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The Bookseller: Amazon’s Monopoly Must be Broken

The anti-Amazonamazon frown rants are at full strength today at The Bookseller’s FutureBook Conference.

Seni Glaister, CEO of UK indie bookseller The Book People, has said that it is impossible to compete with Amazon. She calls on the UK government to intervene. From The Bookseller:

"Amazon is justified in thinking it owns the e-book market, they created it," she said. "But as a reader, as a consumer and as a parent, this dominant force makes me extremely nervous. Amazon is now dominant to the point it is now unassailable."

She said industry leaders had done their best to step in and help to shift the power.  However, "without significant government intervention, it is impossible to compete", she said. "Without in-app purchasing, it is impossible for competition to flourish."

The Book People had felt a duty to be in the e-books market, but it was 'impossible" to do whilst contending with Amazon’s locked-in system, Glaister said. "We must convince the government to intervene and remove some barriers to competition. Does it matter there are only one or two e-book players? Yes it does. If we do not try to intervene and change then we will find ourselves with only one player. That would be a disastrous and sad ending."

If we take her speech to its logical conclusion, she thinks B&N, Kobo and all of the indie ebookstores are doomed.  She also thinks that the folks who started competing ebookstores like Oyster, Bilbary, The Reading Room, and Zola Books (just to name 4) are foolish for starting companies that are inevitably going to fail.

And she must also think that the venture capitalists have wasted the millions of dollars they invested in each of the startups mentioned above.

I think she’s full of it.

While I don’t claim to have a crystal ball which will tell me the future of the ebook market, I do think that all of the interest and money going into indie ebookstores is worth noting.  There are investors that think that indie ebookstores can compete with Amazon, and they’re putting money where their mouth is.

I’m not sure that the indies will succeed, but interest in new startups and the millions of dollars of capital does make me think that the chance of success is better than zero.

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Brian O’Leary November 21, 2013 um 8:38 am

Agreed; the claims are a bit over the top. Last year in the U.S., which is probably two years ahead of the U.K. in its transition to digital formats, eBooks across all channels represented 12.3% of revenue. The share is higher in trade, but it is less than a quarter of the total. No doubt Amazon holds the majority of the share right now – the popular guess is 70% – but it’s in a single format. To the extent that Amazon is able to hold on to that share, it is aided and abetted by publishers who sell them eBooks and go along with the proprietary formats that lock users into the Kindle ecosystem.

Acknowledging that reality doesn’t make for a good stump speech, though.

flyingtoastr November 21, 2013 um 9:03 am

You do post in every other blog that BN is doomed… I distinctly remember you using the phrase "BN might not be around next year" for the last 3 years.

Nate Hoffelder November 21, 2013 um 9:09 am

One, B&N is dying as a result of their own mistakes, not because it is impossible to compete with Amazon.

And two, nope. I’ve only been saying that B&N is in trouble since early 2012, not since 2010. I was concerned about the buy one get one sales and what that said about their hardware business. And given that Nook Media has since entered a down spiral, my concerns were both valid and prescient.

fjtorres November 21, 2013 um 12:04 pm

That word doesn’t mean what they think it does.

By their own admission, Amazon has no monopoly since they only command two-thirds of all sales. In the US alone, the part of the ebook market that Amazon *doesn’t* control adds up to US$600-800 million. With net margins in the 25% range that is something close to $200m profit to be divided by those willing to *work* to earn it, much as Amazon does with their share of the business.
Which is why there is no shortage of investors willing to get into ebooks. There’s good money to be made if you give consumers a good product at a good price.

The real problem is legacy retailers *unwilling* to work for their profit demanding that the government protect them from their customers' choices. Their whining is just veiled pining for the days when all they had to do was stock a few dozen titles and consumers had no choice but to buy what they stocked at whatever they chose to charge. Now, consumers have other options and exercise them so they want government to step in and "save" them from their customers.

yuzutea November 21, 2013 um 3:08 pm

" Glaister also said that with greater competition e-books would find their "natural price" in the market, something that has been "denied" to them so far."

Doesn’t that suggest that prices will go down, if there is greater competition?

Many people are reading ebooks on tablets, smartphones, and computers anyway, and these are not locked-in platforms. I suspect the popularity of Amazon on those platforms is not about lock-in.

fjtorres November 21, 2013 um 4:33 pm

It never has been.
For the first 4 years of the Kindle age, Kindle was the only standalone reader on the market–no PC required; for most of the last 7 years they have had the largest bookstore with the lowest *average* prices, best customer service, best returns policy, and dedicated readers roughly as good as any, often better.
They are simply the *safest* buy.
If you are tech-savvy or concerned about interoperability or ebook plumbing, you can easily make a case for any of several competitors, but most consumers aren’t.
And the more the industry whines about Amazon domination, the safer Kindle looks to those mainstream buyers.
The more they complain about Amazon ebook prices, the more people will assume their prices are *always* lower (which,of course, they aren’t) and go straight to Amazon for their ebooks.
Amazon’s domination is hardly overwhelming but if those fools keep it up, they’ll drive enough business their way that it might get there in another year or two.
When it comes to ecosystems, nobody wants to be caught in the shallow pool if they can help it and puffing up the top dog is a good way to send customers their way.

