Amazon

US vs. Apple

6 December 2019

From The Wall Street Journal:

Politicians and social critics who worry about “the curse of bigness”—and vow to rewrite antitrust law to break up Facebook and Google—forget what happened the last time the government used the law against a Silicon Valley company. In 2012 the government successfully sued Apple for daring to compete with Amazon in selling e-books. The unintended result was not exactly a victory for the consumer or for competition: the continued dominance of Kindle, Amazon’s e-book format and reading device; increased e-book prices; and suppressed e-book innovation.

Chris Sagers, a law professor at Cleveland State University, explains in “United States v. Apple: Competition in America” what he sees as confusion about antitrust law. His analysis can be helpful—he notes the long history of companies invoking claims of “predatory pricing” as a cudgel against more efficient competitors and stresses that consumers often benefit when industries and companies are driven out of business—but he is confused about the case itself.

His thesis is that Apple’s entry into the e-book market was so clearly a violation of antitrust law that critics of the case must not believe in competition. But critics object to an interpretation of antitrust law that ended up punishing Apple for introducing a new pricing approach—an approach that is now common in every other area of online sales. Mr. Sagers forgets the guardrail rule of antitrust: Don’t bring cases against innovations that create more competition.

Consumers were delighted when Amazon launched its Kindle e-reader in 2007, and book publishers were happy to sell books in digital form. But there was an unusual feature. In its selling of e-books, Amazon operated according to the same pricing arrangement that had governed the sale of print books—that is, it bought e-books wholesale and chose its own price for them, just as bookstores had long done with print books. Brick-and-mortar bookstores needed this pricing flexibility for many reasons, not least to clear their inventory of unsold books by means of lower prices. The arrangement let Amazon sell e-books for years as a loss-leader—at the low price of $9.99—to boost profitable sales of its Kindle devices.

Around the same time, Apple had set about licensing music, video and games so that consumers would have reasons to buy its iPad. Apple realized that, for digital goods, there was no reason to follow the wholesale model. It could simply set up a revenue-sharing formula. Content owners and app developers—think of an iPad or iPhone game, such as “Minecraft” or “Fortnite,” that offers premium features—could pick their own price, even choosing to offer content free, and Apple would take 30% of any sales as a commission.

When Steve Jobs decided to include e-books on the iPad in 2010, Kindle had a 90% market share. So book publishers were again delighted—that Apple would be entering the market with its revenue-share model and letting publishers set the prices for their e-books. The largest publishers met among themselves to agree on the terms for licensing their books to Apple. The government sued, claiming an unlawful conspiracy masterminded by Apple.

Mr. Sagers sees this as an open-and-shut case of an unlawful pricing conspiracy and expresses surprise that there was so much support for the book publishers and Apple. He rightly dismisses the self-serving argument that books are so culturally important that publishers and Apple deserved an antitrust exemption. He is also right to note that Amazon was not, despite its huge market share, an unlawful monopolist—big is not always bad.

. . . .

Mr. Sagers believes that opposition to the Apple case shows that Americans are ambivalent about competition. There are times, he says, when “competition seems destructive.” When antitrust law requires firms to compete in such circumstances, then “antitrust itself has seemed like a failure.” The government claimed that Apple conspired with book publishers, risking higher prices, but the case was perceived as a government favor to Amazon, which it was.

Indeed, people objected to the Apple case because it was ill-advised—limiting consumer choices and blocking lower prices. Appeals Court Judge Dennis Jacobs made this point, writing in his 2015 dissent that Apple’s conduct “immediately deconcentrated the e-book retail market, added a platform for reading e-books, and removed barriers to entry by others.” With Apple in the game, Amazon’s 90% market share fell to 60%. Now it’s back up to 83%, according to the latest industry estimate. As competition decreased, prices increased. The typical price for a Kindle best seller is now in the range of $14.95.

. . . .

The Apple case violated the first rule of antitrust: First, do no harm.

Link to the rest at The Wall Street Journal (Sorry if you encounter a paywall)

PG hasn’t read the book that is the subject of the WSJ review. However, the author of the review wildly misstates the purposes, activities and actions of Apple and all but one of the largest publishers in the United States.

