Amazon Curtails Development of Consumer Devices

27 August 2015

From The Wall Street Journal: Inc. flamed out with critics and consumers last year in its first attempt at a smartphone. Now, rather than forge ahead, as it has with other projects, such as its Kindle tablets, the online retailer is retrenching.

In recent weeks Amazon has dismissed dozens of engineers who worked on its Fire phone at Lab126, its secretive hardware-development center in Silicon Valley, according to people familiar with the matter.

The layoffs were the first in the division’s 11-year history, these people said. But the precise toll on its roughly 3,000-person staff couldn’t be learned, in part because Amazon typically requires employees to sign a nondisclosure agreement in exchange for severance payments.

The company also has scaled back or halted some of Lab126’s more ambitious projects—including a large-screen tablet—and reorganized the division, combining two hardware units there into one, people familiar with the matter said.

. . . .

The cutbacks reflect the company’s unusually cautious approach of late to capital spending. Typically, Amazon has plowed nearly all its revenue back into operations and product development. In July, however, the company’s chief financial officer credited tighter cost controls in the second quarter with helping drive a surprise $92 million profit that sent its shares soaring.

. . . .

Fallout from the Fire phone flop has hurt morale at Lab126, according to current and former employees, and raises questions about Amazon’s ability to develop compelling consumer devices. The $180 Echo virtual assistant, a voice-activated speaker, has developed something of a cult following, if not yet mass appeal.

Some workers say Lab126’s shifting and, at times, enigmatic priorities, including a planned high-end computer for the kitchen, have contributed to a frenetic workplace and ill-defined roles. That has led a number of workers to take jobs at other tech firms, the people said.

. . . .

Amazon has also halted or scaled back other development projects, according to people familiar with the situation, including a smart stylus internally called Nitro, which translates a users’ scribblings into digital shopping lists; a device dubbed Shimmer for projecting images on walls and other surfaces; and a tablet code-named Project Cairo, with a 14-inch screen.

Still in the works is a high-end computer for the kitchen—code-named Kabinet—designed to serve as a hub for an Internet-connected home and capable of taking voice commands for tasks like ordering merchandise from

“The next logical step for them is a fully connected home,” said IDC’s Mr. Mainelli. “With the data they have, they could soon be at the point where all the things you need just arrive at your home, without even asking.”

Link to the rest at The Wall Street Journal (Link may expire)

Change Keeps Happening

27 August 2015

From Hugh Howey:

The revolution in the publishing industry has barely begun. That’s the takeaway this week, as a print-on-demand book becomes a #1 bestseller and the Big 5 move into Kindle Unlimited.

First, the children’s book that should be waking up major publishers in a major way. It’s called The Rabbit Who Wants to Fall Asleep, and it was written and self-published by Carl-Johan Ehrlin. If you have kids, you should stop reading this and shoot over to Amazon right now to buy a copy. Using the psychology of suggestion and sleep-inducing language patterns, parents all over the world are discovering the book’s seemingly magical ability to zonk their kids out. No wonder the book has taken off.

It’s been a #1 overall bestseller on Amazon and B&N. And Publishers Weekly is now reporting on this story as the book has been snatched up in a 7-figure deal. The New York Times even had to change the rules of their children’s book bestseller list to exclude paperbacks, in order to make sure an indie book doesn’t do this again. So what exactly happened? Why is the publishing world freaking out over this? Well, it’s because this was thought impossible just a few weeks ago. But the nature of digital disruption is that the impossible becomes possible seemingly overnight.

When I toured the CreateSpace printing facility in 2011, I knew something crazy was happening. It wasn’t just the print process, which had been around a while. It was the way this printing facility was integrated into the Amazon retail machine, and the way CreateSpace maintained the startup vibe, able to pivot on a dime. Things were changing at the facility every day, even as freshly printed books zipped by on steel rollers. The paper stock was improving; the trim size options expanding; matte covers were being introduced; the ink used for the covers was improving; and even the way the books were packaged and handled was being tweaked. In the year it might take for a Big 5 print book to get to market, the POD industry will have revolutionized a dozen important techniques.

