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Is Amazon’s game totalitarianism?

17 January 2015

From author John Brown:

Is Amazon in the process of ushering in a totalitarian book economy?

Is Bezos, as Hitler was in the 1930s, biding his time, playing a long game, one that will lull the masses into a false sense of bookish security? Are we appeasing him, letting him take over the continent bit by bit? Is the blitzkrieg less than a decade away?

If you listened to a recent Intelligence2 debate, you would have heard Franklin Foer and Scott Turow claim that, yes, that’s exactly where we are headed. On the other side of the debate were Joe Konrath and Matthew Yglesais, arguing that Amazon is the reader’s friend.

. . . .

Well, [Foer and Turow] argument went like this.

  • Amazon right now provides an amazing service that’s far and above anything any other bookseller currently provides. They have made more books more accessible to more readers than anyone else ever in history. Readers, of course, love this. But this is a bad thing.
  • It’s bad because Amazon is becoming a monopoly–it already has 41% of all new book and 67% of all e-book sales, and in many divisions of those markets it has even more.
  • If Amazon were an enlightened ruler like Aslan, okay. But Amazon is a business, and as a business it only cares about its profits. And the way to make profits is buy low and sell high. So when Amazon finishes consolidating its hold on the market, it will force publishers and authors to take less of the pie.
  • In fact, Foer-Turow claim Amazon wants to not just reduce the share of the pie publishers get, it wants to kill off the publishers and take their share of the book pie completely. In addition to being very poor manners, this is bad for three other reasons.
  • First, authors of non-fiction books that take a long time to research will never be able to get the money they need to do that research. Publishers are the only ones who can give them that money, which they do in the form of an advance.
  • Second, few authors of fiction will be able to afford good editing, marketing, and book design, and so the many voices that could have been heard will be stifled, or never rise out of the crap to their true potential.
  • Third, and this is the nefarious Nazi part, if Amazon is the only place you see books, they can control which books you see, which means they will exert enormous control over our culture because they will be able to suppress some books, and therefore the ideas in those books, and promote others. Foer-Turow claim Amazon has already done this.
  • Finally, because it’s a business and has a goal of profit, when Amazon covers the land, it will probably eventually charge readers more. In fact, it may charge them a lot more. It can’t avoid it; it’s a business.

. . . .

You need to know I’m not an Amazon groupie. Nor am I a hater of publishers. I am a businessman. I’m looking for good partners. And I recently wrote a post pointing out that it’s delusional for authors to think Amazon is their BFF with pinky rings. They are just, at the moment, a great indie partner. But their interests and mine are not perfectly aligned. Our love is definitely not written in the stars.

. . . .

But has the government given Amazon a legal monopoly?

Um, nope. No charters here to be the only fur trappers in the West.

Does Amazon have an army of thugs who are going to beat people up and make them join Amazon Prime?

No. Well, maybe that’s what the drones are for, but they haven’t rolled them out yet.

Do they own something nobody else can get, like a piece of land? Are they sitting on the world’s largest reserves of cheap book oil?

Nope. They’ve got a great website and excellent logistics. But websites really aren’t that hard. And if we’re talking ebooks, you don’t need logistics.

. . . .

What about the barriers to entry?

The big advantage Amazon has is that they usually have the lowest book prices around, the biggest selection (you can find almost any book you want there in any format it’s available in), and are incredibly convenient, providing samples, reviews, recommendations, and easy checkout. And they have the crowds.

It’s hard to get crowds. It’s hard to get all that content. It’s hard to beat their prices. Those are some dang good barriers that keep new guys out.

And Foer-Turow figured that’s all set. In stone.

. . . .

So is Amazon going to kill publishers? Only if the humans have left the building.

Will they kill authors? Only if authors let them.

Will they gouge readers? Not when other folks see there’s money to be made by undercutting them.

Amazon is playing in a global market with the likes of Alibaba, Google, Apple, Walmart, etc. Amazon is playing in an internet economy where college students can come up with an idea and become billionaires. Equally important, Amazon owns nothing that somebody else can’t recreate. They have no legal monopoly. They have no army of thugs. What they have is a lot of content, a well-known URL, logistics for the hard copies, and good prices.

But what they do not have is a marketplace where everyone else involved is absent a brain.

Link to the rest at John Brown

Here’s a link to John Brown’s books

Amazon, Big Publishing

48 Comments to “Is Amazon’s game totalitarianism?”

  1. Amazon borrowed a billion dollars (no exaggeration: they were carrying $1.4 Billion in debt by 1999) to build up the logistics infrastructure that supports their website.