Let us review the actions and actors in this matter (which were extensively documented and discussed on TPV during the days of yore):

  1. While Amazon was not the first entity to sell ebooks, it was the first to sell ebooks from traditional publishers at a substantial discount from their list prices, which correlated with the suggested list prices for printed versions of the same books.
  2. Amazon also was revolutionary in permitting self-published books (including ebooks) to be listed and sold side-by-side on the same basis as traditionally-published books.
  3. The six largest publishers in the United States – Random House, Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster had developed a cozy little dinner group consisting of their CEO’s who met about every three months in a private dining room in Manhattan to talk about their mutual concerns – most often Amazon’s habit of discounting the prices of their books and what they could do about it. These six produced the majority of books sold in the US and were receiving complaints from their traditional bookstore customers about Amazon’s low prices. The publishers did not want to “cannibalize” their sales of printed books and were the recipients of a growing number of complaints from their traditional bookstore customers. No company attorneys were present during these dinner discussions.
  4. PG will note that private meetings of the top executives of large companies that dominate an industry to discuss the pricing of their products are almost always a bad idea and, by themselves, raise a big red antitrust flag. Competent corporate counsel would always advise against such a practice.
  5. Apple was planning to introduce its iPad in January, 2010, and include an iBookstore as one of the product’s attractions.
  6. PG notes that Apple has never been a fan of significant discounts for the products it sells.
  7. In December, 2009, Apple’s senior VP of Internet Software and Services, Eddy Cue, contacted the members of the Publishers dinner group to set up meetings.
  8. During these meetings, Cue said that Apple:
    1. Would sell the majority of e-books between $9.99 and $14.99, with new releases being $12.99 to $14.99, higher prices than Amazon was charging.
    2. Apple would use the same “agency pricing model” that it used in the App Store for ebooks.
    3. Agency Pricing allowed the Publishers control the retail price of the e-books with Apple receiving a 30% commission.
    4. Most significantly, Apple would require what is generically described as a “Most-favored nation” clause in its contracts with publishers that allowed Apple to sell e-book at the lowest price of its ebookstore competitors (read “Amazon”).
  9. PG doesn’t recall if the publishers had another private CEO dinner or not, but evidence at the later antitrust trial showed the Big Six publishers called each other over 100 times in the week before signing the Apple agreements. Everyone except Random House boarded this bandwagon.
  10. In January 2010, Apple held one of its typically flashy product launches for the iPad together with its associated ebook, music and video stores.
  11. During the post-launch mingling, Wall Street Journal reporter Walter Mossberg asked Steve Jobs why people would pay $14.99 for a book in the iBookstore when they could purchase it for $9.99 from Amazon. In response Jobs stated that “The price will be the same… Publishers are actually withholding their books from Amazon because they are not happy.” In other words, the publishers would force Amazon to raise its ebook prices to match those in the iBookstore.
  12. Amazon complained to the Federal Trade Commission and, rather than not being able to sell any ebooks of the major publishers, switched to the agency model after negotiations with the major publishers. This resulted in an average per unit e-book retail price increase of 14.2% for their new releases, 42.7% for their NYT Bestsellers, and 18.6% across all of the Publisher Defendants’ e-books.

For lots more information, see United States v. Apple on Wikipedia.

Back to the book reviewed in the OP, there was nothing wrong with Apple “introducing a new pricing structure” – agency pricing. Had Apple only done that, no antitrust violation would have occurred. However, when Apple conspired with a group of the largest publishers to force Amazon (and anyone else selling ebooks) to adopt agency pricing when such had not previously been the case, that was an antitrust violation, particularly in the light of what happened to ebook prices after the coordinated joint action took place.

Had the big publishers individually been willing to lose the highly-profitable ebook sales on Amazon as a potential consequence of telling Amazon it had to raise its prices and/or agree to let the publisher set the price, that would probably not have triggered any antitrust concern. Coordination between the publishers to use their combined power to force Amazon raise prices was where the publishers crossed a clear legal line.

With respect to what happened in the court case, each of the publishers admitted guilt, settled the antitrust claim and promised not to do any price-fixing in the future. Apple litigated the antitrust case to the max and lost at every stage.

Although Amazon was not a party to the litigation, Amazon won.

More significantly (in PG’s majestic and resplendent opinion), authors won. Indie authors in particular won. In June, 2010, a couple of years before any antitrust litigation had been commenced, Amazon introduced its 70% ebook royalty option which has put a great deal of additional money into authors’ pockets ever since.

Amazon Announces the Best Books of 2019

13 November 2019

From The Amazon Press Center:

Today, Amazon announced its selections for the Best Books of 2019, naming Margaret Atwood’s The Testaments – the sequel to her dystopian masterpiece The Handmaid’s Tale – the Best Book of 2019. The annual list features the Top 100 books of the year plus Top 20 lists across various categories ranging from literary fiction, mystery and thriller, biography, children’s and young adult, making it the go-to list for holiday reading and gift giving. All lists are hand-selected by Amazon’s team of editors – first by choosing the best books of every month, and then, finally, the best books of the year.

. . . .

