Big Publishing

Why we need an e-book DRM DMCA exemption

31 October 2014

From Chris Meadows at TeleRead:

It’s that time again. Ars Technica reports that the Copyright Office is accepting petitions on activities to exempt from the DMCA’s anti-circumvention provisions, making it legal to crack DRM for certain restricted purposes.

. . . .

Public Knowledge will be submitting requests to legalize consumer ripping of DVDs and to allow circumvention of DRM locks on 3D printers. I’m not holding my breath.

. . . .

Here’s a crazy thought: if the Big Five publishers knew what they were doing, they would be submitting and throwing their weight behind a petition to permit consumers to crack e-book DRM for purposes of archival and platform interoperability. Think about it. Publishers already full well know their insistence on DRM effectively handed Amazon the keys to the kingdom, and their conflict with Amazon has come to a head over the last few months with the Amazon/Hachette squabble. What better time to ask the government to permit consumers to break the Amazon shackles?

This would be a way for publishers to have their cake and eat it, too. They could continue to put DRM on their books, placating authors who fear piracy, and it would continue to be illegal to crack DRM for pirate purposes. And what would it really change? It would only legalize something a lot of consumers already do illegally. It’s not as if they’re even trying to hunt down and prosecute people who crack DRM illegally anyway, unless they do something stupid like upload watermarked books to peer-to-peer.

. . . .

With legalized DRM-cracking for interoperability, e-book stores could set up their own DRM-cracking import services for the people who aren’t tech-savvy enough to set up Calibre themselves. Want to move all your e-books from your Amazon library to Barnes & Noble, or Kobo? Just drag and drop the files from your “My Kindle E-Books” directory onto this uploading app and we’ll take care of everything for you! Who knows, it might even make it possible for other e-book stores to compete with Amazon if you could make it almost as easy for customers to switch away from them and keep their libraries as it is to keep using them.

Link to the rest at TeleRead

A Call for Digital Media Ethics

29 October 2014

From Publishing Perspectives:

Self-appointed digital experts on any digital topic are very popular these days in the digital media. It seems that just being “digital something” gives anyone the right to feel competent at anything that has some “digital” flavor/attribute/declination/relevance. While there is a clear difference between being “a jack of all trades, but master of none” and a “windbag,” in the digital media almost anyone feels to belong to the former rather than to the latter. This is often because they believe their readers know even less than they do. While this might or might not be the case of the average reader, it is never true for the entire reading community. There always are readers that know better than any bigmouth.

These days I have been asked by few friends and colleagues in Europe what I thought about the recent and very popular article appeared on vox.com titled“Amazon is doing the world a favor by crushing book publishers” by Matthew Yglesias.

The title speaks for itself: it is clearly not unbiased journalism, but just another self-serving and very effective propaganda, with 2,300+ shares on Twitter, 6,700+ on Facebook. A lot less (300+) on LinkedIn. Good job, great traffic, a lot of eyeballs and advertising money. This is an example of how a digital media can become “creative” at content publishing to pursue advertising money.

Bashing “book publishers” is a very common sport these days, as publishing expert Mike Shatzkin noticed.

. . . .

However no individual has the right to be listened to. Especially not if it’s for his/her own profit. Being listened to is a privilege that needs to be ethically earned and handled. Not seized by exploiting listeners’ trust or abusing own properly earned listeners’ base. Intentionally and unintentionally. This is still one of the things where the most digital media companies have got plenty of room to improve.

Thus the only point I have here is ethics. Manipulating readers for its own profits perhaps it is legal but not always ethically correct. In my humble opinion.

. . . .

However no individual has the right to be listened to. Especially not if it’s for his/her own profit. Being listened to is a privilege that needs to be ethically earned and handled. Not seized by exploiting listeners’ trust or abusing own properly earned listeners’ base. Intentionally and unintentionally. This is still one of the things where the most digital media companies have got plenty of room to improve.

Thus the only point I have here is ethics. Manipulating readers for its own profits perhaps it is legal but not always ethically correct. In my humble opinion.

. . . .

