are agencied.

As to Amazon’s victims, you neglect to consider that perhaps there have been no victims because of agency pricing. The question, which is unanswerable at this time, is whether there will be corpses in the absence of agency pricing.

You wrote: "The reality of the matter is that the only publishers who got agency pricing were the ones big enough to bully Amazon into it." Hmmm, aren’t there non-Big 6 publishers and distributors who use agency pricing? Such as Smashwords and IPG, neither of whom were/are big enough to "bully" Amazon?

BTW, did you read the article in the Seattle Times about Amazon’s predatory tactics? Have you read about the dispute with IPG and now the Big 6 over contract terms? It seems to me that bullying is a two-way street.

You claim that Amazon has creatd a whole new industry, but let’s give credit where credit is due: It belongs to Mark Coker and Smashwords who brought indie books on a massive scale to Amazon and other ebooksellers. That Amazon is creeping into Smashwords' territory is simply a tribute to Smashwords success, not to Amazon’s innovation.

In the end, just as you think the arguments of those of us who worry about an Amazon-centric publishing world lack facts, be sure that yours lacks them too. Welcome to the factless, but opinionated, world of blogging :).

Nate Hoffelder April 11, 2012 um 3:27 pm

Hardly any of those Smashwords titles are distributed to Amazon. A lot of authors handle that part themselves.

Nate Hoffelder April 11, 2012 um 3:34 pm

And while the Big 6 might account for half or more of the market, not all of their books are at risk of being discounted. Agency mainly affect fiction because prices are lower than for nonfiction like technical and textbooks.

Mike Cane April 11, 2012 um 3:10 pm

People, having come later to the online world than I have, tend to think that companies that dominate always will. Prior to the Internet, there were two online behemoths: The Source and CompuServe. To get online, you had to pay a PER-HOUR FEE (for all-ASCII at 300bps!). At some point, CompuServe gained the dominant position (ironically, due to a forerunner of Twitter: CB Simulator). Then along came AOL to change the game. You paid far less. Then the Internet came along and per-hour fees were GONE. The Source, CompuServe, Delphi, AOL, all the dominators, the huge companies, PFFFFFT!

Let’s talk software too. VisiCalc was the reason to buy an Apple computer. Then the IBM PC came long and Lotus 1-2-3 gave it the advantage over VisiCalc and Apple began to fall.

No one EVER stays dominant. The world does not work that way, period.

Especially in America — despite Police State impulses from those currently (and temporarily!) in charge — we favor freedom, we favor choice, and we favor a marketplace that as many people as possible can participate in. Whatever advantage Amazon has had is really over. Its glory days are past and not in its future. There’s Apple, B&N, Kobo, and many smaller competitors. Who knows what the breaking point will be that will ignite a demand from current Kindle book owners for pervasive knowledge of how to strip their DRM and transfer their books to another format? For all we know, DRM itself might fall — as it did with music! — and all that will be necessary is using Calibre.

So to all the panic-mongers: Piss off. I have lived this history. I know how the world works for real. Get your head out of your ass — or better, out of *our* asses, because you want us to be *your* puppet to protect *your* gravy train. We’re not your tools. Compete or drop dead.

George April 11, 2012 um 3:24 pm

Now, now, Mike, facts & logic will get you nowhere in this debate. The end of agency pricing is the end of Western civilization as we know it. 🙂

To take a line from 1984, the future will look like a picture of Jeff Bezos' boot stamping on a human face forever.

fjtorres April 11, 2012 um 3:45 pm

The biggest gain I see from the settlement of the lawsuit is that it will shut up all the whining about Amazon’s basket-pricing discounts; the settlement explicitly blesses selling ebooks below cost if the retailer so chooses, as long as they make money in the aggregate.
What I’m wondering is just how much *harder* the euro terms are, that nobody has signed up yet. Having admitted to conspiracy in the US it is going to be harder to fend off the Brusselcrats…
…and the State AGs and the Class Action suits…
Hel-looo east Texas!

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Richard Adin April 12, 2012 um 7:56 am

@Felix — You wrote: "the settlement explicitly blesses selling ebooks below cost if the retailer so chooses, as long as they make money in the aggregate." Here’s my question: How will they know whether Amazon makes a profit on ebooks in the aggregate unless Amazon opens its books, something Amazon has so far refused to do. An interesting problem, methinks.

Tyler April 12, 2012 um 8:35 am

I am not sure that means profit or if it means that they have to make a revenue from e books. That is, the total amount that they are selling e books at has to be higher than the cost for them. Profit is going to be after all expenditures are looked at and paid.

Lynne April 12, 2012 um 2:47 pm

To my mind, all of publishing (books, art, music, movies) is heading in the direction of lower-cost, higher-numbers-of-buys. It seems like the products (music, books, whatever) get cheaper, but you also see more artists doing more direct marketing of themselves, and reaping a higher percentage of the profits, and a hell of a lot more people doing the buying, so while the individual prices went down, the income remains somewhat doable.

Also, hells and shells, how MUCH of the cost of books was in the printing?? I mean, a huge percentage. As well as marketing etc. Marketing now is cheaper to do in the age of social networking (albeit it’s an uphill battle to get above the signal-to-noise ratio), and ebooks totally eliminate the cost of printing, with the replaced lower cost of electronic storage and bandwidth dropping precipitously all the time…

What I want to see is less crap (middlemen) between the artist/author and the consumer. I read a couple of books over last weekend that were utterly self-published – and recommended to me by my Kindle since I had read something similar (in the superhero genre, if you must know). I looked at the reviews (largely quite good), downloaded the sample and got hooked, and then wound up cursing because the third book in that series is only being written as we speak and I’d gotten through the first two already in a couple of days and wanted more.

Never would have picked that book up, probably, in a store. That author might not have even BEEN published in the store.

I’m not saying that Amazon is not some sort of ebil empire (look at their employment practices) but they’ve opened up a whole new world of buying books for me. Prior to my acquisition of a used Kindle (that a friend sold me cuz it wasn’t for her), I maybe bought a book or two a month if that. I like to go to bookstores but I rarely find the time. I never really got heavily into buying books online and getting them shipped, either.

Since getting the Kindle last Nov, I think I am in the range of 30-35 books bought. A few technical manuals and fact based books, and a whole GIANT library of scifi and fantasy, my escapist loves. The prices of those books was part of the appeal, too. Getting a second dog? I could buy and download a little book recommended to me by the foster mom THAT DAY. I don’t even have to look for it online and wait for it to be shipped!

Call me crazy but that new way of doing things has a huge benefit to a lot of people. I’m totally hooked, and part of it is the new manner I can find and instantly buy and download new authors.

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John Stackhouse April 16, 2012 um 3:46 am

As we say in Oz, "Whacko! the Diddleoh! And "Bring it on!!"

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