“The Books Editorial team reads thousands of new releases every year, all with the goal of recommending the very best to our customers,” said Sarah Gelman, Editorial Director, Amazon Books. “This year there were so many great books from various genres. Our top 100 Best Books list includes books with clever satire, heartwarming memoirs and psychological thrillers. But as soon as we read it, it was clear that Margaret Atwood’s The Testaments was the book of the year. The sequel to the modern classic The Handmaid’s Tale enraptured our editorial team and readers across the globe with a dramatic continuation of goings-on in the dystopian Republic of Gilead. It’s so exciting to witness literary history being made, and Atwood has done just that with this deeply moving book.”

“I’m Canadian, where modesty is a requirement. So I’m mildly embarrassed, though absolutely delighted, to hear that the Amazon editorial team has chosen The Testaments as their book of the year,” said Margaret Atwood, author of The Testaments. “While I’m no prophet, we seem doomed to live in stressful times. A tale of hope and courage narrated by three strong female voices appears to have connected to this crucial 2019 moment.”

. . . .

8 . They Called Us Enemy by George Takei, Justin Eisinger, Steven Scott, and Harmony Becker: George Takei’s vivid graphic memoir reveals the story of his family’s incarceration during the internment of Japanese Americans during World War II, beginning when Takei was only five years old. Even as the memories depicted range from unsettling to infuriating, They Called Us Enemy inspires readers to insist that our country treats fellow human beings with fairness and dignity.

9. The Silent Patient by Alex Michaelides: In this psychological thriller, a couple seems to have it all until the wife is convicted of shooting her husband in the face. But she will say nothing about the crime—or anything else, for that matter. After a criminal psychologist obsessed with the case comes on the scene, dark twists and delightful turns follow, secrets (and a diary) are revealed, and you will likely find yourself racing to the end of this year’s must-read thriller.

10. Maybe You Should Talk to Someone by Lori Gottlieb: What happens when a celebrated psychotherapist finds herself on the other side of the couch? Maybe You Should Talk to Someone is an entertaining, relatable, moving homage to therapy—and just being human.

The top pick in the children’s category is the middle grade novel:

  1. Dear Sweet Pea by Julie Murphy: Bestselling author Julie Murphy makes her middle-grade debut with a smart, funny novel that tween readers will quickly embrace. Patricia “Sweet Pea” DiMarco is a seventh grader dealing with a wide range of emotions and change, including recently divorced parents and friendships in transition. Dear Sweet Pea is a warmhearted read that is at once reassuring, wise, and utterly relatable.

During 2019, the Amazon Books editorial team read thousands of pages to help customers discover their next great read. Here are some interesting facts about this year’s Best Books of the Year list:

  • Most highlighted quote from Margaret Atwood’s The Testaments, our number one pick, is: “You don’t believe the sky is falling until a chunk of it falls on you.”
  • Customers’ Most Wished For titles in our top 100: The Silent Patient by Alex Michaelides, The Testaments by Margaret Atwood, City of Girls by Elizabeth Gilbert, Maybe You Should Talk to Someone by Lori Gottlieb, and Daisy Jones & the Six by Taylor Jenkins Reid
  • Top three best of the year selections that readers have used both Audible and Kindle interchangeably throughout are: The Silent Patient by Alex Michaelides, City of Girls by Elizabeth Gilbert, and Mrs. Everything by Jennifer Weiner.
  • Alex Michaelides’s The Silent Patient, our ninth pick, is the number one most popular book on Goodreads this year, added to Goodreads shelves by more than 380K members; especially impressive since it’s a debut novel!
  • Lori Gottlieb’s Maybe You Should Talk to Someone (#10 on our list) is the number one most popular nonfiction book on Goodreads this year, followed closely by Three Women (#19).

Link to the rest at The Amazon Press Center

And here’s a link to all the best books

Amazon’s Heavy Recruitment of Chinese Sellers Puts Consumers at Risk

11 November 2019

From The Wall Street Journal:

It looked like Amazon.com Inc.’s yearslong quest to build a shopping business in China was a bust in July when it folded a big part of its local business.

In fact, Amazon’s China business is bigger than ever. That is because it has aggressively recruited Chinese manufacturers and merchants to sell to consumers outside the country. And these sellers, in turn, represent a high proportion of problem listings found on the site, according to a Wall Street Journal investigation.

The Journal earlier this year uncovered 10,870 items for sale between May and August that have been declared unsafe by federal agencies, are deceptively labeled, lacked federally-required warnings, or are banned by federal regulators. Amazon said it investigated the items, and some listings were taken down after the Journal’s reporting.

Of 1,934 sellers whose addresses could be determined, 54% were based in China, according to a Journal analysis of data from research firm Marketplace Pulse.

Amazon’s China recruiting is one reason why its platform increasingly resembles an unruly online flea market. A new product listing is uploaded to Amazon from China every 1/50th of a second, according to slides its officials showed a December conference in the industrial port city of Ningbo.