This would help, in the end, to reduce the overall online buzz around unqualified opinions and ultimately better curate a quality selection of content by ethical digital media to the great benefit of the readers. And still — hopefully — with decent profits for the digital media owners.

“Digital media ethics” are three simple words that open an entire very complex world of options, risks and opportunities. A Pandora’s box, perhaps. It is about time to seriously do something about it. The readers will certainly appreciate ethics. Advertisers will follow and shareholders will be happy too.

Link to the rest at Publishing Perspectives and thanks to Bill for the tip.

In PG’s inexhaustibly humble opinion, this article has a fairly high incomprehensibility index. However, the comments are great.

From David Gaughran:

Ethics? Values? Give me a break. What kind of values does the publishing industry have exactly?

Penguin Random House owns the biggest vanity press in the world and is aggressively expanding its exploitative operations. Harlequin, HarperCollins and Simon & Schuster have white label vanity press imprints powered by Author Solutions. Harlequin is facing a class action for swindling its own writers out of contractually agreed royalties. And that’s just the tip of the iceberg.

The reason we criticize the industry (as I explained to Shatzkin), is because (a) we find this behavior unacceptable and (b) we want the industry to change.

From Joe Konrath:

You claim Yglesias is engaging in the sport of “book bashing” in order to make advertising dollars. You claim the author didn’t disclose his background. You claim this is unethical.

You’re funny.

Where is the citation and refutation of any of Yglesias’s points? You make a claim of “fiction” without supporting your belief that Yglesias isn’t telling the truth. We should agree with your “fiction” pronouncement because you’re an expert?

Must I have a PhD in mathematics to say “2 + 3 = 5″? Am I not allowed to defend gay rights because I’m not gay?

Do you know that the “arguement from authority” is a fallacy?

You speak of propaganda that “pursues advertising money.”

Kind of like someone who makes money in the digital book business and writes an editorial defending the groups who hire him? But there’s no propaganda behind your piece, eh?

From William Ockham:

I notice that the author doesn’t follow his own advice. Shouldn’t his disclaimer include that he has never run an online magazine, never been a professor of ethics, etc.?

Negative disclaimers are silly. This isn’t about ethics, it is about attacking the credibility of outsiders who have the insolence to opine about publishing. Vena wraps his hit piece in the veneer of ethics, but he really seems to be afraid of open debate with people outside his ‘tribe’.

From Papyrus to Pixels

28 October 2014

From The Economist:

Fingers stroke vellum; the calfskin pages are smooth, like paper, but richer, almost oily. The black print is crisp, and every Latin sentence starts with a lush red letter. One of the book’s early owners has drawn a hand and index finger which points, like an arrow, to passages worth remembering.

In 44BC Cicero, the Roman Republic’s great orator, wrote a book for his son Marcus called de Officiis (“On Duties”). It told him how to live a moral life, how to balance virtue with self-interest, how to have an impact. Not all his words were new. De Officiis draws on the views of various Greek philosophers whose works Cicero could consult in his library, most of which have since been lost. Cicero’s, though, remain. De Officiis was read and studied throughout the rise of the Roman Empire and survived the subsequent fall. It shaped the thought of Renaissance thinkers like Erasmus; centuries later still it inspired Voltaire. “No one will ever write anything more wise,” he said.

The book’s words have not changed; their vessel, though, has gone through relentless reincarnation and metamorphosis. Cicero probably dictated de Officiisto his freed slave, Tiro, who copied it down on a papyrus scroll from which other copies were made in turn. Within a few centuries some versions were transferred from scrolls into bound books, or codices. A thousand years later monks meticulously made copies by hand, averaging only a few pages a day. Then, in the 15th century, de Officiis was copied by a machine. The lush edition in your correspondent’s hands—delightfully, and surprisingly, no gloves are needed to handle it—is one of the very first such copies. It was printed in Mainz, Germany, on a printing press owned by Johann Fust, an early partner of Johannes Gutenberg, the pioneer of European printing. It is dated 1466.

. . . .

