Home » Amazon, Apple, Big Publishing, Ebooks, Self-Publishing » E-Book Ruling Gives Amazon an Advantage

E-Book Ruling Gives Amazon an Advantage

12 July 2013

From The New York Times:

Jeff Bezos, the founder of Amazon, loves disrupting markets. In that regard, he must be having a delightful summer. The book business, once so mired in the past it seemed part of the antiques trade, is up for grabs.

A federal judge ruled on Wednesday that Apple had illegally conspired with five of the six biggest publishers to try to raise prices in the budding e-books market.

The decision came two days after Barnes & Noble lost its chief executive and said it would not appoint another, signaling that the biggest chain of physical bookstores could be immediately broken up.

The verdict in the Apple case might have been a foregone conclusion, telegraphed by the judge herself, but it emphatically underlined how the traditional players in the book business have been upended. Only Amazon, led by Mr. Bezos, seems to have a plan. He is executing it with a skill that infuriates his competitors and rewards his stockholders.

. . . .

The publishers settled long ago, protesting they had done nothing wrong but saying they could not afford to fight the government. But it might be a long time before they try to take charge of their fate again in such a bold fashion. Drawing the attention of the government once was bad enough; twice could be a disaster.

“The Department of Justice has unwittingly caused further consolidation in the industry at a time when consolidation is not necessarily a good thing,” said Mark Coker, the chief executive of Smashwords, an e-book distributor. “If you want a vibrant ecosystem of multiple publishers, multiple publishing methods and multiple successful retailers in 5, 20 or 50 years, we took a step backwards this week.”

. . . .

 “Amazon is not in most of the headlines, but all of the big events in the book world are about Amazon,” said Paul Aiken, executive director of the Authors Guild. “If the publishers colluded, it was to blunt Amazon’s dominance. Barnes & Noble’s troubles may stem from a misstep with its Nook tablets, just as Borders’ bankruptcy might have been hastened by management mistakes, but its precarious position is that of any rent-paying retailer facing a deep-pocketed virtual competitor.”

. . . .

 Amazon executives are not much for public debate, but they argue that all this disruption will ultimately give more money to more authors and make more books more widely available to more people at cheaper prices, and who could argue with any of that?

. . . .

 But the more pressing concern for the industry is the fate of Barnes & Noble.

. . . .

“If all of those corporate outlets vanish, there is suddenly a hell of a lot less space devoted to showcasing a large number of titles,” said J. B. Dickey, owner of the Seattle Mystery Bookshop. “We’ll probably see a continuing shrinking in print runs, maybe fewer titles published, fewer authors published and the New York houses retreating into the known best-sellers. Which means more novice and midlist authors scrambling to find a way to stay in print and more authors self-publishing their print books — or more likely releasing their works as e-files.”

All of that sounds dire.

Link to the rest at The New York Times

Amazon, Apple, Big Publishing, Ebooks, Self-Publishing

40 Comments to “E-Book Ruling Gives Amazon an Advantage”

  1. But the more pressing concern for the industry is the fate of Barnes & Noble.

    “Screw the writers and their need for money, keep your eye on the ball, people! What about us?!?!?!?”

    With fewer writers, guy, you shouldn’t need that much space. Upside to everything!

  2. “…releasing their works as e-files.”

    Yes, “files,” not “books.” Because everyone knows that “real” books are made out of paper. ;)

  3. I just realized these guys are doing Mr Bezos a great favor: they are pumping Amazon stock to record levels. :)
    There is a whole camp of Amazon detractors and shorters who are eagerly awaiting the day Amazon shareholders get tired of the long game. With every NYT screed on how Amazon is going to take over publishing, that day retreats a little bit further into the unknowable future.
    Plus, with his enemies doing all the pumping, Bezos can monetize a nice chunk of stock for when the publishing apocalypse fails to materialize.
    Truly he has been blessed with “special” enemies. :)

  4. Said Mark Coker, the chief executive of Smashwords, an e-book distributor. “If you want a vibrant ecosystem of multiple publishers, multiple publishing methods and multiple successful retailers in 5, 20 or 50 years, we took a step backwards this week.”