Chinese factories are squeezing profit margins for middlemen who sell on Amazon’s third-party platform. Some U.S. sellers fear the next step will be to cut them out entirely.

Tony Sagar began noticing the China effect around 2015. His company, Down Under Bedding in Mississauga, Ontario, had sold goose-down duvets on Amazon since 2014—these days, for $699 for a queen-size version. Then Chinese competitors hit, listing goose-down duvets for sometimes a sixth his price. He bought one and had it tested: Inside was inexpensive duck down.

The Journal in October bought a duvet from the same Amazon seller claiming “100% Fill With Goose Down” and had it tested. The result matched Mr. Sagar’s: duck feathers.

“They’re claiming they’re selling a $500-$700 duvet based on false specifications, so people say, ‘$120, it’s a good deal!’ ” Mr. Sagar said. “Amazon is making a direct push for these factories in China.”

In response to this article, an Amazon spokesman said, “Bad actors make up a tiny fraction of activity in our store and, like honest sellers, can come from every corner of the world. Regardless of where they are based, we work hard to stop bad actors before they can impact the shopping or selling experience in our store.”

. . . .

Mr. Sagar’s discovery came as Amazon was expanding a campaign it started around 2013 urging Chinese businesses to sell directly to consumers abroad. An Amazon sales director, Alicia Liu, at a 2017 conference told Chinese business people she was leading a team in China, drawing on her previous experience cutting out middlemen in Walmart Inc. ’s supply chain.

. . . .

“We help factories directly open accounts on Amazon and sell to U.S. consumers directly,” a video shows her telling them. “This is our value.”

A wave of Chinese merchants have joined Amazon’s millions of third-party sellers worldwide, who collectively represent more than half of Amazon’s physical gross merchandise sales.

Among the 10,000 most-reviewed accounts on Amazon’s U.S. site whose locations could be determined in October, about 38% were in China, Marketplace Pulse calculates, compared with 25% three years ago.

The Amazon spokesman said 38% “is a significant exaggeration of the real percentage of the top ten thousand’’ and that the methodology is flawed, citing what it said were problems with the way in which the analysis used seller review counts to estimate the percentage. Marketplace Pulse said it stood by its analysis.

. . . .

Amazon’s third-party marketplace, which connects merchants and buyers around the world, is crucial to the company’s growth. At the same time, even though it has become a source of fake or dangerous goods, Amazon has denied it is liable for what’s sold there, saying in court cases that it neither makes nor sells the products in question.

In its annual Securities and Exchange Commission filing this year, Amazon disclosed for the first time that counterfeits and fraudulent products are a risk factor. It said Amazon may be “unable to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated, or stolen goods,” among other issues.

Amazon said it recruits sellers in many countries and that these merchants are central to its goal of offering customers good selection at good prices. Amazon said it requires products to comply with applicable laws and regulations. It said that in 2018 it blocked more than three billion suspect listings for various forms of abuse.

Consumers and businesses with safety and intellectual-property grievances have found it hard to hold Chinese sellers accountable—in part because Amazon doesn’t require its sellers to provide their locations to the public on its U.S. site.

. . . .

The Journal identified sellers as being in China from their pages on Amazon’s site in Mexico, where regulations require sellers to list their locations on Amazon—a method Marketplace Pulse also uses.

New sellers from China are hurting merchants that have built Amazon businesses offering products they import from Chinese factories, said Amazon seller Bernie Thompson. His Plugable Technologies in Redmond, Wash., lists electronics products made in China. Since about five years ago, Chinese manufacturers selling on Amazon have priced him out of some product categories, he said—some of them his own suppliers and others who game Amazon’s rating system, he said.

. . . .

Amazon seller Zhao Weiming said the site “is the most cost-effective way to sell into the United States.” The Guangzhou businessman experimented several years ago listing gadgets on Amazon before settling on cosmetics and essential oils, he said, establishing factories to produce them under the name Lagunamoon. He said his company earns $50 million a year on Amazon.

Listings for some popular Lagunamoon essential oils claimed they were U.S. Food and Drug Administration approved, until the Journal raised the matter with Amazon and Mr. Zhao in early November. An FDA spokesman said essential oils wouldn’t meet the agency’s definition of an approved product, although it was possible some component—a dye, say—might be approved.

Mr. Zhao said FDA requirements are complex and he didn’t want to use tens of thousands of words to explain.

. . . .

Concerns at Amazon about Chinese listings arose several years ago in its China team, which noticed that as local sellers flocked to the platform, it saw increasing patterns of fraud, counterfeits and unsafe products, said former Amazon employees in China.

Washington state’s attorney general’s office said Amazon agreed to pay $700,000 as part of a legally binding agreement after an investigation revealed dozens of products marketed toward children had excessive lead and cadmium. The products were made in China, the office said, some sold by China-based third parties. Amazon didn’t admit wrongdoing.