Although this copy of de Officiis may be sequestered, the book itself is freer than ever. In its printed forms it has been a hardback and, more recently, a paperback, published in all sorts of editions—as a one off, a component of uniform library editions, a classic pitched at an affordable price, a scholarly, annotated text that only universities buy. And now it is available in all sorts of non-printed forms, too. You can read it free online or download it as an e-book in English, Latin and any number of other tongues.

Many are worried about what such technology means for books, with big bookshops closing, new devices spreading, novice authors flooding the market and an online behemoth known as Amazon growing ever more powerful. Their anxieties cannot simply be written off as predictable technophobia. The digital transition may well change the way books are written, sold and read more than any development in their history, and that will not be to everyone’s advantage. Veterans and revolutionaries alike may go bust; Gutenberg died almost penniless, having lost control of his press to Fust and other creditors.

But to see technology purely as a threat to books risks missing a key point. Books are not just “tree flakes encased in dead cow”, as a scholar once wryly put it. They are a technology in their own right, one developed and used for the refinement and advancement of thought. And this technology is a powerful, long-lived and adaptable one.

. . . .

Books read in electronic form will boast the same power and some new ones to boot. The printed book is an excellent means of channelling information from writer to reader; the e-book can send information back as well. Teachers will be able to learn of a pupil’s progress and questions; publishers will be able to see which books are gulped down, which sipped slowly. Already readers can see what other readers have thought worthy of note, and seek out like-minded people for further discussion of what they have read. The private joys of the book will remain; new public pleasures are there to be added.

What is the future of the book? It is much brighter than people think.

. . . .

Historically books were a luxury item. Having become cheap enough for the masses in the 20th century, in the 21st century digital technology and global markets have made them more accessible still. In 2013 around 1.4m International Standard Book Numbers (ISBNs) were issued, according to Bowker, a research firm, up from around 8,100 in 1960. Those figures do not capture the many e-books that are being self-published without an ISBN.

Many of those self-published books are ones in which traditional publishers would have had no interest, but which almost-free distribution makes worthwhile: do you feel like checking out some Amish fiction? The size of the text, as well as the size of the niche, becomes less of an issue, too; short stories and novellas are making a comeback. “Before there used to be too-big-to-carry and too-short-to-print,” says Michael Tamblyn, the boss of Kobo, an e-reading company. “Now all those barriers are gone.”

. . . .

[A]s Russell Grandinetti, who oversees Amazon’s Kindle business, puts it, the print book is “a really competitive technology”: it is portable, hard to break, has high-resolution pages and a “long battery life”. Technology companies that are used to consumers flocking to snazzy features and updates have found it surprisingly challenging to compete with a format of such simplicity, and consumers are uninterested in their attempts to do so. All most want is the ability to change font size, which is attractive to older eyes. Experiments with reinventing the presentation of books—by embedding sound and video inside e-books, for example—have fallen flat. Sales of e-readers, the most popular of which is the Kindle, are in decline. “In a few years’ time,” a recent report by Enders Analysis, a research firm, predicts, “we will look back at e-readers and remember them as one of the shortest-lived of all consumer media devices.”

You do not need a dedicated e-reader to read an electronic book. The multipurpose tablet devices which are replacing e-readers let you read books and—crucially—buy them whenever you like. Some forms of book benefit a lot. Heavy readers of genre fiction—romance, thrillers and science fiction—were early converts to the cheaper, more portable alternative. Other sorts of book have remained more stubbornly in print form, for various reasons. Physical books make better gifts; many people still want bookshelves in their homes. Parents who feel that their children are spending too much time with screens go for printed books as an alternative, which means a new generation is growing up in contact with print.

. . . .

“A bookstore is defending a very specific lifestyle, where you want to take time out of your day and write or think or read,” says Sarah McNally, owner of a bustling independent bookshop in Manhattan.

. . . .