Nate Hoffelder November 21, 2013 um 5:39 pm

The first _two_ years, but yes.

fjtorres November 21, 2013 um 6:04 pm

I was thinking of the Adept "epub standard" that Amazon is constantly decried for not kowtowing to.
But yes, Nook caught up to Whispersync a lot sooner than the interoperability dwarves.

Nate Hoffelder November 21, 2013 um 6:25 pm

Well, Sony released the PRS-900 very late in 2009, and it supported Adept Epub and had a 3g data connection. But the second device (not counting the Kobo Wifi) to do so was the Kobo Touch, which you were correct in dating it to mid-2011.

David Haywood Young November 21, 2013 um 7:04 pm

Well, I still say they’re ALL doomed. There’s no obvious reason these centralized systems have to dominate internet sales at all. Set up an easy-to-use system for content owners to offer their wares from wherever they choose to host ’em, and handle sales by at least one common protocol, and the only central system of use will be an index…which will really only be useful to most insofar as it is also a recommendation engine.

IOW, hosting/payment-processing/recommendations for digital content can and therefore will all be handled separately, with room for lots of players at many levels. The only reason it isn’t happening yet is that so many people are still new to this "internet" thing. It lends itself very well to distributed networks, for obvious reasons.

So…this is a paradigm shift that will make what Amazon has done to traditional publishers look minor. I don’t think it’s more than a few years away…with "a few" being countable on the fingers of one hand.

Of course opinions vary in these and other matters. {8′>


Nate Hoffelder November 21, 2013 um 7:58 pm

Amazon’s too good at selling stuff to be killed off by a distributed sales platform. That network of sellers won’t collectively be as good at selling as Amazon. And besides, if it looks like one of the minnows is going to become serious competition then Amazon will simply buy the minnow. And that includes the distributed platform.

Speaking of which, there already is a distributed sales platform; it’s called Gumroad. And it’s not the only one.

David Haywood Young November 22, 2013 um 2:48 pm

Well, you could be right. And I could be wrong. This happens often; you should see what happens to me in poker games.

That said? To me this sounds like you’re saying Amazon can shovel back the tide. Once upon a time only universities had much of a web presence. Then businesses started getting onboard. People started realizing they could put up a homepage for themselves or their business…but it was a little hard, and still the province of early adopters. Then Facebook (for example) came along, and made it easy, and techies everywhere got all frustrated but saw their grandmothers getting online in spite of it.

I think Facebook has lots of built-in "stickiness" (as we used to call it), but it only works because it’s free to the end user and because FB has managed to crowdsource their content in an interesting way. The design of the system is essentially public, and it would be so easy to build a new version with similar functionality if people were motivated to leave FB. So FB has to watch out for that.

Amazon, I think, is going to run into a similar problem–but they’re already charging lots of money. A distributed system is technically very easy to build (and in fact by coincidence a friend of mine got some funding to build part of one just yesterday–only starting off with streaming audio content rather than ebooks).

So…this doesn’t matter as long as most people look to Amazon to find content. But all it takes is a couple of big-name authors going an even-more-indie route, because Amazon is taking huge "royalty" chunks away from authors/publishers. I’m fairly sure Smashwords, and other distributors, would send stuff to a different sort of network without requiring a lot of convincing. And there’s no inherent reason for the currently high royalties–they’re not for hosting the content, or for processing payments. They’re for an index, aka a recommendation engine.

In fact all it takes to kill the current ebook companies is somebody with an unaffiliated recommendation engine that people enjoy (or an online review system–possibly the same thing), plus another player who sets up a much better deal for authors/publishers. Just how long will this remain "impossible"? It gets easier to design and build the technical bits every year. Seriously, I could do it myself. And lots of people are better at that sort of thing than I am.

This, to my mind, is a strong candidate for the primary reason Amazon bought Goodreads. Amazon’s business model for digital content is extremely fragile, and a successful Goodreads (with links to any retailers an author or publisher chooses to include) had the potential to completely destroy ’em.

So…that’s my take. I don’t expect anyone to agree with me. But we’ll find out fairly soon whether I was right. I’d have said "eventually" but in my experience these paradigm shifts happen very quickly when the time for them is right.


Nate Hoffelder November 22, 2013 um 2:51 pm

Amazon can only shovel back the tide so long as they have the money to buy startups. Did you see my post this morning?

David Haywood Young November 22, 2013 um 2:56 pm

Just now 🙂

Whateveragain November 22, 2013 um 7:50 am

So has Amazon started paying a decent level of tax yet?

Nate Hoffelder November 22, 2013 um 7:58 am

If by decent you mean "legally required to pay", then yes.

Whateveragain November 23, 2013 um 10:52 am

Obviously, I don’t mean that. Is that what you think 'decent' means? I’ll give you a synonym: Honest.

Anne November 23, 2013 um 11:18 am

Do you pay more tax than you’re legally required to pay?

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