. . . .

Cheap Chinese counterfeits drove Kevin Williams, a Utah seller of water-powered cleaning brushes on Amazon, to lay off six employees this year—most of his U.S. staff, he said. He and his co-founder developed their patented Brush Hero product, made in the U.S. and U.K., in 2015 after finding it difficult to clean their vehicles, selling them on Amazon for $34.99.

. . . .

Poorly made copies began appearing in 2018 on Amazon, eventually listing for as low as $9.99, some claiming to be the Brush Hero brand, he said. Buyers, unaware they were fake, trashed Mr. Williams’s products on his Amazon page, he said. When he complained to Amazon, he said, it told him to order the alleged counterfeits and test them. Amazon removed brushes he proved counterfeit, he said, but it could take weeks for them to arrive for testing, and new counterfeits kept popping up.

He dropped prices to $19.99, which “pulled out the rug from us from a cash-flow perspective” he said. A retailer declined to give him a large contract. “He said, ‘What the heck, your Amazon reviews are terrible,’ ” said Mr. Williams, who calls his company “walking dead.”

Amazon said that it acted on infringement cases where Brush Hero provided adequate information and that it has introduced programs for sellers to fight counterfeits, including one called Project Zero that uses automation to scan Amazon stores and remove suspected counterfeits.

Counterfeits and inauthentic reviews “have all gone through the roof with the rise of Chinese sellers,” said Chris McCabe, an investigator for Amazon until 2012, now a consultant helping Amazon sellers counter illicit competition.

. . . .

Inauthentic reviews for listings from China can trick Amazon’s algorithm into boosting products, people outside Amazon familiar with the activities said. A search for “travel pillows” in August presented products with names such as MLVOC offered by sellers whose names matched those of Amazon accounts registered in southern China.

The Journal ordered MLVOC-brand pillows from sellers named Corki and Kingstyle Supplies, and got gift cards offering a free pillow if the buyer emailed an address—the same address for both sellers. A “Gift card team” responded, asking the buyer to give a five-star review for which it promised an Amazon gift card. Of one MLVOC pillow’s roughly 2,000 reviews, about 86% have five stars.

Amazon policy forbids making inducements for positive reviews. Amazon said it investigated and took action, eventually reinstating Kingstyle and Corki. Amazon said in some cases it will reinstate seller accounts after violations if the sellers provide corrective action plans, though the accounts would be blocked after further infractions.

. . . .

It is often hard to tell that an Amazon seller is based in China, as is the case with the Amazon page of Lagunamoon, the essential-oil and cosmetics provider. It shows no indication the products are Chinese and gives no store address. Lagunamoon’s Mr. Zhao said that is because the U.S. doesn’t require it.

. . . .

Amazon seller Molson Hart in Texas is suing 73 sellers, many located in China, in Texas federal court, for trademark infringement on products like his Brain Flakes interlocking plastic disk set. He has been selling the Chinese-made toys on Amazon since 2014, and counterfeits started appearing in 2015, he said.

After he filed suit, he couldn’t hunt down the Chinese companies. “I know who did it,” he said, “but I can’t serve them.”

. . . .

Amazon buyer Irvin R. Love Jr. of Georgia bought a hoverboard on Amazon in November 2015 that caught fire and burned down his home, according to a suit he filed February 2018 against Amazon, the seller and others, in Georgia federal court. In an amended complaint this year he alleged that Amazon was negligent for not removing the hoverboard from its website before Mr. Love’s purchase. Amazon argued in a legal filing that it doesn’t owe damages because it didn’t design, manufacture or sell the hoverboard.

Mr. Love also sued the seller, Panda Town, which his lawyer, Darren Penn, said appeared to be a Chinese company, based on sales information. Mr. Penn said that he can’t locate the seller and that Amazon declined to provide its location.

Cross-border e-commerce has made it harder to police unsafe products entering the U.S., he said. “When you had the traditional importer and customs and brokers—and all those procedures are followed—you provide a couple of layers of protection that you don’t when you’re talking about an internet market.” The case is in discovery, and Mr. Penn declined to make Mr. Love available for comment.

. . . .

“It’s not normal that a factory with 200 people manufacturing baby monitors in Dongguan can ship products directly to consumers in Minnesota or in Europe through a marketplace,” he said. “The day the regulator makes them responsible, then we’ll have proper compliance programs.”

Amazon said sellers create their own product listings and are required to comply with all relevant laws and regulations when listing items for sale in Amazon stores.