    Thanks to Indie Publishing there are far more publishers than ever before and I’m certain that they’re using multiple publishing methods.
    Now as for “multiple successful retailers in 5, 20 or 50 years” that’s really a function of the marketplace and the players within.
    The DOJ did their job. It’s not their business to worry about the effect of that on the miscreants they prosecute.
    And 50 years?
    Hell, that’s several lifetimes given the current pace of technology and change.

  5. One side point: Amazon isn’t currently rewarding shareholders. In fact, shareholders are being remarkably patient with its strategy to grow at the expense of profits.

    What that strategy does, though, is make it very difficult to compete with Amazon. What is remarkable about the current situation in publishing is that its competitors in publishing and book selling are *so* unprepared to compete with it on so many levels.

    I’d be happy if Amazon had some real competition, especially in the ebook market. But instead of that the publishing world gave us agency pricing. Brilliant.

    • Bill Bonner, an economics commentator I am very fond of, refers to Amazon (as an investment) as “The River of No Returns.” I find that very funny.

    • Since the beginning of 2012, Amazon’s stock price has increased from about $180 per share to over $300. If I were an Amazon shareholder, I would feel very rewarded.

      Tech companies that are pushing for growth don’t typically pay dividends. They’re always a share-price growth investment.

      • Didn’t Buffet say any company paying dividends instead of growing the business with those profits was doing it wrong?

        Dan

        • I remember a TV show years ago where they took some management consultant type to a small British car company, and he told them all the wonderful things they could be doing to massively grow the company.

          Their response was something along the lines of ‘Why would we want to do that? We have orders for three years and steady jobs, how would that benefit us?’

          Many companies are already just the right size and quite happy to give money back to the people who funded them.

          • Buffet’s statement was aimed at business leaders who, in his opionon, weren’t smart enough to figure out what to do with profit except give it away.

            The Bristish car company not withstanding…grow or die. Even if you’re standing still, happy, everyone else is moving forward. Leaving the standers behind.

            I’m curious to see where that Bristish car company is today.
            Owned by Tata Motors?

            Dan

            • What if the smartest thing to do with profit is to give it away? I’ve worked for companies that failed because they grew too fast.

              I think it was Morgan Cars, but I’m not 100% sure. They’re still around and still seem to be privately owned as far as I can tell from Wikipedia.

              Buffet buys and sells companies, so he’s obviously looking for different things than the people who run and work for those companies.

          • And what’s the “right size” for a Global Online Mall operator?

            • One planet? Local supply and delivery, no expensive boost out of gravity well… all sorts of advantages.

              • Nah, one solar system. After all, as long as you have miners in the asteroid belts and colonists on Mars, Luna, and some of the Jovian moons, they’re going to be interested in ordering non-local items. Captive audiences, if you will, and great audiences for e-goods, as they don’t have much room in the habitats to store books, but bytes will be easy on the quantum computers.

                Although, if we get faster-than-light, that opens up the supply chain to all the exoplanets without causing the time-lag logistics headaches to be measured in years.

  6. ‘All of this sounds dire.’

    Lol sure, but not for me. You break the law, you get the clamps. My I offer the serenade of the world’s smallest violin for them? Gratis since they’re likely strapped for cash (in their minds)

  7. Call me crazy, I’m thinking that five major publishers and one of Amazon’s biggest competitors (Apple) in the ebook market choosing to focus on committing antitrust violations by colluding to raise and fix ebook prices was where the step backward was taken and what gave Amazon (and a lot of indie writers) a big advantage.

    I mean, imagine how different things would be in 2013 if, instead of following that path in 2009, instead those 5 big houses and Apple had each instead focused on competing effectively in the evolving marketplace with the new technologies and distribution mechanisms that were emerging.

    I know, I know. CRAZY. But that’s how I see it.

    • @ Laura –

      This. +10.

    • Similarly, the people who try to justify how “Apple got involved in price-fixing because Amazon couldn’t be beaten any other way” are:

      1) Making Apple and the 5 publishers look pretty weak, stupid, and un-innovative that they can’t come up with anything better – as you pointed out (and without even going into how stupid they came off with the naive grade-school way they went about their price-fixing during the entire process)

      2) Forgetting that Amazon didn’t throw up their hands when they first came into the market (any market, actually) and declare the only way they can beat the existing competition was to illegally collude. I seem to remember instead that Amazon has taken a lot of chances and done a lot of innovation in the face of doubts and criticisms. You know, the stuff Steve Jobs and Apple faced when they rolled out stuff like the iPod, iPhone, and iPad.