Before the 19th century it was common for writers to publish themselves, a practice that carried no particular stigma, but imposed a significant burden of inconvenience on seller and buyer alike. One author in Paris had to direct buyers to his home on “Mazarine Street…above the Café de Montpellier, on the second floor using the staircase on the right, at the far end of the alley”. As publishing became a mass-market business in subsequent centuries, the self-published came to be seen as kooks or egotists, and treated as marginal in either case. Readers went to bookshops, bookshops bought from publishers and that was the way it was. Bookshops mostly refused to stock them.

Today self publishing has made a comeback. The internet enables people to sell their e-books and print books without the hassle of directing people to their homes or trying to get bookstores to display them. It also offers them success on a scale never before possible.

. . . .

Last year Amazon’s sales of self-published books were around $450m, according to one estimate; a former Amazon executive thinks the number is higher. In America about a quarter of the books that got an ISBN in 2012 were self-published, according to Bowker—almost 400,000 titles. In 2013 self-published books accounted for one out of every five e-books purchased in Britain, according to Nielsen.

. . . .

But the advantages of being “properly published”—editors, promotion, and the like—should not be oversold. “We have to be careful not to compare the reality of self publishing with the ideal of legacy publishing,” says Barry Eisler, a thriller writer. In 2011 he walked away from a publisher’s advance of $500,000 in favour of the self-publishing route; he says the decision paid off well. Susan Orlean, an author and a staff writer at the New Yorker, considered something similar for a recent book. “In a million years I would have never thought of that before,” she says. She thinks the day will come when publishers may have to start unbundling their services. “The mere fact that publishers make hardcover books won’t be a powerful enough argument. They will have to reimagine their role.” Publishers could start offering “light” versions of their services, such as print-only distribution, or editing, and not taking a cut of the whole pie.

. . . .

In 1471 [Niccoló Perotti] the humanist scholar complained to a friend, “Now that anyone is free to print whatever they wish, they often disregard that which is best and instead write, merely for the sake of entertainment, what would be best forgotten, or better still, be erased from all books.” His worries were echoed for centuries. “If everyone writes, who will read?” asked Christoph Martin Wieland, an 18th-century German writer.

Link to the rest at The Economist and thanks to Tina for the tip.

Save the Book Publisher

28 October 2014

From Bloomberg View:

Last week, Matt Yglesias wrote a piece with the headline, “Amazon is doing the world a favor by crushing book publishers.” He thinks that “publishers are superfluous,” they’re “terrible at marketing,” and also something about advances.

Let’s think about what publishers are, what they have to offer authors who would otherwise self-publish and what alternatives to them exist.

Let’s think about what publishers are, what they have to offer authors who would otherwise self-publish and what alternatives to them exist.

A lot of work goes into publishing a book. Someone needs to edit the manuscript. The manuscript must be typeset and copy-edited. A cover has to be designed (most self-published books are terrible in this regard). The book needs to be marketed to readers, which can require producing ads and seeking out publicity. Paper books have to be printed, stored, shipped to distributors and bookstores, and sold; returns need to be managed. E-books have to be converted to various formats, ideally not just using automated tools.

Self-published authors can try to do all of these jobs themselves. Many attempt that, and it shows. Or they can outsource some or all of the tasks. When doing so, it’s best to use professionals who have tried to publish a book before. Maybe a team that’s used to working together. Perhaps the people even sit in the same building, so that they can quickly coordinate.

Congratulations: You have just re-created publishers, but without advances.

The question is how to pay for all of that. Since there is no advance, the author has to not only finance writing the manuscript — which can be a big burden — but also to come up with perhaps tens of thousands of dollars to prepare the book for publication.

. . . .

It’s probably true that publishers are terrible at marketing most books. And it may be true that some books aren’t edited very well, although I know that my book editor girlfriend spends a lot of time on her manuscripts. The mistakes of big publishing are legion, but I doubt that the problem is that publishers are not investing enough in their business; rather, they are not investing enough in the right areas.

Link to the rest at Bloomberg View

PG is obviously biased, but, as a journalistic genre, these apologias written to inform the peasants how important publishers are seem more and more lame.

Amazon’s Dispute With Hachette Might Finally Be Hurting Its Sales

27 October 2014

From Time:

The book business launched Amazon to success, and now it’s hurting the online retailer’s growth.