    I admit that yes, Amazon’s “secret sauce” and killer web site are both something that can be replicated, but when we talk about barriers to entry, we’re talking about that billion dollars and a 20 year head start.

    With that exception noted, I’ll say I agree with the tone and other points made in John Brown’s post: Amazon is really, really, really big – but there should be ways for other companies to compete in their shadow

    • Well, no. Yes, Amazon borrowed a lot of money to build up their infrastructure, but it wasn’t just for their website. It was mostly to support the shipment of physical goods. If you want to compete with them to be the “Everything Store, then you will need a significant amount of capital. On the other hand, the amount of capital expenditure required to compete with them in the “book” business is exactly zero dollars. No kidding. Which is about a billion dollars less than you would have us believe.

      • Exactly.
        Anybody can pick up a phone and talk to Overdrive, Bluefire, TxTR and others and be in the commercial ebook business as fast as they can set up the web site.

        What Amazon has that their competitors don’t have is customers. Customers they earned with their service, pricing, return policies, deep catalog, recommendation engine, etc.

        The warehouses and data centers are optional.

        • one word, two thoughts; the word : alibaba. Been watching what appears to be their ‘creep’ into amz area with plans for huge expansion, and they have the money beyond money to do it

          1. customers dont care where their merch is coming from as long as it comes as advertised, cheapest and fastest, most securely.

          2. We lived through in the 1990s thousands of indie bookstores closing, appealing to their long long traditions of community base to please help them to stay open by buying from them instead of that new B & N/ Borders/Joe Beth/ BooksAMIllion that just squatted practically atop them right down the block. No. As much as people of the book community loved those old bookstores that were embedded in service to the community, the lure of 20 and 30% off hardbacks and bestsellers, etc, caused a stampede to the new stores. [Before ABA won hard fight for same price on goods from big pubs for indies that chains were receiving]

          The old stores, and their staff and owners, sadly closed down. And BooksAMillion brother-owners were waiting right there to snatch up inventory and sometimes the store lease itself. It was beyond predatory. And the customer base drove the shut downs and the rise of the big stores who had their initial staff who thought, [often] Steinbeck was a first and last name: Stein Beck. Serious. True story.

          So, were there alternatives to AMZ today or in future, no doubt there would start to be price wars and delivery quickness wars and new streams of whatever offered, a pink pony with your order of $1000 or more. Who knows.

          What Alibaba has that amz does not and may not ever, is all of China and Asia, in their own languages. Literally billion+ of people, to add to the other billion[s] elsewhere. Alibaba also is a broker to among a thousand other items, books being PRINTED in China and Taiwan, etc… that indie authors could with research avail themselves to for say full color print on paper books. There are also thousands of bilingual Chinese who can format ebooks and do a great cover for $50 US. Alibaba is huge and can be an outsource market for indie authors also. But their main huge machinery is in making deals with suppliers to undercut someone like amz, for ali baba can place orders;/holds on many more times the amounts that amz likely can… and sell them, for they have the customers– in asia– as well as elsewhere.

          we shall see. amz stock bounces alot, its profile very jaggedy over the last 1-2 years. Riding now at aprx 290 a share, was up to near aprx 400 about six months ago. Has been much lower. Compare to Google stock, 600 -500 aprx and slightly below, [this is from memory, if one wants the actual, check th stock exchanges] but with a much more huge reach, amz is keeping up in its own sphere but …

      • Sure, anyone can “compete” with Amazon.

        But can they “compete” effectively?

        The way Amazon is able to keep the customers are they make it so easy for people to buy from them that they don’t have to know anything about computers. As I’ve said before, that’s a huge barrier to someone trying to compete with them.

        • Quite true.
          But that is a matter of execution, not upfront investment.

          Getting into the game is easy… staying, not so much. But not impossible either. After all, Amazon and Kobo have established what matters and what doesn’t so a serious competitor is no longer operating blind. (Look at Germany’s Tolino for an operator taking a page out of Kobo’s playbook by looking for cross-border partners almost from launch.)

          The best case study available right now on how to compete with Amazon is Nook: they started out with a close follower strategy, matching Amazon in all the areas that mattered for ebook sales. They just flubbed the execution and lost sight of the goal line. Instead of focusing on the customer experience they focused on fighting Amazon and trying to be Apple. Apple can use hardware to sell content because hardware is their core business–B&N and Amazon are retailers and their core business is customer experience.