Mr. Thompson, the electronics seller, said Chinese factories have steadily pushed him out of lower-end goods such as USB cables, pricing at less than he can. The Chinese sellers often boost their product rankings by arranging large purchases of their own products and leaving positive reviews for themselves, he said—a tactic he said he learned about while attending an independent Amazon-seller event featuring a China-based sales consultant in Hong Kong several years ago.

Link to the rest at The Wall Street Journal (Sorry if you encounter a paywall)

PG has written previously about the increasing number of stories describing skeezy behavior by Amazon. These differ from earlier Amazon-Derangement Syndrome press-release stories about Amazon generated by U.S. labor unions, publishers, booksellers, etc., in that the more recent stories have originated from far more reliable sources and reflect a deeper level of research into allegedly questionable Amazon activities.

PG suggests that stories like the OP are a perfect means of generating legislation that holds Amazon liable for damages arising in connection with actions arising from third-party sales through its online platforms. General rules governing product liability in the U.S. include a retailer which sells a defective product among those an injured party may sue. If PG recalls the rationale for such liability correctly, it is because the retailer participated in the sale, the retailer is in a better position to identify defective products than the consumer is and the purchaser should not be burdened with the task of pursuing a manufacturer or designer who may be difficult to identify and locate when the retailer is known.

While he’s happy to be corrected by the various well-informed attorneys who follow TPV, PG is not aware of any great legal hurdles that would have to be surmounted to impose liability on a seller like Amazon which mingles products sold and sometimes produced by itself and those for which the nominal “seller” is a third party, particularly an unidentified or misidentified third party, for whom Amazon is effectively providing a trusted American storefront and provides outsourced billing and payment services for the third party that Amazon contends is the “real” seller.

As for PG’s purchasing behavior, he studiously avoids buying any products on Amazon that hint of being sold by Chinese companies which do not have a well-established reputation for making and selling high-quality products. While this is undoubtedly unfair to lesser-known Chinese companies that have high standards for product design and quality, PG suspects he’s not the only one engaging in such discriminating purchase behavior. PG has also decided that if he purchases a product through Amazon that turns out to be sold by a Chinese company that has disguised its identity or the location where the product originates, he’s returning it immediately for a refund.

PG is acquainted with some price-sensitive shoppers who have started routinely checking online prices from Walmart before they purchase anything from Amazon. One of the stated reasons is that they’ll have no problem returning an unsatisfactory product to Walmart for a full refund.

The reputation of a brand is expensive and time-consuming to build, but it can be seriously, sometimes irretrievably, tarnished in a much shorter period of time.

PG recently read that Jeff Bezos wants to buy an NFL professional football team and that he spends much of his time away from the Seattle headquarters of Amazon. In and of themselves, those facts tarnish the Bezos/Amazon image in PG’s mind.

If these reports are true and if the past behavior of other business leaders/owners of large commercial organizations is any guide, it appears that Bezos may have subcontracted control of Amazon’s business philosophy and practices to subordinates who don’t share the same values that characterized the Amazon of 5-10-15 years ago.

PG suggests this isn’t a good idea if the long-term well-being of Amazon as an online retailer is still important to Bezos.

Raven Book Store Owner Publishes “How to Resist Amazon and Why”

10 November 2019

From The American Booksellers Association:

Danny Caine of Raven Book Store in Lawrence, Kansas, has published a zine titled How to Resist Amazon and Why. The 16-page zine features Caine’s October 2019 letter to Amazon CEO Jeff Bezos, a review of the case against Amazon, a compilation of Raven’s Twitter advocacy, and additional material.

How to Resist Amazon and Why was quick to receive widespread attention. Caine told Bookselling This Week that “Between in-store sales, online sales, and wholesale orders we’ve shipped out, we’ve moved about 1,400 zines in the first 10 days. All of those were hand stapled by me, my wife, and my friends.” Caine added, “we’ve sent them to around 60 stores in the U.S., Canada, and England.”

Due to the zine’s popularity, Raven partnered with Microcosm Publishing to assist with distribution. Microcosm has a record of resisting Amazon — even going as far as altering its business model to no longer have a direct distribution relationship with the company. Microcosm has positioned itself in such a way that Amazon sales comprise only one percent of its sales each month.

According to Caine, Microcosm expects How to Resist Amazon and Why to be its best-selling zine of the season with already a few thousand pre-orders. Microcosm confirmed that Caine’s zine was impressively its #2 title for the last week of October.

Joe Biel of Microcosm told Bookselling This Week, “I think the zine has been so successful because people feel very frustrated by Amazon.” Biel added that no one “realized how big of a title this would be. Nor did anyone realize that [the zine] would resonate so deeply with bookstore employees.”

In Raven’s letter to Bezos last month, Caine articulated some of the many ways Amazon has hurt booksellers. “We like business competition, we think it’s healthy. But the way you’ve set things up makes it impossible to compete with you,” said Caine.

