From Publishers Weekly:
The Federal Trade Commission, supported by 17 state attorneys general, finally filed its long-awaited antitrust lawsuit against Amazon yesterday. In a 172-page complaint, the government alleged that the e-tailer “uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power.” The use of that power, the government continued, allows Amazon “to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon.”
The immediate industry reaction to the news of the suit was uniform: “What took so long?” Or, in the words of Melville House publisher Dennis Johnson, that it was “about ******** time.” An industry lawyer, who wished to remain anonymous, gave a more nuanced view in wondering why it took the government so long to act, pointing to the infamous buy button case in 2010, when Amazon pulled Macmillan’s buy buttons in a dispute over e-book terms.
Even with Amazon’s dominant position over the sale of e-books and print books, the suit doesn’t mention books, which, of course, were Amazon’s first line of business. The suit does, however, highlight Amazon’s hold over the companies who use its online marketplace to sell a range of products, including books, to consumers.
Jed Lyons, CEO of Rowman & Littlefield, was skeptical about how the case will play out, pointing to the government’s “sketchy” track record in lawsuits against major corporations. But even though the FTC lawsuit is more about third party sellers, Lyons said, if “it shuts down unauthorized sellers of new books, which we know are not new books, then that will be a win for book publishers.”
Independent booksellers, which were the first physical retailers impacted by Amazon and the steep discounting on books it employed to attract customers, praised the FTC’s long-awaited action. The lawsuit, said ABA CEO Allison Hill, “is good news for indie bookstores and good news for all small business. ABA applauds the FTC and states’ effort to release Amazon’s stranglehold, and we look forward to the transparency this lawsuit will provide into Amazon’s business practices.”
. . . .
Other industry groups, including the AAP and Authors Guild, have also long advocated that the government investigate many of Amazon’s practices.
No bookseller has been more active in attacking Amazon’s book practices than Danny Caine, owner of the Raven Book Store in Lawrence, Kans., and author of How to Resist Amazon and Why. Caine acknowledged that, “while the suit doesn’t go after Amazon’s book business in particular, it can still do a lot to level the playing field. For one thing, it can prove that Amazon is acting illegally or anti-competitively via tactics like preferencing its own products, placing unfair pressure on sellers who list their products for lower prices elsewhere, and forcing sellers and customers onto their Prime platform.”
The head of one independent publisher, who wished to remain anonymous, said that if the government prevails, “it could be very beneficial to publishers.” She then laid out the many challenges publishers face in dealing with Amazon: “I think [the suit] could affect tactics around the negotiation of discounts and fees, etc., with publishers. This would also be a good thing. The negotiations over the years between publishers and Amazon have been brutal. At first, Amazon got big discounts since they were buying non-returnable. Then, predictably, they started returning books and kept the discounts.”
She continued: “Publishers were simply too fearful and too powerless to stand up to their biggest customer. And then Amazon started added all manner of fees, effectively increasing their discount even further. To the extent that Amazon was able to discount books to lure customers away from other booksellers, publishers were effectively subsidizing Amazon’s growth and dominance while watching their margins erode.”
Melville’s Johnson made many of the same points, lamenting that the government’s lack of action up until now and allowing Amazon to use books as a “loss leader” got the company to where it is today. The government further strengthened Amazon’s hand, Johnson maintained, when it sued the major publishers over their e-book pricing policies. That decision “really pounded Amazon’s suppliers, and thus altered the business of making and selling books, probably irrevocably.”
Link to the rest at Publishers Weekly
Here are a few questions PG would like to put to the traditional publishers celebrating the FTC’s suit against Amazon:
- Do you really want your biggest customer to stop selling your books? That’s an option for Amazon. Traditionally-published books are a minuscule part of Amazon’s total sales, a rounding error.
- If Amazon decided to shut down its book business on a temporary or permanent basis, would Americans buy more or fewer books? Would Americans change their behavior and travel to physical bookstores once again (assuming they live within a reasonable distance from a remaining physical bookstore)?
- Do you really not care about readers who live a long way from a physical bookstore? Have you ever even visited North or South Dakota? Nebraska? Wyoming? New Mexico? Idaho? Nevada (outside of Las Vegas)? Kansas?
- Do you understand that the internet provides endless reading material at no charge to readers, reading material that doesn’t include commercial books?
- Do you really think your books are not competing for reader attention against free reading material on the internet?
- Do you understand how many more Americans log on to the internet every day instead of visiting a physical store of any sort, let alone a book store?
The answers to your questions:
1. Frankly, if it meant Amazon not selling books at all, yes. Amazon is also their biggest competitor, as far as publishers are concerned.
2. They think that they can stuff the indy publishing genie back in the bottle and go back to the good old days when they could push books onto the public.
3. No, they don’t care about readers who live out in the boonies, and no, they haven’t ever been out there, except maybe as tourists. Most of these people don’t really think that anything outside of the Acela corridor and California between San Francisco and L.A. is real.
4. No, they don’t understand this.
5. Yes. They really don’t understand what the internet has done.
6. No. Shopping on the internet is something plebeians like you and me do. They do their shopping in person, when they do it themselves.