          Anybody seriously intending to compete with Amazon needs to focus on the consumer, not their suppliers and not on their competitors.

          (And that is why I doubt AliBaba is going to do much to Amazon out west–like Rakuten and eBay their focus is more on vendors than consumers. There’s lots of money to be made that way but not much of it is going to come out of Amazon or Wal-Mart’s hide.)

    • I admit that yes, Amazon’s “secret sauce” and killer web site are both something that can be replicated, but when we talk about barriers to entry, we’re talking about that billion dollars and a 20 year head start.

      The day Amazon opened for business (1994) Barnes & Noble, Borders, and the New York traditional publishers (at the time) all had more money and more customers.

      So who had the head start?

      CLUE: It wasn’t Amazon.

      In every case, Barnes & Noble, Borders and the New York traditional publishers CHOSE not to compete online.

      So SAD too BAD. 🙂

      TODAY, Apple and Google — both HAVE LOTS of MONEY, a huge internet presence and a MASSIVE CUSTOMER BASE in their primary business arenas. They also have e-book stores.

      But they are CHOOSING NOT to compete with Amazon.

  2. Excellent follow up article to the debate.

    • D.L. I agree. Would love to send a copy of John Brown’s article to everyone in that N.Y. audience.

  3. Godwin’s Law – as an online discussion grows longer, the probability of a comparison involving Nazis or Hitler approaches one – strikes again.

    • The impressive thing here is that they went to Hitler in the second sentence.

    • Lost me completely after that. What a shame.

      • Yes, it is a shame – for you. You might be interested to read the actual argument.

        Contrary to popular belief, mentioning Hitler is not a logical fallacy.

      • Funny thing is, he’s not the one who made the Hitler comparison. He’s saying the ones who did make the comparison are all wet. At length.

        Funny how so many of the comments in this thread are from people who skim-read, noticed the name “Hitler,” and threw a fit. This is why Godwin’s Law works the way it does. Not because of what people actually mean when they mention (or, in this case, cite someone else who actually mentioned) Hitler, but because people will gladly read their own meaning into it without bothering to check whether they would agree with the one that’s actually there.

    • If you visit his site he did it in the first word (“Amazatzi”) and titled the post with an image of a nazi flag.

      So… Not only Godwinning himself from the start, but now his site shows up any time anyone does an image search for “nazi flag”.

      When you start off a post with such unconstructive trash, I assume the rest of the article is the same.

      • Youre right on that Steve: there’s a saying in journalism, old school, that running to the hitler/mussolini/chavez/castro/duvalier/ceacescue/ than shwe/ [sp]/goebbels/mengeles [sp]/ mwgabe/etc tropes is sort of like not having a thought out argument, so using instead a personage that is far oversimplified but has a gut-reaction in many to the name alone.

        The idea, as I understand it, is called ‘yellow journalism’ [we all learned about this in school mostly] which is to sensationalize with hyperbole, to make the story seem more exciting. lol. The old trope is how to win dirty: tell everyone what horrible thing is happening, then tell everyone who to blame. It’s an old not very secret machiavellian idea, the cloth of which, wears through fast for readers/listeners who can differentiate one idea from another with acuity and not glom them altogether by association.

        Just a couple differentiations: the writer may have meant ‘fascist’ e.g. ‘my way or the highway’ but jumped to ‘nazi’ instead. Prob is : History. Rise of nazi-ism was based not on plenty, but on inferior econ after war, landlocked, huge crippling inflation, collective sense of being beaten [in war] and more. Ripe for any ‘leader’ who claimed they would restore the people’s dignity and power, re-aright the econ, and more. There is SO much more to the entire rootstock of Nazi-ism –and totalitarian dictators who each have their special brands of enslavements and lacks of justice, that cannot be condensed to a tinfoil wad to throw at whomever.

        • I suppose you missed noticing that the entire point of the article was to rebut the people who were making the Hitler comparison?

          To be fair, he did kind of bury the lede.

          • sorry, i prob went off topic Chris M in discussing generally the trope of ‘hitler’ as used in so many discussions of politics esp in pop culture. I thought he’d meant he was rebutting peeps making what seemed to me to be fascist rather than ‘hitlerian’ comparisons. I see what you are saying too. Thanks.