. . . .

The major publishers and the New York Times do not like this one bit. The Big 5 have shunned POD as a backup solution, refusing to give Amazon and Ingram PDFs so that these two companies can handle supply when that supply is outstripped by demand. This has been shameful when books attempt to go viral but can’t because of how slowly the Big 5 print and ship their wares.

. . . .

Make no mistake: Carl-Johan’s breakout success is a game-changer. Because the “digital” in digital disruption isn’t relegated to ebooks. When PDF files can be emailed, and books can be printed in minutes anywhere and then sold instantly everywhere, and then shipped same-day most places, the old chain of print-in-China and sell-in-B&N has been radically upturned. Not only is the publishing revolution moving into the print space, the indie revolution has as well. When we see authors, agents, and publishers warning writers of all the money they are leaving on the table by ignoring print, they are clinging to what they thought was their last redoubt. No longer.

. . . .

Speaking of the Big 5 selling stuff through Amazon, look who’s playing around in Kindle Unlimited right now. I love me some Vince Flynn. Imagine my surprise this shows up while I’m browsing KU. My first thought was that his estate must’ve gotten the rights back and self-pubbed the ebook edition, because the Big 5 do not participate in Kindle Unlimited. Guess they do now.

Link to the rest at The Wayfinder

Here’s a link to Hugh Howey’s books. If you like an author’s post, you can show your appreciation by checking out their books.

The Amazon Agenda

26 August 2015

From Joe Konrath:

Amazon was recently the subject of world news when the ever intrepid David Streitfeld, the NYT reporter that gave us the wonder of whale math, did a hit piece on Amazon corporate culture that came to the startling and controversial conclusion; Amazon employees work really, really hard.

. . . .

Streitfeld, too, has a book available on Amazon, though his dismal 700,000 rank may be part of the reason he dislikes Zon so much.

Last I checked, the five hundred plus signatories of the latest Authors United bullshit letter also all had their titles available on Amazon. That letter recently arrived at the DOJ, and I’d bet it wasn’t a coincidence that it was on the heels of Streitfeld’s anti-Zon piece. I can imagine their delicious, mutual self-gratification as Preston and Streitfeld exchanged super-important emails about how to best coordinate their Anti-Amazon efforts for maximum impact, and about how Suzie in Algebra is dating Brad now because he dumped Melissa after she gained weight, and OMG doesn’t gym class suck this year 4 realz?!?

. . . .

Here we have all of this vocal, public author disapproval of Amazon, yet no one has the guts to actually pull their books.

. . . .

Amazon has allowed more writers to reach more readers than any other company in history. They’ve done this by innovating, giving readers what they want, and working with authors to offer us much better terms than any publisher ever has, in the past, or the present.

The Big 5 are a price-fixing cartel who want to charge readers high prices. That’s why the DOJ went after them and Apple, and that’s why they lost the suit. They had an oligopoly over paper distribution for decades (the only way to reach readers was through bookstores, the only way to get into a bookstore was through those publishing gatekeepers). Because they controlled who got published, they could get away with giving authors take-it-or-leave-it unconscionable contract terms.

Amazon has broken that oligopoly by allowing readers to reach readers via ebooks.

Because of this, the Big 5 can no longer control book pricing—and independent author can undercut them—and as a result the Big 5 are losing marketshare to Amazon and to indies.

. . . .

This isn’t altruism on Authors United’s part. It’s greed. It’s wanting to return to the old ways, where top authors got seven figure advances. Great for that 1%, not great for the 99% that Big Publishing ignored, harmed, and/or took advantage of.

Because Authors United is a bunch of entitled rich and famous authors (who should be celebrating the luck they’ve had in life rather than whining like babies about Amazon), they’ve been wooing their media contacts to wage a public opinion war against Amazon by painting Zon as a bully.