Amazon announced its worst quarterly loss in 14 years Thursday, losing $437 million in three months. One of its worst-performing segments? Amazon’s old core business: North American book, movie and music sales. The segment’s sales increased a mere 4.8% from 2013, the slowest growth for the category in more than five years. That compares with a 17.8% growth in that segment a year ago.

Amazon chalked up the slow media segment growth to fewer students buying textbooks, but that doesn’t seem to be the whole story. In fact, the company’s woes may in part be related to its damaging publicity spat with the publisher Hachette.

. . . .

There isn’t much visibility into what’s going behind closed doors and in sealed accounting documents at Amazon, but by targeting Hachette, Amazon is making it harder to buy the retailer’s own books. A customer deterred by an artificially long shipping time on a Hachette book is a sale lost. For a huge company like Amazon, that may be little more than a self-inflicted scratch, but it’s likely making difference.

And more importantly for the online retailer over the long term, the dispute may be hurting Amazon’s image and turning customers away. For book readers who love particular authors, it’s hard to forget when a bookstore is accused of having “directly targeted” a favorite writer. A literary-inclined crowd, already more likely to side with the letters people than the money people, may see the Hachette dispute as a turning point. “It’s logical that readers identify more with authors than with Amazon,” says Colin Gillis of BGC Financial. “Amazon is a service. You may like the service but you build a relationship with authors.”

Link to the rest at Time and thanks to James for the tip.

Do Publishers Deserve to Exist?

27 October 2014

From Dr. Syntax:

This week’s screed against book publishers comes from Matt Yglesias at Vox.com, who proclaims, “Amazon is doing the world a favor by crushing book publishers”–a headline that shouts clickbait but fairly reflects his piece. Yglesias, whose work I have often admired, notes that he’s the child of two authors and has published a book himself, so his hatred seems to be honestly earned. Writing of the “fundamental uselessness” of publishers, he says they are going to be “wiped off the face of the earth soon” by Amazon “and readers will be better for it.”

Book-business types rolled their eyes at Yglesias’ hostile tone and ignorance of some key facts, but I saw it cited as smart and “thoughtful” by a number of media people and others who I’d have hoped would know better.

. . . .

Curation. The function of choosing what work is most worth presenting to readers is derided by some as a retrograde, “elitist” notion. Why should publishers appoint themselves as selectors of what people ought to read, when everybody can  put their work online and let readers judge for themselves?

For starters, think about the staggering number of books released every year: in 2013 it was close to one million–304,000 traditionally published and more than double that number of self-published books (precise figures are hard to collect because many self-pub titles, including those produced on Amazon, aren’t captured by standard industry measures). A customer going into a bookstore confronts what may seem like a dizzying number of titles. But all of them have been through a multi-step screening process where agents, editors, marketers, and booksellers have determined these books have value.

When I was a publisher, I probably turned down a hundred books for every one I published–and most of those had already been screened by agents who filtered another hundred for each one they sent me. Imagine the bookstore–more like a mega-warehouse–where all of those titles are on the shelf.

. . . .

 Investment/Venture Capital. Publishers pay advances against royalties, taking substantial risk that enables authors to undertake time- or money-intensive reporting, or sometimes just to feed their families, while they’re working on their books. Even novels sometimes require travel and research. This point has been made by several other writers (such as Franklin Foer and Evan Hughes) so I won’t go into depth on it here. Suffice it to say that unless someone is willing to risk substantial advances, the only authors who’ll be able to devote months or years to their work will be those who are independently wealthy.

. . . .

When authors who have not already captured the public’s attention publish themselves, by and large the results do not prove the uselessness of publishers. The average sale of a self-published title is under 250 copies, somewhat less than the average number of friends on Facebook. (I say this not to bash self-publishing, which is a fantastic opportunity for some authors and demonstrably a route to stunning success and riches for a few. But just because some authors achieve stunning success without publishers does not mean the latter add no value.)