He challenged the idea of tech companies “disrupting” old ways of doing business to further innovation, saying “…we are not ripe for disruption. We’re not relics. We’re community engines…If your retail experiment disrupts us into extinction, you’re not threatening quaint old ways of doing things. You’re threatening communities.”

Link to the rest at The American Booksellers Association

PG doesn’t like to see any small business fail because, almost always, there is a lot of work that someone or several someones have put into building it up and keeping it running.

However, any business, large or small, relies on customers to purchase its goods/services.

PG suspects that blaming Amazon for a sales downturn really amounts to blaming the former customers of the business who have, for one reason or another, chosen to purchase from Amazon because doing so benefits those customers in some way that’s important to them.

If lower cost is a reason those customers prefer purchasing from Amazon, criticizing Amazon is effectively blaming those customers who may not have enough money to pay for the extra overhead involved in supporting a physical bookstore. At least some of those customers are avid readers who appreciate the ability to obtain more books to read and enjoy.

PG also suggests that, if Amazon had never existed, someone else would have run the same play that Jeff Bezos did. Physical books are a great product for mail order because they don’t spoil on the shelf, don’t get broken during shipping and even benefit from lower postal costs.

Ebooks are an even more ideal product because they’re cheap to store and, effectively, cost nothing to deliver. If Amazon had not executed its ebook strategy, some other cost-cutter or combination of cost cutters would have done the same thing.

Again, blaming Amazon because a lot of people prefer reading ebooks over physical books is, effectively blaming those readers for their personal choices.

How a failed economic theory still rules the digital music marketplace

8 November 2019

From 5Mag.net:

Unless you spent a lot of time listening to early ’00s techno-utopian babble, the Theory of the Long Tail probably means nothing to you. Yet if you live in the US or Europe and you run a digital music label, you’re living it – or the fallout from it – almost every day.

In 2004, Wired magazine editor Chris Anderson proposed The Long Tail, an economic theory blown up by futurist steroids. It theorized that with the introduction of the internet, blockbusters would matter less and everyone would sell “less of more.” The Long Tail prophesied “How Endless Choice Is Creating Unlimited Demand,” according to the subtitle of Anderson’s later book, which if true would turn the field of economics on its head.

For a practical example of what this all means, compare a brick-and-mortar record store like the old Tower Records vs. an online retailer like Traxsource. Your local Tower Records had to limit its inventory to take into account a finite shelf space. Their stock might have consisted of a couple hundred records. And each record didn’t get equal shelf space: your hippie boomer parents were going to buy more copies of Beatles records than all your Belgian techno records, so the store would stock and give more attention to the former. This “artificial” scarcity of physical products taking up physical space and depriving it from other products had bent consumer behavior out of shape for basically all of history.

. . . .

With the internet and the creation of intangible digital products, this was supposed to change. Traxsource and other digital retailers are limited not by shelf space but by the size of their server hard drive array. And buying more server space is cheaper than building a new store.

According to Anderson, sales would in the future would represent a classic “Pareto” or “power law” demand curve: 20% of sales would be by “star” artists selling millions of copies each in our record store analogy, while 80% would consist of many thousands, tens of thousands or even millions of artists selling relatively few copies of each of their albums as the store’s near-infinite inventory meant people could metaphorically “wander about” and choose from millions of options.

This was the “Long Tail” in a nutshell, represented on a chart stretching to the right into infinity: in the future, music retailers would sell “less” copies from “more” artists. Many more.

. . . .

As early as 2008 – five years after iTunes was founded and we began to get actual data of how this whole thing was working – keen observers began chopping the Long Tail down to size. Economist Will Page working with Andrew Bud and Gary Eggleton was able to obtain somewhat anonymized transactions from a “large digital music provider” rumored to be either Rhapsody or iTunes itself. They had so much data, in fact, that an ordinary Excel spreadsheet choked on it.

It was a gigantic sample of… nothing.

80% of the songs had no transaction data: they had sold no copies at all.

There wasn’t any volume in the “Long Tail” and nothing had really changed – except for the worst. The actual sales data showed an even greater concentration of sales in the “Fat Head.” Page later spoke about their findings:

“We found that only 20% of tracks in our sample were ‘active,’ that is to say they sold at least one copy, and hence, 80% of the tracks sold nothing at all. Moreover, approximately 80% of sales revenue came from around 3% of the active tracks. Factor in the dormant tail and you’re looking at an ’80/0.38% rule’ for all the inventory on the digital shelf.

“Finally, only 40 tracks sold more than 100,000 copies, accounting for 8% of the business. Think about that – back in the physical world, forty tracks could be just 4 albums, or the top slice of the best-selling ‘Now That’s What I Call Music, Volume 70’ which bundles up 43 ‘hits’ into one perennially popular customer offering!”