. . . .

Authors United are a bunch of greedy whiners who don’t want the status quo to keep shrinking; and it is shrinking, for the good of all readers and the vast majority of writers. So they beat their chests and flail about, trying to spin media, hoping public opinion will make big bad Amazon stop disintermediating the publishers who have made them rich.

It won’t work. Authors United knows this. Their argument doesn’t hold up to US antitrust law, logic, or majority opinion. But they are seeing their livelihoods slip away because their corporate masters don’t control the book world anymore, so they’re throwing a public tantrum.

. . . .

I’m pretty tied into the indie community, and the thousands of writers I’ve encountered are smart, and aware. Sometimes they draw incorrect conclusions, or feel persecuted, but the difference between dealing with Amazon and dealing with the Big 5 is like the difference between and honest, open, friendly relationship, and being beaten up by a group of muggers.

Link to the rest at Joe Konrath and thanks to James for the tip.

Here’s a link to Joe Konrath’s books. If you like an author’s post, you can show your appreciation by checking out their books.

Kindle Scout

26 August 2015

PG received an email from Merrill asking about Kindle Scout.

Merrill  “would love to know if anyone has tried it – either to read books or submit their own work.”

We’ve had some references to Kindle Scout, but PG doesn’t recall a lot of people sharing their experiences.

Smashwords and Flipkart to End Distribution Relationship – Amazon Scores Victory

26 August 2015

From Smashwords:

Smashwords and Flipkart are ending their distribution agreement first announced in August, 2013.

The unfortunate news effectively hands the market for indie ebooks in India to Amazon.

A few weeks ago, I notified Flipkart that Smashwords was placing its distribution agreement with Flipkart under review.

I provided Flipkart a deadline by which Flipkart was asked to repair certain problems related to the listing and removal of Smashwords titles, and to provide Smashwords an acceptable plan to prevent such issues from recurring in the future.

I informed Flipkart that if these requirements were not met that Smashwords would request the immediate removal of all Smashwords titles.  The deadline was missed and an acceptable plan was not presented.

This morning Smashwords received word from Flipkart that after careful consideration, Flipkart determined their systems are not yet capable of supporting the dynamic nature of the Smashwords catalog.  As a result they will begin winding down the relationship with Smashwords and remove our titles.

. . . .

Our primary concern was Flipkart’s delays associated with the removal of Smashwords titles that had been unpublished. Most of these titles were removed because the Smashwords author or publisher made the decision to enroll their book in KDP Select, an ebook self publishing option offered by Amazon that requires authors to make their books exclusive to Amazon.

Once authors enroll a title in KDP Select, Amazon requires the author to immediately remove the book from all competing retailers otherwise the book is removed from the KDP Select program and the author is warned that repeated offenses could lead to the termination of their entire KDP account.

As you might imagine, these fire-and-brimstone emails from Amazon are unnerving to authors.

. . . .

Many indies don’t understand the long term implications of KDP Select.  The million or so books enrolled in KDP Select are almost entirely provided by the indie author community. Amazon coerces authors to enroll their books my making KDP Select books more discoverable and more desireable to Kindle customers, while making non-exclusive books less visible and less desirable.   The message is quite simple:  If you want to sell more books at the world’s largest ebook retailer, you must be exclusive.

I don’t blame indies for their difficult decision.  I met with one indie author a few weeks ago at a conference who told me words to the effect of, “I hate the exclusivity of KDP Select, yet I’m in it because I have a mortgage to pay.  Books in KDP Select sell better than non-exclusive books.

. . . .

I believe KDP Select is toxic to the future of indie publishing because it forces authors to abandon competing retailers and become more dependent upon Amazon.  When competing retailers lose access to this important inventory of indie titles, they can’t compete.

Amazon wields its dominant market share like a club to bludgeon authors who don’t fall into compliance with Amazon’s exclusivity or pricing requirements, even when the lack of compliance is not the author’s fault.  No other ebook retailer practices such draconian punishment of authors.