      Amazon got to where they are by taking chances in the marketplace. A lot (not all – such as their A9 search engine) of their big gambles have been rewarded.

      Nothing was stopping Apple from spending a fraction of its $150 Billion in cash to out-compete Amazon on price and see which company blinked first.

      But Apple protects its high profit margin. No matter what people within and without Apple like to say about “well, it’s really just about making cool stuff – money doesn’t matter” – money matters a lot at Apple and always has. It’s a business and not a charity. And its high profit margins are what it has always strived for in all products. The company does not like low-margin business, let alone loss-leading ventures.

      So they’d rather break the law than break a cultural rule about selling things for less than a fat profit. Nothing wrong with the latter, except when the former happens.

      • Smart companies learn from “failure” and find ways to repurpose those sunk-cost efforts.

      • “(and without even going into how stupid they came off with the naive grade-school way they went about their price-fixing during the entire process)”

        Seriously. I commented to my partner that I couldn’t write this — nobody would believe that people could be that stupid.

    • Oh, what you said. Money quote from the article for me: “The book business, once so mired in the past it seemed part of the antiques trade, is up for grabs.”

  8. Wow.

    There’s actually a section in there comparing Amazon to Orwell’s 1984.

    Amazon Derangement Syndrome on steroids.

    This is such a one-sided distorted piece of alarmist propaganda, I’m alittle blown away that any newspaper would print it. Even the New York Times.

    I have to add I am seriously disappointed in Mark Coker. Standing behind the Big 5? I know he has an issue with Amazon, but to excuse the behavior of Publishers is allying with a group of corporations that has exploited authors for decades, and recently committed a felony action in order to continue to do so. I guess I expected him to be more of an author advocate than that.

    As the judge said in the ruling, if they had an issue with Amazon, there is a formal complaint system. For some reason, articles like this always seem to skip over that minor point, and imply that Publishers had no other options but to cost-fix, raise prices and cost the consumer money.

    • Patricia Sierra

      I had the same reaction to Mark Coker. Surprised me.

      • Mark Coker’s a nice guy, and he’s done a lot for indies, but he’s rabidly anti-Amazon and pro-Apple. It tends to blind him to some stuff … for example, collusion and price fixing. :D

        • Agree.

          “If the publishers colluded, it was to blunt Amazon’s dominance.”

          Or screw customers.

          Dan

        • Dan, glad you think I’m a nice guy. :) Yes, I’m pro-Apple. I’ve personally witnessed what they’re doing to support the entire indie community and I’m constantly impressed. I’d disagree about your characterization about me being rabidly anti-Amazon. I’m not. Amazon, more than any other player in this business, provided the fuel for the ebook revolution. They’re probably the smartest, most brilliant, most impressive player out there. For anyone who cares to take the time to research, I’ve said many complimentary things about Amazon over the years both in writing and in public statements about their store, their discovery, and their algorithmic smarts. My criticism of them has been on only a couple points. 1. I take issue with their push for exclusivity with KDP-Select, but at the same time I understand why their doing it, I admire their success with it, and I’m pleased for the authors who have found success with it. But I’ll never think that exclusivity with any retailer is in the long term best interest of the indie author community. If Apple launched a similar program, I’d speak out against it too. 2. I’ve spoken out against Amazon’s draconian price matching. Too many times I’ve seen them punish authors for pricing mistakes made by other retailers. Amazon know it causes those authors to make decisions that are beneficial to Amazon and harmful to the author and affected retailer, such as removing books from other retailers.

          We’ll have to agree to disagree on the DoJ actions. I think when publishers were given the Agency model, they should have used it to lower prices. Instead, they got greedy. Indies immediately used Agency to lower prices. I spoke with the DoJ in advance of the trial and provided the data to support this, but in retrospect I think they were hell bent on nailing publishers and Apple to the wall. I blame publishers for setting prices too high, but I don’t blame Apple for creating a superior selling model with Agency, and I don’t think they conspired to raise prices. For the entire time we’ve been working with Apple, they’ve always supported FREE ebooks without restriction or strings, and have always given incredible promotional support to lower priced ebooks. They pay 70% on prices under $2.99, and have done so since the launch of the iBookstore. If that’s not showing support for lower prices, I don’t know what is.