The tragedy of publishing is that publishers are never as good as marketing as they would like to be. Any thoughtful bookperson is all too aware of this, even before disappointed authors like Yglesias remind us. Blockbusters aside, the revenues generated by any individual book are barely enough to cover much more than the cost of mailing review copies, maybe a couple of online ads or a handful of author appearances. That every new book is a unique product, whose audience won’t be quite the same as any other book, means that each marketing campaign is a matter of inventing the wheel–horribly inefficient. And for these reasons, the time and attention of publishing personnel are also limited resources that are typically stretched too thin.

. . . .

Marketing a book is a far larger and more complex process than just listing it on Amazon or buying a New York Times ad. In a publishing house, the marketing process begins even before a title is acquired, with an editor kindling enthusiasm among colleagues. As the process gathers steam, word is spread out to the world by publicists, sales reps, e-mails and personal letters, schmoozing, and gossip, plus advertising, review copies and free advance e-books, social media, and paid promotions with bookstores and online sellers.

As soon as a manuscript enters the publishing pipeline, the house is communicating with retailers, reviewers, media producers, movie scouts, foreign publishers, and all the other channels by which readers hear about books, telling them what makes this title worth reading. One of the oldest publishing truisms is that word of mouth is the most effective way to sell books, and in some ways a publisher is a large group of people organized to generate word of mouth and amplify it as widely as possible.

. . . .

If lower prices are good for readers, so is diversity in the marketplace of ideas. If Amazon were to “crush” publishers, first of all, book sales would plunge as printed books, and thousands of sales outlets for them, largely disappeared. The publisher-less world Yglesias imagines will also be a bookstore-free world, totally dominated by one seller that will have even greater sway over what gets promoted than it does now. It will also have the ability to change at whim the terms it offers to authors, in their disfavor, as it already has more than once. That’s my idea of a dystopia, not of readers being better off.

It is naive to imagine that trading many different publisher-gatekeepers for one or a few massive retailer-gatekeepers would result in authors “seeing their total income rise.” As for readers, the serendipity of browsing bookstore shelves and of discovering a book you didn’t know you were looking for, or of getting a great recommendation from a clerk who knows your taste, will be nostalgic memories– replaced by a search function and algorithms completely controlled by one or two companies who make the “giant conglomerates” that own publishers look puny and who may tilt the playing field for their own purposes.

Link to the rest at Dr. Syntax and thanks to Barry for the tip.

Read this before you take sides in the tussle between publishing houses and Amazon, Flipkart

25 October 2014

From Tech in Asia:

The tussle between big book publishers and Amazon, which started in the US, has now spilt over to India, where local ecommerce leader Flipkart has also been dragged in.

The arguments made against Amazon and Flipkart have a familiar ring – that their discounts will kill the publishing industry in the long run, that the two companies are becoming a duopoly, and that ebooks need to be priced higher for the sake of authors.

The publishing houses enjoy sympathetic coverage in the mainstream media in both the US and India, as the godzilla Amazon makes an easy target for scare-mongering. This report in The Economic Times, for instance, presents a one-sided view of the issue. It doesn’t alert readers that the claims made by publishing houses are exaggerated on several counts, not the least of which is that digital publishing and online distribution are hurting authors.

Ashok Banker, well-known Indian author of the Ramayana Series, is unequivocal when he explains how much he has gained from ebooks. He tells Tech in Asia:

The ebook editions of my books now outsell the print editions by a factor of easily 100:1. As in, for every 100 ebooks sold of a particular title, the publishers sell barely one print copy. To look at it another way, the print editions have increased in sales at a rate of about 10 percent each year, while ebook sales have doubled every six months or so for the past three years.

. . . .

By and large, however, the well-established authors, who manage to wangle decent royalty deals for printed books, pitch in for the brick-and-mortar publishing industry. And they are the ones usually quoted in the print media. Amish Tripathi, author of the much-loved Shiva Trilogy, had this sweeping statement in The Economic Times: “Online stores are not convenient for browsing as against a physical bookstore where people spend hours discovering new titles. This creates a problem for new authors who find it difficult to be visible on these sites.”