. . . .

To be clear, the termination of our agreement with Flipkart is not Amazon’s fault.  However, Amazon was a catalyst because the harm they’re causing our shared authors made it impossible for us to give Flipkart the runway they needed to improve their systems.

Although Flipkart is a small ebook retailer and the financial impact on Smashwords authors will be negligible, I’m more concerned by what this signals for the future of ebook retailing around the world.

Link to the rest at Smashwords

Is Amazon Creating a Cultural Monopoly?

25 August 2015

From The New Yorker:

For months, a group of writers calling themselves Authors United have campaigned, mostly unsuccessfully, against the business practices of On Thursday, they mounted their latest challenge, officially requesting that the Department of Justice investigate how Amazon exercises its “power over the book market.” (A spokesman for the Justice Department said it is reviewing the request.) The list of signatories fills twelve pages and reads like an unusually expansive long list for a prestigious writing award; the five hundred and seventy-five writers include Philip Roth, V. S. Naipaul, and Ursula K. Le Guin, along with many longtime contributors to this magazine.

These writers generally aren’t legal experts, however, and they freely acknowledge this near the beginning of their letter to the Justice Department, while asserting that their profession does afford them some degree of expertise: “We are not experts in antitrust law, and this letter is not a legal brief. But we are authors with a deep, collective experience in this field, and we agree with the authorities in economics and law who have asserted that Amazon’s dominant position makes it a monopoly as a seller of books and a monopsony as a buyer of books.”

. . . .

 It is perhaps the writers’ lack of legal expertise that has given them the freedom to put forth what antitrust experts described to me as a highly unorthodox argument: that, even though Amazon’s activities tend to reduce book prices, which is considered good for consumers, they ultimately hurt consumers.

. . . .

 Authors United’s specific argument—that Amazon’s actions are bad for consumers because they make our world less intellectually active and diverse—is unorthodox in its resort to cultural and artistic grounds.

. . . .

 None of this is to suggest, however, that the Department of Justice would have a strong case against Amazon if it were to sue the company and apply Authors United’s reasoning. One reason pricing has been such a popular method of measuring consumer welfare is that it’s easy to quantify: a three-dollar jar of peanut butter is objectively better for consumers than the exact same jar priced at five dollars—forty per cent better. While it may be attractive, on a philosophical level, to argue that Amazon is bad for us because it makes our culture poorer, measuring that effect would be difficult, if not impossible. How would one go about valuing an unpublished masterpiece by an unknown author? This is further complicated by the fact that Amazon makes it easy for authors to self-publish and have their work be seen, without having to go through such traditional gatekeepers as agents and publishers; Amazon might argue that this allows for more free flow of information and ideas.

. . . .

 I spoke with Douglas Preston about these points, mentioning that another antitrust expert I spoke with had supported them, as well. Preston acknowledged, “Not being a lawyer, maybe they’re right—maybe we’re barking up the wrong tree.” Indeed, it’s quite possible the Justice Department will read the Authors United letter and dismiss it as uninformed. But even if that happens, Preston said, it will have been worthwhile for the writers to have made their case. Last fall, Authors United appealed to Amazon’s board of directors to get the company to change its practices; the board seemed unmoved, but the authors’ request was written about in the press. That in itself served the writers’ goal, Preston told me, because it helped disseminate their message to regular people, including Amazon customers. Authors United’s larger mission, he told me, was this: “We hope to show the public that getting products faster and cheaper isn’t necessarily the greatest good. It comes at a human cost.”

Link to the rest at The New Yorker and thanks to Barry for the tip.

If you fail to achieve your original objective, change the objective and claim to have achieved the new one.

Kindle Unlimited

25 August 2015

From author Susan Tisdale:

Over the past few months, there has been lots of talk about Kindle Unlimited. For those of you who don’t know what KU (Kindle Unlimited) is, think of it as Netflix for books. For $9.95 a month, you can borrow as many books as you can read. As soon as you’re done with a book, you can return it and get another, keeping as many as ten titles at a time to read to your heart’s content.