          I’m glad they plan to fight it.

          • Mark, you’re doing what I’ve seen you do before: turning the DOJ suit into an attack on agency, when you know damn well it’s not.

            You told me last year that you didn’t believe that Apple conspired, but that if they did they should get the screws put to them. You said the same thing about the publishers. You clearly believed at that time that nothing underhanded was going on. Well, the latter colluded beyond a shadow of a doubt, and the former was just found guilty in a court of law (and they did this to RAISE prices, which they practically bragged about), and you just gloss over it.

            For a man in your position and with your platform, that shows an incredible bias and tacit approval of criminal conduct for the horse that you’re backing.

            I do think you’re a nice, intelligent, friendly dude, but impartial you ain’t. Not anymore.

            • Dan, I’ve never claimed to be impartial, but I do have an honest opinion based on the evidence presented at trial, and personal experience negotiating with Apple prior to the launch of the iBookstore. Did Apple conspire to raise prices? IMO, no. Did they desire higher prices? No. Did they offer publishers lower earnings if they priced books under $2.99? No. Did they know publishers were upset about their books being priced below cost by Amazon? This was public knowledge to anyone who was following industry news. Did they know that publishers would sell at a list price higher than the discounted prices? Probably, that would be expected from publishers who at the time wanted greater price parity between print and ebooks. Did Apple design a program they thought would appeal to publishers but also meet Apple’s model of earning an app-like 30% commission? Yes, of course. Does any of this constitute collusion to raise prices? No, not in my opinion. If publishers had used agency to lower prices, or to match retailers’ then-discounted prices, would Apple have been bent out of shape, or felt like the publishers let them down? Definitely not. I honestly don’t believe it was Apple’s intent to conspire to raise prices. Even before the DoJ suit was a twinkle in anyone’s eye, Apple was showing its support for lower prices with unfettered support of FREE, 70% for sub-$2.99 books, a pricing system that capped maximum prices, and on-store merchandising promoting low cost titles. Let’s blame the publishers for pricing too high, but don’t blame Apple for how publishers used Agency.

              I do think a lot of this is about agency. The DoJ said it wasn’t about agency, yet agency and its effects were central to the case if you look at the charts presented by the prosecution.

              There’s a myth in some quarters that retailer discounting under the wholesale model somehow constitutes a public service. It doesn’t. Wholesale pricing of ebooks doesn’t guarantee discounting, and when the retailer doesn’t discount and takes the full 50%+ margin, they’re taking that cut from authors, publishers and customers.

              • Let’s blame the publishers for pricing too high, but don’t blame Apple for how publishers used Agency.

                The problem with that is that you are ignoring the facts. Apple created the mechanism (agency + MFN, implemented at the same time by 5 big publishers) that enabled the higher pricing for new release books. Apple sent the exact same price list to each publisher with an email that said (in effect) “Sign with us and this how much you can charge for your ebooks at all retailers.” Then Steve Jobs bragged about it on tape.

                Apple’s email listed specific titles with their then current price at Amazon and B & N. The next column listed the higher price that would be fixed by Apple’s contracts. Steve Jobs used one of those titles in his iBookstore demo at the iPad launch. When Walter Mossberg asked him about the discrepancy between the iBookstore price and the Amazon price, Jobs answered with his usual supreme confidence that Amazon would not have the book for $9.99. And guess what? He was right.

                Then, even before the iBookstore was open, prices for the books covered by Apple’s price list were forced on all the other retailers. Prices for specific titles listed in the Apple email were fixed at the higher price. Do you really think that any rational person will believe that it was all a big coincidence? dictated to the publishers how much they could charge and the publishers dictated to the other retailers. It’s as obvious as anything could possibly be. They left a paper trail at every step.