. . . .

Initially, when he submitted the manuscript of his first book to the publishers, all of them, without exception, rejected the book. Then Tripathi decided to self-publish. His agent invested in printing, and he in its marketing. The management techniques Tripathi learnt at IIM (Indian Institute of Management) probably helped him spread the word about the book on social media. “When my book became a best-seller within a week, and sold 45,000 copies in less than four months, the publishers came back to me,” he told me in an interview earlier this year.

. . . .

Ashok Banker too, despite a successful start to his writing career, got stymied by the “MNC factory publishers,” as he describes the major publishing houses. There were no takers for his Ramayana Series in India, which then got snapped up abroad. He explains what prompted him to eventually take the self-publishing route:

Once the Ramayana Series was bought by all those foreign publishers, the Indian publishers immediately became interested in my mythological retellings and bought Indian rights – but still did not expect mythology to sell as well in India as it might sell abroad. So despite the success of the series, when I tried to sell my next titles, they continued to reject them or offer abysmal advances. This was what prompted me to retain ebook rights of all my works and sell them independently on my own website and also on the Amazon Kindle platform.

Banker had the last laugh because mythology went on to become the biggest-selling category in Indian publishing. “Now my publishers want the ebook rights, but I’m not selling them at any price,” he says happily.

Link to the rest at Tech in Asia and thanks to T.M. for the tip.

Paul Krugman Is Wrong About Amazon.com

25 October 2014

From The Motley Fool:

The no-holds-barred fight between Amazon.com  and Hachette Book Group over e-book pricing took a turn for the worse recently (for Amazon, that is) after a number of prominent commentators suggested the U.S. Justice Department should sanction the e-commerce giant for alleged violations of antitrust laws.

. . . .

But to anyone familiar with antitrust legislation — more specifically, federal appeals courts’ interpretation of the Sherman Antitrust Act — it’s clear that claims like these are nothing more than hyperbole. While Amazon is certainly a large and growing online retailer, even a liberal interpretation of its share of the domestic e-commerce market puts the figure at less than 50%, which is well below the 70% threshold courts typically require as proof of monopoly power.

. . . .

The gap between hyperbole and reality widens when you consider the e-commerce market’s insignificance in the context of overall retail sales. In 2013, for instance, domestic e-commerce sales added up to $263 billion, which is a fraction of the $4.5 trillion in total retail sales processed in the United States over the same period.

And even if a court found Amazon to possess monopoly power — as one could somewhat realistically claim it does in the e-book market — that’s still only half the battle, as it must also be proved that said power is being exercised to the detriment of consumers. According to the Justice Department’s antitrust guidance, “Prohibiting the mere possession of monopoly power is inconsistent with harnessing the competitive process to achieve economic growth.”

To prove Amazon is illegally exercising this hypothetical power, in turn, one would have to demonstrate that it is raising prices or curtailing supply by, among other measures, keeping competitors out of the market through predatory pricing or other prohibited means. Implicit in this is the assumption that Amazon earns monopoly profits — that is, the economic profits that accompany inflated prices. But as many investors know, Amazon has never reported meaningful earnings. In 2013, it generated a mere $274 million in net income from $74.5 billion in sales. That equates to a profit margin of only 0.37%.

Link to the rest at The Motley Fool and thanks to Dusty for the tip.

Why the Book Publishing Industry Exists

25 October 2014

From The New Republic:

Matt Yglesias has a little “real talk” for us at Vox. Amazon is doing us all a favor, he says, by crushing the fundamentally useless middleman between author and reader: the book publisher.

Yglesias’s piece is mostly a rehash of familiar arguments that often come from people who occupy a similar position to Yglesias’s: They are, broadly speaking, outsiders to the publishing world and more closely associated with the broader fields of business, economics, and technology. They appear to believe their outsider status allows them to see more clearly how broken publishing is; they’re not captive minds. The insiders tend to respond that the outsiders could stand to be less ignorant of the industry they’re criticizing. This fight tends to devolve quickly.

. . . .