The major publishers are happy sell direct to the consumer nowadays from their websites. They don’t push this, but they have the infrastructure set up. Many small publishers do in fact push this. It is the best of all worlds for them. They have to spend to fulfill the order, but they don’t have to split the sale price with a third party, and they have contact information for a reader of their sort of books. The big houses for a long time followed the older model of not engaging in direct retail in favor of the established distribution network, but they are not so slow as some enjoy imagining.
And in any case, Amazon is not the only game in town: just the biggest. Barnes & Noble, and even Walmart, are only too happy to sell you books online. Or, for that Powell’s. And so on…
The implicit belief that Amazon is the only place to buy books on the internet is fascinating. While it clearly is untrue, that an observer of the book trade can argue this with a straight face rather argues the government’s case that this is a monopoly.
Were Amazon to get out of the book business, there clearly would be a period of readjustment for readers, but Bob in South Dakota would not be cut off, if he has the least inkling of initiative to look at other sites.
Modern retail is a whole different game than anything the publishing establishment is even capable of understanding. It is now a game of branding, consumer loyalty, and constant change. And becoming a war of platforms that aggregate products from multiple sources. The winners are, like in any war, those that get there “firstest with the mostest” and there are no mulligans.
Looking at distribution channels as platforms isn’t just for software or even digital.
(Home Depot, Sam’s , and Costco are exemplars in the B&M world. Etsy and, yes, Amazon, are the exemplars in the online dry goods markets.)
What makes a retail platform successful, even dominant, isn’t just stocking the shelves or listing the product on a functional web site. (Just ask Buy.com, which started around the same time as Amazon and for a time was a close follower.)
In the book world, corporate publishers going back to direct to consumer (like the 60’s and 70’s) is a good thing. But if all they do is list the titles at full price and sit back, waiting for customers to magically find their way there, it won’t be terribly helpful. Especially if they keep relying on authors to do their own marketing and promotion.
As you say, the big publishers don’t play up their stores. Just having the infrastructure upis better than not but if that’s all they do?
What makes Amazon and the other retail platforms dominant in their markets is the *other* things they do to support their suppliers *and* the shoppers. Things like policing product availability (have you tried to buy a product listed at Walmart.com, even a house brand item, only to hit buy and *then* discover they no longer avaiable, not just out of stock?), linking similar products (also boughts may be of limited value for books but for food, dry goods, and electronics they’re priceless. Customer return policies. Shipping efficiency. Sales. And yes, low regular pricing.
For corporate publishers, the best example I’ve seen is TOR (somehow they got their overlords to let them copy Baen’s website). They do sales, freebies, mailings, and even host and online community. As a result, the TOR brand means something, u like most corporate imprints. (Their NYC-fovused editorial slant may not be for everybody but they do have a specific target audience in mind, not just “anybody who reads SF”.)
Amazon built their KDP dominance among Indies by offering value; hosting author pages, allowing sales, and offering access to the biggest book buying customer base. And, don’t underestimate the value of the ebookstore in the Kindle readers and app to say nothing of visibility newcomers get from KU where they don’t have to compete with big name tradpub authors. Their clasification structure, recent releases lists, and even the also boughts are useful to one extent or another.
Mind you, there are lots of things other digital platforms do (Steam, MS PC appstore, Playstation and XBOX stores, Netflix, Spotify, to name a few) that Amazon could learn a trick or two from but they still are the cream of the crop in dry goods retail.
If you look closely at the plaints from the publishing establishment they boil down to their inability to force Amazon to promote their product at tbe expense of others (particularly Indies).
The ideologues?
Much easier to diagnose.
Just as with MS and Facebook, Sony, and Apple, they refuse to accept the primacy of network effects. Or that success breeds success, with no legally mandated upper limit on sucess.
They simply “refuse* to accept the realities of the online economies: size comes with the territory.
(FWIW, the same FTC chasing Amazon, are still chasing their white whale of the Microsoft-Activision despite three clear losses in federal court and three weeks to go before the deal is executed.)
Wait until they discover that the Ante for the new “AI” markets, starts at $1B.
https://www.msn.com/en-us/news/other/openai-is-reportedly-working-on-an-iphone-of-ai-whatever-that-means/ar-AA1hpD8w
Amazon just *added* $4B to their deal with Anthropic. MS dropped over $10B to jumpstart their internal LLM models and it’s already starting to show up in Windows.
It a game where only giants can play.
If Amazon is too big for them, lets see how they deal with what’s coming in the era of multi-trillion companies.
Why it took the government so long to act, pointing to the infamous buy button case in 2010, when Amazon pulled Macmillan’s buy buttons in a dispute over e-book terms.
Publishing “won” that round, though, in the sense that they now control all ebook prices, not retailers, exactly how they wanted. The fact that went on to price ebooks at absurdly high prices is hardly Amazon’s fault.
“Loss leaders?”
Amazon doesn’t do loss leaders – except to try out businesses. If, after a reasonable trial, a business goes nowhere, they drop it, chalk it up to experience, and move on – and the people involved are reassigned, not dumped.
I doubt they’d still be in the book business if it weren’t at least mildly profitable.