                You also say that the trial was about agency pricing. If the trial was about agency pricing, why was agency pricing specifically permitted by the settlement agreements? The parts of the price-fixing scheme that were prohibited were the MFN clauses and the use of agency to prevent retailer discounting of specific titles.

                By the way, when you say that under the wholesale model “when the retailer doesn’t discount and takes the full 50%+ margin, they’re taking that cut from authors, publishers and customers”, you are making a false statement. The additional amount that the customer pays comes from the customer. Not from the publisher or author. Surely you know that.

              • Apple’s people – Eddy Cue and Steve Jobs – were well-tuned into the conflicts going on between the publishing industry versus Amazon to understand that they could leverage that into a safe bet for Apple:

                * Issue terms to the publishers that would “encourage” the publishers to raise prices, thus guaranteeing higher profits for Apple (same 30% margin against a higher pricing point)

                * Cover the downside because if someone tries to price-fight, Apple can price-match and still get 30% – albeit at a lower pricing point.

                The latter encouraged publishers to raise prices.

                So did all of the “wink-wink, nudge-nudge, nothing to see here” communications between Apple and the publishers – with Eddy Cue probably very certain the publishers would disseminate between themselves.

                Apple is the guy who walks into a room of a bunch of guys scheming about how to hold up a jewelry store. If only they had a few guns and stocking masks, it would probably be easier. Apple tosses a few guns and stocking masks into the room and walks out, with a little wink-wink, nudge-nudge. And afterwards holds up protesting hands, “Hey, I didn’t tell *anyone* to go hold up a jewelry store! What are you saying?”

                Apple and its executives are *not* stupid.

                Arguing that they went into negotiations blameless and lamb-innocent and totally shocked-shocked that the publishers would take Apple’s proffered ball and run with it makes Apple look even worse:

                http://www.youtube.com/watch?v=-Gf8NK1WAOc

                The judge was not convinced. And chances are that appeals courts are not going to be terribly persuaded by the “Hey, I had no idea!” act.

                But if Apple wants to change its public image from being a smart, innovative company to one run by bumbling idiots who run around like bulls in a china shop and are utterly clueless about what goes on in the business world around them, they can see where that may lead them. I’d prefer people to respect Apple. And trying to argue that your company and its executives are naive and stupid isn’t a way to accomplish that.

                Not to mention PG’s own assertion that Apple had a myriad of ways to actually compete against Amazon. And rather than doing something traditional like price-matching, they engineered a ham-handed process that looked a lot like price-fixing – and they were quite open about it as were their publishing partners. That’s like Apple entering a car race where they know one team has the fastest car. Rather than building their own fast car, they meet with the referees and organizers of the race and devise ways to re-engineer the racing rules. Not an impressive way to compete, in my opinion.

                • I’ll also add that Apple didn’t try to just get one or two of the Big Six to participate in their pricing model. They were adamant about getting *all Six* – that was the entire key to the thing working.

                  If Apple’s agency plan was the superior competitive variant, why not just make sure one or two publishers got on board – and then let Apple’s superior business model devastate the competition? Because it wouldn’t have worked.

                  That’s why Eddy Cue complained to Steve Jobs:

                  “There is no answer because Random House doesn’t want to go agency and is in bed with Amazon. Until we get them, we can’t succeed.”

                  http://news.cnet.com/8301-13579_3-57589715-37/apple-holds-a-quarter-of-e-book-market-eddy-cue-says/

                  And then we have this:

                  “After Random House finally agreed to a contract on Jan. 18, 2011, Eddy Cue, the Apple executive in charge of its e-books deals, sent an e-mail to Mr. Jobs attributing the publisher’s capitulation, in part, to “the fact that I prevented an app from Random House from going live in the app store,” the filing reads.”

                  http://www.nytimes.com/2013/05/15/technology/us-now-paints-apple-as-ringmaster-in-its-lawsuit-on-e-book-price-fixing.html

                  And the flurry or articles before and during and after the iPad release that noted that book prices would be rising:

                  “With Apple, under a formula that tethers the maximum e-book price to the print price on the same book, publishers will be able to charge $12.99 to $14.99 for most general fiction and nonfiction titles — higher than the common $9.99 price that Amazon had effectively set for new releases and best sellers. Apple will keep 30 percent of each sale, and publishers will take 70 percent.”