A publisher’s list of books is in essence a risk pool, a term most often associated with health insurance. In the insurance business, the profits from the healthy people outweigh the big losses from the sick ones because the healthy outnumber the sick. In publishing, it’s the opposite, yet the underlying concept is the same. Most books lose money, but the ones that make money earn enough to cover all those novels that didn’t sell.

The publishing scenario that Yglesias is advocating is a world without health insurance. (Ironic, I know.) In a system without the publisher operating as middleman, where the author takes his life’s work and just posts it to Amazon, each book becomes a lonely outpost in the stiff winds of the marketplace, a tiny business that must sell or die.

. . . .

Mark Krotov, an editor at Melville House, points out on Twitter that in posts like these two, Yglesias has often recommended “good, unusual books” such as Maxine Hong Kingston’s Tripmaster Monkey and Daniel Dennett’s Consciousness Explained. “I’m confident that none of these books, as different and diverse as they are, could ever have found their audience without a publisher,” Krotov writes.

. . . .

The observation that book publishers are not charities but business enterprises is largely accurate, but it does not capture the whole truth.

Link to the rest at The New Republic and thanks to Meryl for the tip.

PG always finds it interesting when someone tries to argue for the necessity of big publishing in an age of Amazon, ebooks, the internet and freelance editors.

Because . . . risk pool! Find an audience!

Lurking in the background is the meme that authors are idiot savants who need someone to do the practical work necessary to sell their books.

Does Amazon’s Monopoly Really Matter?

25 October 2014

From Megan McArdle at BloombergView:

The first thing to remember about the Amazon/Hachette Book Group dispute is that this sort of thing happens all the time in business. When two big companies negotiate, it’s like Mothra and Godzilla: Each party can throw around a lot of weight, which means some collateral damage. It’s not exactly unheard of for a company that doesn’t like a supplier’s price to stop carrying the product, or to deny the supplier valuable end-cap space, or otherwise deprioritize the sales of the contested items.

The second thing to remember about the Amazon/Hachette dispute is that writers are categorically unable to see what they do as in any way akin to, say, selling potato chips. Writing is special and sacred! The sight of our product being treated like Chef Boyardee spaghetti is more than our tender souls can bear. And unlike grocery suppliers, writers have access to column space in which to pour out our anguish. That’s why so much ink has been spilled over this contretemps.

The third thing to remember is that publisher interests are not the same as author interests. Neither are Amazon’s.

. . . .

This is actually a deep debate about monopoly. The standard argument you’ll hear about monopoly is that it’s bad for consumers. That wasn’t always the case. If you look at a case like the one against Alcoa, decided in 1945, it’s not clear that the target was consumers; Alcoa was holding onto its monopoly by selling final aluminum products at such a low price that new entrants found it impossible to compete. But at its inception, anti-trust policy had a much broader orientation toward producers as well as consumers. Over time, it came to focus on consumers, so that they are all you hear about today.

. . . .

You will note that authors complaining about Amazon’s war on Hachette rarely say, “This is terrible because readers will buy someone else’s book instead of mine”; rather, they focus on the harm to the reader, even though having to wait a few weeks for your book, or order from Barnes & Noble, ranks pretty low on the list of terrible things that can happen to someone.

. . . .

The problem with using antitrust laws to protect producers is that smaller incumbents have a broad interest in nothing changing. Small bookstores were better off without Barnes & Noble, and Barnes & Noble is better off without Amazon. Demanding protection from a “monopolist” that has less than 50 percent of the market easily turns into a demand to protect small, inefficient producers from innovation. This is unworkable, unless you’d think we’d be better off frozen in 1935.

. . . .

Writers are in particularly parlous shape because every segment of the industry seems to be hoping that they’ll be able to survive by getting a subsidy from some other segment: the publishers hope to save on publicity by giving contracts to well-known writers with a good “brand,” and the news outlets wanly suggest that writers getting paid pennies a word could make it back by writing books. So naturally, a war on the one segment that still, sometimes, actually makes money from consumers buying the product seems particularly frightening.

Link to the rest at BloombergView

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