There also seems to be a lot of misinformation out there on just how it works. Today, I’ll answer some of the main questions and concerns that I hear from readers regarding KU.

But first, let me talk about my own personal experience with Amazon and the other vendors. For more than three years my books were exclusive to Amazon and I was very content and happy with my success there. I had built a great reader base and was able to give up my day job within in a year of publishing my first book. That was until last summer when the bottom seemed to fall out. I didn’t realize it at the time that it was only a temporary set back. Instead, I gave in to a knee jerk reaction and began preparations to make my books available on other platforms. By January of this year, my books were also available at iBooks, B&N, and Kobo.

In all honesty, were it not for Amazon, I would not have been able to give up my day job a few years ago to become a full time author. None of the other vendors treated me with the same amount of respect and level of help that Amazon and it’s KDP people have.

After a seven-month long experiment, I’ve decided to go back to being exclusive to Amazon and making many of my books available through the Kindle Unlimited program. While I had a couple of relatively decent months at the other vendors, the results were erratic and unstable. There was nothing that I could count on and in the case of B&N no one to turn to to ask questions, get support, or strategize with. Simply put, there is no one at B&N to help the indie author. While it was much easier to find an actual human being to help you at iBooks and Kobo, the resulting sales were not anywhere near what I had hoped for. Many indie authors are quite successful on these platforms and to them, I tip my hat. But as in almost all things, results will vary from author to author, person to person. Why one things works for one author and not another, I simply do not know. I can only speak to my own personal experiences.

. . . .

My own personal results with the new KU 2.0 as we call it has been amazing! In July alone I had more than 800,000 pages read. By the 20th of this month I had surpassed even that number and if things continue on the current path we will hit the million pages read mark within the next 48 hours. That is a lot of new readers being introduced to my books and that makes me exceedingly happy.

. . . .

Kindle Unlimited can be a great resource for those people who have ‘book budgets’, like I used to have when I got my first Kindle in 2010. Back then, I could read three or four books a week and that could get quite expensive. KU gives those readers the opportunity to read as many books as they wish without worrying about going over their budgets.

Link to the rest at Your Cheeky Wench and thanks to Shelly for the tip.

Here’s a link to Susan Tisdale’s books. If you like an author’s post, you can show your appreciation by checking out their books.

The Authors United Letter from an Antitrust Law Perspective

25 August 2015

From author Randall Morris:

Claim 1: Monopoly

AU’s first point is that “Amazon’s dominant position makes it a monopoly as a seller of books and a monopsony as a buyer of books.” The U.S. Supreme Court in U.S. v. Grinnell Corp. (U.S. v. Grinnell Corp.) held that the test for monopoly control under Section 2 of the Sherman Act has two requirements “(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.”