                  http://www.nytimes.com/2010/01/28/business/media/28media.html

                  “Amazon has set a basically standard price for new e-books at $9.99, which publishers feel undermines the value of new books, which generally retail in hardcover at about $25. Apple was asking publishers to price new e-books at between $12.99 and $14.99, according to the Journal. Publishers would keep 70% of the sale price, with the rest going to Apple.”

                  http://www.crainsnewyork.com/article/20100127/FREE/100129897

                  Plus this:

                  ““There’s a lot of heat between Apple and Amazon and Google,” an adviser to Jobs said. “Steve expresses contempt for everyone—unless he’s controlling them.” An Apple insider said, “He thinks Amazon is stupid, and made a terrible mistake insisting that books should be priced at $9.99.”…Why, Mossberg asked, should consumers “pay Apple $14.99 when they can buy the same book from Amazon for $9.99?”

                  “That won’t be the case,” Jobs said, seeming implacably confident. “The price will be the same.” Mossberg asked him to explain. Why would Amazon increase prices, when consumers were buying so many books? “Publishers may withhold their books from Amazon,” Jobs said. “They’re unhappy.””

                  http://www.newyorker.com/reporting/2010/04/26/100426fa_fact_auletta

                  Which resulted in “an e-mail exchange between Carolyn Reidy, CEO of Simon & Schuster, and Elisa Rivlin, then the company’s general counsel.

                  “I can’t believe that Jobs made the statement,” Rivlin wrote. “Incredibly stupid.””

                  http://tech.fortune.cnn.com/2013/06/05/apple-jobs-ebook-video/

                  We’re left with believing one of the following:

                  * Apple’s executives including Steve Jobs didn’t read the major news articles up to, through, and after the iPad release that talked openly about the switch to agency and the pricing effect it would have. They were completely naive about everything. Had no idea the publishers would collude on pricing, even despite the fact that Apple insisted that *all Six* big publishers all come on-board and provided them all with the exact same terms and were concerned when Random House was the holdout.

                  * Apple’s executives including Steve Jobs knew exactly what they were doing and projected considerably arrogance – which is a common thing that happens to powerful companies.

                  Apple isn’t the scrappy underdog anymore, and hasn’t been for years. What Apple says about its motivations can be taken with a very big grain of salt. Tim Cook didn’t rise to the position he is because he went to China and worked out aggressive logistics agreements for the purpose of making “cool products” – he is highly responsible for the high profit margins Apple has garnered on its products.

                  Apple doesn’t leave its profits overseas because it’s solely interested in making “cool products” – it’s a corporation, after all. Ditto for its investment arm, Braeburn Capital:

                  http://www.guardian.co.uk/business/2012/oct/26/apple-investment-manager-braeburn-capital

                  And the reason Apple used its leverage to provide the method and the incentive for the publishers to fall in line is because Apple doesn’t compete on price. They do everything they can to protect and promote their primary business interest – which is concentrated in high-profit-margin products and services.

                  We’ve all seen corporate arrogance rise to the level of Apple believing they can take on the DOJ given the weight of evidence against them and the publishers. From Leona Helmsley proclaiming that only the little people pay taxes, to Enron’s Jeff Skilling joking during the California energy crisis and rolling blackouts that at least the Titanic kept its lights on while it was going down, to Bill Gates’s confrontational depositions in the 1990s.

                  When you Google “famous arrogant CEOs” or “arrogant CEOs” we see Apple heavily featured among some of these others, including some current and former tech titans.

                  I don’t think this is the image Apple ought to try to portray. Nor do I think they ought to be trying to persuade people they are either naive or stupid in their business dealings with no idea of consequences.

                  Disclosure: I own no Apple products.

                  Further Detail: I’ve been building computers for 20 years and do PC gaming – both of those preclude using an Apple. I don’t buy Alienware for the same reason I don’t buy Apple – the 200%+ markup over the cost of components. I do not like laptops. I bought a Chromebook for traveling because I needed something light, inexpensive, quick to turn on, and prefer a keyboard over a touchscreen. I have no interest in buying a tablet from any manufacturer at any price. I simply have no use for a tablet – the Chromebook emulates the internet/email capabilities of a tablet without the media/game functions, but the former are all I need at that size of a device, and again, I prefer a keyboard. I intended to buy an iPhone last year when I decided to get a smartphone, and after trying it out and then trying the Samsung Galaxy S3, I went with the latter solely because I didn’t like the iPhone’s screen which was too small. Likewise, the larger screen sizes like the Galaxy Note are too big for my tastes.