  4. It seems to me that if Turow and the industry he represents are concerned about Amazon’s total dominance of the literary world, the easy, although painful, solution for them is to withdraw all of their books from their stores. That would certainly put a dent in Amazon’s armor.

    I fail to understand why there is such fear of a company that makes them so damn much money.

    • +10.

      Where do you think all these “record profits”, that Publishing execs are screaming about from the hilltops, are coming from with rapidly declining shelf space?

      It’s coming from Amazon and a good to giant chunk of that cash flow is from low-no overhead e-books.

      • …which is why Amazon was able to squeeze them for tiered, price-based margins.
        Amazon isn’t interested in dominating any piddly billion dollar business. They just want a piece of the retailing pie…
        …every retailing pie.
        From diapers and shoes to jewelry and fine art.

        Any day now they’ll figure out how to sell cars and real estate.

  5. My husband and I both have had relatives living in nations with totalitarian leadership (different nations). I know what Totalitarianism looks and sounds and smells like.

    Amazon is not Totalitarian. Not even close.

    These folks need to STFU.

    • ^This.

      And I’m glad you’re free, Mir.

    • ^This again.

      I’ve lived as a foreigner in a country like this. My wife is from one. My mother-in-law was walking to her middle school one day, looked up, and found her teacher hanging by his neck. His crime? He criticized how the government was handling something. Middle aged people there are still afraid to criticize the government, even though things have improved. That’s because people still get disappeared for speaking their mind.

      Pampered elitists who make comparisons to totalitarian states need to leave their ivory towers a bit. In the US, you don’t even need to be rich to be one of those pampered elitists, either.

  6. The three points the anti-Amazon side made are demonstrably false.

    I assume that somewhere there is a author “of nonfiction that takes a long time to research” who was paid an advance that covered her living and research expenses during that “long time”, but in every example I have been given, I discovered that the claim was false. The idea that only publishers can provide this role is totally false.

    As for the stifling of voices, tell that one to John Kennedy Toole and then get back to me.

    I would have thought that Foer, at least, was aware that controversial ideas can be published in other venues. He’s certainly published many of his own in magazines. The idea that Amazon is in the business of suppressing dissent is at least as ludicrous as the other two claims, but far more pernicious.

  7. The “gate keepers” are accusing Amazon of being a gate-keeper wanna-be.
    They claim defenseless authors will not be able to afford good editors or designers and imply this would be a departure from trad publishing; Traditionally, Big 5 publishers base the availability of good editors and designers on their own predictions as to whether an author’s book will earn enough to “deserve” these perks.

    An author can market their own book and pay a publisher for the privilege or the author can market their own book and be paid for it.

    The allegations are textbook psychological projection.

  8. Funny, 51% of my book sales came from Smashwords in 2014 while just 49% came from Amazon. I did no marketing for iTunes whatsoever, yet the bulk of my Smashwords sales came from them.

    But then I just look at the numbers and don’t necessarily jump to conclusions before then, so perhaps I’m not the best for commenting on self-publishing.

    • But then I just look at the numbers and don’t necessarily jump to conclusions before then, so perhaps I’m not the best for commenting on self-publishing.

      No, but you’re wizard at choppering in and dropping vaguely insulting remarks.

      • But, hey, he did show that calling Amazon a monopoly is supremely dumbass. I know some pals who make 90% of sales on Amazon and others who make most vis Smashwords/non-Amazon. Not all indies have the same numbers. But the numbers show Amazon was no/is not a totalitarian monopoly. 🙂

    • Greg, you shouldn’t call your non-Amazon sales “Smashwords sales.”

      They aren’t.

      Those are Apple, Barnes & Noble, Kobo, etc. sales for which you are paying a 10% Smashwords tax.

      Smashwords does have its own retail store in theory… but nobody ever shops there. Even a BookBub ad specifically pointed at Smashwords will sell fewer than 5 books through Smashwords… and those 5 will put you on the Smashwords Top 100 Best Seller list.

      Coker is pulling off a pretty good sleight of hand when he talks about “Smashword sales” and authors don’t call him on it.

      • I agree. I’ve just seen a post on KBoards where someone swapped from Smashwords to D2D, saw sales increase, and attributed it to D2D! Smashwords and D2D are distributors who charge 10%, and that’s 10% of list price = 14.3% of net.

      • Of course the authors know the sales aren’t Smashwords or D2D, that they are distributors. But it’s shorthand. It takes much longer to say Apple, Kobo, B&N, etc.