Relevant Market

The first question is “what is the relevant market?” If we look to the AU letter, they allege that Amazon has “unprecedented power over America’s market for books.” They also claim that Amazon has become “the largest publisher and distributor of new books in the world.” I have no idea how they’re defining new books and the U.S. Supreme Court can’t grant relief for a market larger than the United States, so I’d rather focus on “America’s market for books.” They also note that “according to published figures, this one corporation now controls the sale of:
– More than 75 percent of the online sales of physical books.
– More than 65 percent of e-book sales.
– More than 40 percent of sales of new books.
– About 85 percent of e-book sales of self-published authors.”
In their list of figures, it seems that they are alleging that “America’s market for books” is made up of e-books and physical books. The other two figures they list would fall into those two categories. I don’t know if they’re trying to make the relevant market “America’s market for books” or if they maintain that Amazon has two separate monopolies (one in e-book sales and one in physical book sales). Justice Sotomayor (who was still a Circuit judge at this point) gave clarification to what the courts should look for in defining a relevant market. In Todd v. Exxon Corp. (Todd v. Exxon Corp.), she held that “to survive a Rule 12(b)(6) motion to dismiss, an alleged product market must bear a “rational relation to the methodology courts prescribe to define a market for antitrust purposes – analysis of the interchangeability of use or the cross-elasticity of demand,” Gianna Enters. v. Miss World (Jersey) Ltd., 551 F. Supp. 1348, 1354 (S.D.N.Y. 1982), and it must be “plausible.” Hack v. President & Fellows of Yale Coll., 237 F.3d 81, 86 (2d Cir. 2000).” She goes on to say that “cases in which dismissal on the pleadings is appropriate frequently involve either (1) failed attempts to limit a product market to a single brand, franchise, institution, or comparable entity that competes with potential substitutes or (2) failure even to attempt a plausible explanation as to why a market should be limited in a particular way.” In other words, in order to continue with your case and not have it dismissed, you must allege in your complaint a relevant market that plausibly doesn’t have interchangeability of use or cross-elasticity of demand with other products. In our case, e-books and physical books would have to be different enough that they couldn’t be seen as reasonable substitutes for one another. There’s some confusion as to what AU wants the relevant market to be. If they want to maintain that Amazon has a monopoly both in sales of e-books and sales of physical books (two distinct markets) then they would need to “attempt a plausible explanation as to why [the] market should be limited in [this] way.” I see no discussion in their letter of the differences between e-books and physical books and no reason why they should be seen as different markets. AU even admits that their concern is for “America’s market for books.”

Monopoly Power

Now that we have AU’s alleged relevant market, “America’s market for books,” we can look into whether Amazon has monopoly power in this market. A case that is perfectly on point is Bookhouse of Stuyvesant Plaza, Inc. v., Inc. (Bookhouse of Stuyvesant Plaza, Inc. v., Inc.). Bookhouse alleged in their complaint that Amazon controlled “60% of the U.S. e-book market.” They also made claims that Amazon’s market share of the print book market were similar. I’d like to go on a brief tangent related to the relevant market. The judge in Bookhouse also saw one of the problems I found with AU’s letter, they didn’t list enough differences to make it clear that these are two distinct markets. The judge noted that “without more detailed allegations or explanation, the Court cannot reasonably infer that these two markets simultaneously are so different that e-books and print books are not acceptable substitutes, and yet so similar that the Publishers’ market share is the same in both markets.” AU’s letter does allege a different market share for print book sales, but the two numbers seem to be close enough that it should at least be an open question as to whether we’re looking at a U.S. market for books or two markets – e-books and print books. AU has still not addressed the issue of whether e-books and print books are acceptable substitutes for one another.

When looking into Bookhouse’s complaint that Amazon controlled 60% of the e-book market, the judge held that “even if plaintiffs had alleged a cognizable market, plaintiffs’ only allegation suggesting that Amazon possesses monopoly power is that its market share is 60%. See First Am. Compl. ¶¶ 15, 20, 22. But the Second Circuit has held that “[a]bsent additional evidence, such as an ability to control prices or exclude competition,” even “a 64 percent market share is insufficient to infer monopoly power.” PepsiCo, 315 F.3d at 109.” Market share does seem to be AU’s main argument that Amazon is a monopoly. They allege that Amazon has 65% of the e-book market and 75% of the print book market. If these two figures make up “America’s market for books,” then Amazon controls 48.75% of American’s market for books. Absent “an ability to control prices or exclude competition,” this is not enough to establish monopoly control over the market. Even taking their separate figures, 65% of the e-book market would be inadequate to imply monopoly control on its own. I’ll address AU’s predatory pricing issue later on, but I doubt AU’s complaint would survive a 12(b)(6) motion to dismiss on the issue of monopoly control under the first requirement listed in Grinnell above. AU would have an even more difficult time proving the second requirement, that Amazon didn’t gain monopoly power “as a consequence of a superior product, business acumen, or historic accident.”