                  Apple makes great products, and I recommend them to people based on what the individual wants out of a device. Where Apple succeeded was in recognizing what tech people understood throughout the 1990s – that the WinTel push-marketing of forcing out more powerful hardware was never matched by consumer needs, which lagged many years behind. Device usage isn’t very hardcore for the majority of people. So devices that match the main uses (email, light games, internet) are better targeted than most PCs ever made.

      • I wasn’t particularly surprised. It seems like every time Coker opens his mouth he says something idiotic. He’s basically in the same position as Apple. He doesn’t know how to compete effectively with Amazon, and so he latches on to whatever else is available. I don’t think people like Coker realize that Amazon is happy driving them mad. It makes them irrational and, as the case against Apple demonstrated, quite stupid.

    • I don’t see the Times piece as alarmist propaganda. There’s no doubt the DoJ actions against the publishers have benefited Amazon. Score one for Amazon. They’ve outwitted and outplayed everyone. The publishers are almost irrelevant to their future as a publishing platform and retailer. It’s not like Amazon needed the help. The publishers are doing a fine job of squandering their future all by themselves. Although no big 5 publisher has ever considered me their friend. That said, I think it would be bad for the future of publishing if they disappeared tomorrow. Although I think self-publishing is a superior publishing choice for the vast majority of authors, I appreciate authors have the traditional option, and I think both options can co-exist and provide synergy to the other. That was the point of my quote. I made a more definitive comment on NPR, which aired today, as well as comments at Site Updates at Smashwords. The publishers could collapse tomorrow and it would be a boon for Smashwords, but that’s not what I want to see happen.

      • @ Mark Coker,

        I guess I describe this piece as alarmist propaganda for a couple of reasons:

        1. It’s an almost completely one-sided opinion piece that presents itself as objective journalism. To my mind, that’s propaganda, whether you agree with the message or not.

        Unless I’m mistaken this was not “blogged” by a contributor, it’s a major article written by the NY Times staff who covers technology.

        2. It uses unnecessarily inflammatory words that are designed to provoke an emotional reaction. It says “Orwell” twice. Examples of other sentences include: “All of that sounds dire” “Amazon is left free to exert its dominance” “…guns seem pointed in the wrong direction” “…the only consolation for those who fear…”

        These words are designed to invoke fear and alarm.

        I should say to you directly (since I didn’t say this above – although I’d planned to respond to Dan and add this), I admire you. I think you were and are a pioneer in the world of independents and you shaped indie publishing as it is now. I admire your innovation, your boldness and your foresight.

        However, I think that as a strong indie representative, it’s always tricky to ally yourself with traditional publishing in a case where they committed a felony action.

        Traditional publishing, with its incredibly low royalty rates, draconian non-compete and reversion clauses, and overall disdain of the author, is not popular in some strong indie factions – at least that’s my interpretation. Some of the indie community hold up the price-fixing as an example of a lack of moral center in the Big Five, a lack that contributed to their exploitation of the author for decades.

        I agree with you that Amazon needs competition. But I suspect that will not come from the Big 5; as you said, they are doing a good job of making themselves obsolete. I’m not sure where it will come from, but I trust it will come when needed. It may come from small groups gathering together rather than from a big lumbering competitor.

        In addition, real competition will come (and I’m sure you agree with this) – not from self-serving illegal actions – but from innovative business practices that compete well in the marketplace.

        Anyway, even if we disagree, thank you, I appreciate the discussion.

      • The DOJ actions benefit consumers, which is what antitrust is about.
        If it hurts a handful of entited NYC glass tower publishers, that does not mean *all* of publishing is hurt; just a bunch of bloated-overhead multinationals.