  9. The position Turrow and Foer took demands we accept their ability to see into the future and determine how all the pressures in a huge economy will resolve.

    I don’t think they are smart enough.

    • +1. Turrow also thinks no self published author can afford good editing. And the opinion of anyone who has the majority of their sales through Amazon is suspect, like publishers…?

  10. Count me as another one who stopped taking the whole thing seriously at the Hitler reference. Amazon-Hitler? That’s not a stretch or a leap it’s space travel.

    “1. customers dont care where their merch is coming from as long as it comes as advertised, cheapest and fastest, most securely.”

    I disagree with this. I avoid anything from China as best I can in this day and age and know many others who do the same. My avoidance started with the pet food that killed American cats and dogs and nothing I’ve heard since has changed my mind. The quality control is not there. I do realize a Chinese version of Amazon would not be selling only Chinese products, but the fact is I do care where things come from.

    • I care, too. I”ll pay more if it’s verifiably “made in the USA.” And I’ll wait longer for delivery if it’s a better quality product that does what I need it to do.

      While I want it cheaper, fast, more secure overall, there are always exceptions. I mostly shop at Amazon…because I feel it is secure, because it’s easy to navigate the shop, because they have a large selection. But unlike years past when I was sure to find it there best/cheapest, they aren’t always the cheapest and, in some cases, the product arrives dented/damaged/moldy. But when that happens–they refund my money, no hassles. THAT is priceless.

    • I care where things come from. I buy a lot of fair trade food items (vanilla, chocolate, etc.), because I want the people who do the hardest work in making the product available to me to get a fair share of the money. (And I don’t want to support businesses who source their ingredients from child slave labor.)

      • I look for fair trade–not consistently, I will admit, but if it’s a choice between not and fair trade and they both fit the bill, it sways me every time.

        I’m opposed to any slave labor and don’t want to support it.

        I’m more cautious about child labor. Sometimes, that’s the only way a child can eat (or their siblings, or anyone in the family). It would be a case by case for me, but if in that country, in that town, in that circumstance, the child working means the family survives–then I can’t say from my cozy first world situation: no to you working. Unless I’m willing to supply that family with my own money to make the kid free to study, then I figure I’m making things worse, not better. Food and clothes and a roof trump my own political outrage in my book. (And we have sponsored 5 third world kids to get education/immunization/food/transporation/seeds/hygiene products, so we try, we try.)

        I can only say I hope it changes as a country improves its overall conditions.

        (Although, honestly, I am not aware of what I might have bought that would fall under child not-slave labor. I don’t buy persian rugs and I don’t buy diamonds and I haven’t bought stuff with real gold in a long time.)

        Forced labor/slavery–that I’d shoot the slave trafficking EFFERS.

        Oh, and these guys have killer yum fair trade offerings: http://www.paradiseroasters.com/categories/Coffee/Fair-Trade-%26-Organic/

        • Mir,

          I distinguish between child labor and child slaves. (Theoretically. Not sure how you distinguish between the two at a distance.) I agree with you about the danger of pressing my so-called first world “values” onto other cultures in which children work.

          But the kids who are abducted, put to work on the cacao farms, and locked in at night so they can’t run away…I just can’t eat chocolate made from the misery of those children.

          ETA: Green&Black’s is scrumpdelicious chocolate and fair trade.

    • There was a time when “Made In Japan” indicated cheap, poor quality merchandise that fell apart. Time changed.

      China is following the same general path as Japan, Korea, and Taiwan. It works.

    • Count me as another one who stopped taking the whole thing seriously at the Hitler reference. Amazon-Hitler? That’s not a stretch or a leap it’s space travel.

      If you had bothered to read on, you would have found that Brown was not claiming that Amazon = Hitler, but ridiculing Turow and Foer for claiming that Amazon was trying to impose totalitarian control on the bookselling business.

      But hey, if it makes you happy, go on believing that Godwin’s ‘Law’ is a real law, and that it actually says that mentioning Hitler in an argument means that you automatically lose.

      • (Grin) It does indeed help when you read at least to the thesis statement.

      • See, that’s why the corollary to Godwin’s Law is that invoking Hitler means the conversation is over. Because when people see the name “Hitler,” their higher reasoning centers immediately shut down.

        • Hitler comparisons belong in history books and cheap political discourse.
          Not serious economic or technical discussions.
          Which is *why* the knee jerk reaction is to “…move along, move along… Nothing to see…”

  11. Me three, Mir. 🙂

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