. . . .

Claim 2: Blocking Sales

AU’s next issue is that “Amazon, to pressure publishers over the past 11 years, has blocked and curtailed the sale of millions of books by thousands of authors.” Their next point seems to raise a similar issue “Amazon, during its dispute with Hachette in 2014, appears to have engaged in content control, selling some books but not others based on the author’s prominence or the book’s political leanings.” Now I question whether either statement is true, but for the purposes of a 12(b)(6) motion, we assume that the facts alleged by the Plaintiff are true. In response to a similar claim, the judge in Bookhouse said, “in essence, plaintiffs complain that Amazon has not allowed them to sell e-books on Amazon’s devices and apps. But no business has a “duty to aid competitors.”” The judge then cites the Supreme Court, noting that “[f]irms may acquire monopoly power by establishing an infrastructure that renders them uniquely suited to serve their customers. Compelling such firms to share the source of their advantage is in some tension with the underlying purpose of antitrust law, since it may lessen the incentive for the monopolist, the rival, or both to invest in those economically beneficial facilities.” That pretty much sounds like the situation between Amazon and AU (most of whom are authors published by the Big 5, Amazon’s rivals.)

. . . .

Claim 4: Predatory Pricing

AU’s next claim is that “Amazon routinely sells many types of books below cost in order to drive less well-capitalized retailers – like Borders – out of business. This practice, known as “loss-leading,” also harms readers by reducing the amount of revenue available for publishers to invest in new books.” Their first sentence is a claim of predatory pricing. Their second sentence, that readers are being harmed, seems to assume that new books can only reach readers via publisher investments and that when this amount is reduced, readers will have reduced selection. I don’t know why they’re alleging this because Amazon still pays the publishers the full amount when they price under their cost. There is no reduction of revenue as far as I understand.

The Supreme Court in Cargill, Inc. v. Monfort of Colorado, Inc. (Cargill, Inc. v. Monfort of Colorado, Inc.) defined predatory pricing as “pricing below an appropriate measure of cost for the purpose of eliminating competitors in the short run and reducing competition in the long run.” That’s what AU is alleging here. They say that Amazon is engaging in predatory pricing to drive competitors like Borders out of business. The Supreme Court later found predatory pricing to have two requirements in Brooke Group Ltd. v. Brown and Williamson Tobacco Corp. (Brooke Group Ltd. v. Brown and Williamson Tobacco Corp.) These requirements are “(1) the prices complained of are below an appropriate measure of its rival’s costs, and (2) that the competitor had a reasonable prospect or a “dangerous probability” of recouping its investment in the alleged scheme.”

I don’t think Amazon was targeting competitors with their below-cost pricing, but I think it could go either way. I agree that there is evidence that they priced below cost at some times, but I doubt they did it to drive Borders and Barnes and Noble out of business. Concerning his book pricing strategy, Jeff Bezos said in an interview (Business Insider Interview with Jeff Bezos), “Books are the competitive set for leisure time. It takes many hours to read a book. It’s a big commitment. If you narrow your field of view and only think about books competing against books, you make really bad decisions. What we really have to do, if we want a healthy culture of long-form reading, is to make books more accessible. Part of that is making them less expensive. Books, in my view, are too expensive. Thirty dollars for a book is too expensive. If I’m only competing against other $30 books, then you don’t get there. If you realize that you’re really competing against Candy Crush and everything else, then you start to say, “Gosh, maybe we should really work on reducing friction on long-form reading.” That’s what Kindle has been about from the very beginning.”