        The whole “Amazon made them do it” meme ignores the critical fact that Amazon lost nothing meaningful under the “attack” by the conspiracy; they wree already down from the mythical 90% share since the introduction of the Nook, months before the conspiracy kicked in.
        Three years after the conspiracy kicked in, Amazon still has the same 60% plus market share from summer 2010. But since that peak, Nook has lost anywhere from a third to half, Kobo is stuck in neutral with no significant US gains while they flourish elsewhere, BooksOnBoard is history, Sony and Google are afterthoughts, Fictionwise lost it business model and was shut down…
        All the conspiracy achieved was to raise prices on BPH titles and *reduce* consumer choice to basically Amazon and Apple, with Nook scrambing to survive with even the NYT’s David Pogue giving them up for dead.

        In all the anti-amazon screeds, nobody considers the readers and their rights. Or the authors. It’s all about the middlemen in the glass towers. From the NYC publishing point of view, readers are just sheep to be led to the shearing.
        The law and the courts know better.
        I hope the penalty phase forces Apple to divest ibooks, if not the appstore.

  9. “What’s the problem?” said the thief. “I was just taking charge of my fate in such a bold fashion.”

    As for Mr. Coker, I remember when his site basically said you’d make no money self publishing and should jump on a traditional deal if you got it. That was years ago, and much moolah ago for MC. But I don’t think the world view that spawned it has changed.

    Remember, what we’re doing here ain’t real. We’re just a virtual warm up act for well-fed conspirators in Manhattan. Smashwords Edition.

    • Tortuga, do you see a problem with us honestly telling authors that most self-published authors will sell poorly, and they should keep their sales expectations realistic? We’ve been upfront about this from day one of Smashwords.

      In terms of our guidance to authors about whether or not they should take their traditional offer, I think the guidance has remained essentially unchanged from the day we launched in 2008. From https://www.smashwords.com/about :

      Q. I’ve been offered a book deal with a big mainstream print publisher. Should I take it?

      A. This is really a personal call, and depends on the terms of book deal. For most authors, if a publisher offers you a six figure advance (and this is rare for any author), you’d be foolish not to consider it. However, if they’re only offering you a couple thousand dollars, and they don’t allow you to retain digital publishing rights, then, well, it’s a personal decision. And if you do sell the rights to your book, make sure rights revert back to you if the publisher takes your book out of print or fails to deliver agreed-upon sales, marketing and distribution support. Better yet, if you have the ability to do so, consider retaining digital rights for yourself (so you can continue publishing on Smashwords) and sell the print rights. A good literary agent can help you navigate these negotiations.

  10. “We’ll probably see a continuing shrinking in print runs, maybe fewer titles published, fewer authors published and the New York houses retreating into the known best-sellers. Which means more novice and midlist authors scrambling to find a way to stay in print and more authors self-publishing their print books — or more likely releasing their works as e-files.”
    J. B. Dickey is right about this, that’s what will happen. And as the paper book becomes less and less of a medium for books, or paper books will be printed on demand as POD for the readers who like paper, what edge do the Big Five have? Can the Big Five survive on a few bestseller authors? They will if they shrink, not become bigger.
    Based on all the blogs I read over the past few years I am convinced that the following will happen:
    1- The authors will win and most if not all authors will self-publish e-books or POD books
    2- Boutique publishers will grow to help the authors with the publishing, but mostly marketing. The authors will take the risk of publishing, if they don’t want to do it themselves, and the authors may pay a 10+% commission to the boutique publishers, depending on how instrumental they were in the success of the books
    3- The Big Five will become the Borders and B&N of today, in other words extinct
    4- The Independent Book stores will be thriving again in limited numbers, offering POD books for mostly an older clientele. E-reading will become more and more dominant.
    5- A lot more authors will see their dreams realized, be published, and there will be a lot more titles.

  11. ‘“Amazon is not in most of the headlines, but all of the big events in the book world are about Amazon,” said Paul Aiken…’

    Oh, puh-leez! Every day there’s a headline from someone dissing Amazon. I’m wearying of that spin.

  12. “If you want a vibrant ecosystem of multiple publishers, multiple publishing methods and multiple successful retailers in 5, 20 or 50 years, we took a step backwards this week.”

    I don’t think energetic lawbreakers form the kind of “vibrant ecosystem” that writers and readers want!

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