Let’s give AU the benefit of the doubt. Let’s say Amazon was targeting competitors with predatory pricing of books. Let’s say AU could prove that “the prices complained of are below an appropriate measure of its rival’s costs.” They then have to prove the second element which is where I think their argument fails. They would have to prove that Amazon “had a reasonable prospect or a “dangerous probability” of recouping its investment in the alleged scheme.” It is not enough to prove that a company engaged in predatory pricing. The Supreme Court noted in Brooke Group that “recoupment is the ultimate object of an unlawful predatory pricing scheme; it is the means by which a predator profits from predation. Without it, predatory pricing produces lower aggregate prices in the market, and consumer welfare is enhanced.” I don’t see how anyone can prove that Amazon plans on recouping profits when it engages in predatory pricing because Amazon as a company is willing to run on razor-thin margins. It reinvests what it makes in other acquisitions. Let’s give AU the benefit of the doubt on this one as well and say that they could somehow prove this.

Link to the rest at Randy Morris

Here’s a link to Randall Morris books. If you like an author’s post, you can show your appreciation by checking out their books.

Kindle Counterfeiting — A Growing Threat to Authors

24 August 2015

From Words on Words:

An insidious form of piracy is on the rise again, and you may already be a victim.

When Vancouver attorney and author Rebecca Merry Murdock checked Amazon listings for her debut book, she found something strange. The listing for her ebook version was not linked to her author page or the print version of her book. Amazon’s support team remedied the problem by linking the ebook to the print version and her author profile.

Weeks later, Rebecca noticed that a search for her book brought up an unfamiliar ASIN (Amazon’s unique catalog number).

An imposter had stolen the content of her book, uploaded it to Amazon, and created an exact duplicate of her real sales page. That imposter had been collecting royalties for the sale of Rebecca’s book. The imposter’s sale page was indistinguishable from the real one, and worse — it was now linked to her official author page.

And as a final insult, the counterfeit page appeared first when customers searched for Rebecca’s title.

. . . .

Although Amazon’s Anti-Counterfeiting Policy states that “if we determine that a seller account has been used to engage in fraud or other illegal activity, remittances and payments may be withheld or forfeited,” there is no indication that Rebecca will be compensated for months of stolen royalties.

Link to the rest at Words on Words and thanks to Andy for the tip.

New York Times v Amazon: a clash of cultures

24 August 2015

From The Guardian:

Last week the New York Times dropped a lighted match into the tinderbox of the August story drought with an 11,000-word article describing the wincing workplace norms of online retailer Amazon. Detailing stories of employees being treated callously in the wake of family tragedies and grown-ups weeping at desks, the Times noted that: “Amazon is in the vanguard of where technology wants to take the modern office: more nimble and more productive, but harsher and less forgiving.”

Authors Jodi Kantor and David Streitfeld interviewed more than 100 past employees to piece together the distressing picture of data-driven drudgery, but this did not stop accusations that the piece lacked the balance of voices of happy Amazon employees.

. . . .

Jeff Bezos, Amazon founder and owner of rival news organisation the Washington Post, went on the record with a statement to staff, saying the Amazon depicted in the article was not the workplace he recognised, that anyone suffering such abuses should contact HR or email him personally. The line adopted by both Bezos and his new head of PR, Jay Carney (formerly the White House press secretary) was that it was impossible to imagine any company with such practices surviving yet alone thriving in the highly competitive global marketplace.

. . . .

The back and forth between Amazon and the Times and the conversation it has generated is a perfect meta-narrative for the tension between technology companies and media companies. The modern newsroom is increasingly a place of measurement, and the more you measure (runs the theory), the better you will be as an organisation. Amazon, by the way, recorded $816,000 per employee in revenue last quarter, versus the New York Times’s $441,000 per employee. It is a matter of opinion as to whether this signals Amazon is a far worse or far better employer than the New York Times. Although this is certainly not what inspired the NYT reporting it is true to say that in most newsrooms there is particular curiosity about the quantified workplace as it becomes an ever closer threat (or amazing opportunity) for journalists themselves.

Link to the rest at The Guardian

PG notes that The New York Times had 5,363 employees in 2012 and 3,588 in 2014. Source

The Amazon had 88,400 employees in 2012 and 154,100 in 2014. Source

But Amazon is such a terrible place for employees, nobody ever works there.

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