When the new owners of Rolling Stone recently announced they would challenge Billboard’s dominance of the pop charts, what was left unsaid is how pointless a “top 100” of ANYTHING has become. As far as big-time music industry relevance, a “top 100” could probably be cut down to a “top 8” or “top 11.” Sales are so heavily concentrated at the top that you’d expect artists to start their own campaign for industry income equality.

Link to the rest at 5Mag.net

PG suggests the same thing may happen on Amazon with books.

But he could be wrong.

For one thing, it is possible that the market for a wide array of books is different than the market for popular music.

Or not.

PG will be interested to hear the opinions of one and al on this topic.

The Current State and Future of Goodreads

7 November 2019

From Book Riot:

I’ve always been a numbers gal. Don’t get me wrong, I was never a math whiz, but I can’t resist creating lists and following my progress in a numerical fashion. Even as a slow reader, I get a kick out of tracking the books I read throughout the year on Goodreads. It’s a helpful motivator, and it’s the ideal way to refresh my abysmal memory when asked about my recent favorite reads. I rarely know off the top of my head, and my Goodreads list is always there to save me.

Goodreads was born a little over a decade ago, in December 2006. Soon after its launch, the site’s membership grew exponentially. It quickly racked up over half a million users by the end of 2007. User numbers kept on growing, and the popular site for book readers caught the eye of Amazon in 2013. At the time, readers (and writers) were wary of the purchase, though some did feel positive about the move.

. . . .

Fast forward to early 2019. Goodreads now has a companion smartphone app, but the site still looks much the same as it once did. Otis Chandler and Elizabeth, Khuri Chandler, the founders of the site, stepped down as CEO and Editor-in-Chief earlier this year and Veronica Moss—previously the Revenue & Operations Officer for Goodreads—took over as CEO.

. . . .

I was interested in finding out whether there was a future for a platform that feels so outdated and archaic in terms of design and functionality, so I set about to speak to users to hear out about their thoughts and experiences. I also got in touch with Goodreads to inquire about future plans for the site.

. . . .

There are no two ways around it, Goodreads is due for an update. The website needs a visual refresh—the color palette and design feel incredibly outdated. I almost feel nostalgic when I logon because it feels like a website I might have perused in the early 2000s as a kid in computer class. And that’s because that’s what it is. The site has changed minimally over the years. Books are added every day to the platform, but the shell hasn’t grown or evolved as quickly as its user base.

. . . .

I asked fellow readers and members of two online book clubs about their Goodreads experiences via social media. In the end, I received the opinions and observations of nearly a hundred readers who all echoed similar complaints but who were also often vehement about their love of the platform.

. . . .

It’s surprising that a platform owned by Amazon has such terrible search functionality. If you’re only vaguely certain of the book title, you’re looking for? Good luck.

Search is a joke. You have to type in the whole title in its entirety and even then it’s not usually one of the top results. Or when you’re searching and as you type more letters of the title to be more specific, the book you’re looking for disappears from the drop down options. —Laurel Kenneweg, a Goodreads user who has used the platform for at least nine years

. . . .

“I hate the app but love the website”
. . . .

Oddly, Goodreads fails miserably when it comes to integrating with services like Audible and Amazon. The Kindle integration is pretty stellar, but readers told me that they find it strange that there’s seemingly very little feedback going on between Amazon and Goodreads. Book recommendations on Amazon don’t seem to line up with a user’s Goodreads activity, for example.

. . . .

The groups function of Goodreads is incredibly retro. The message board–like area of the site where people can chat with like-minded readers needs an update of its own. For a site that focuses a lot on the social aspect of reading, it makes it markedly difficult to engage with other readers.

Link to the rest at Book Riot

Amazon now sells movie tickets in India

3 November 2019

From TechCrunch:

Amazon has set its eye on the next business it wants to disrupt in its key overseas market India: online movie tickets. The e-commerce giant said Saturday it has partnered with local online movie ticketing giant BookMyShow to introduce booking option on Amazon India shopping site and app.

The move comes months after the e-commerce giant began offering flight ticketing option in the country as it races to turn its payments service Amazon Pay into a “super app” — a strategy increasingly employed by players in emerging markets such as India.

Starting today, Amazon users in India can book movie tickets from the “movie tickets” category under “shop by category” on the shopping site or through the Amazon Pay tab, the e-commerce firm said. BookMyShow, which leads the online movie ticketing market, is the exclusive partner for this new offering, the two said.

To gain market share, Amazon said its credit card users in India will get a 2% cashback on each movie ticket purchase. Until November 14, it will also offer a cashback of up to Rs 200 on each ticket purchase.

. . . .

BookMyShow, which employs 1,400 employees, sells about 15 million tickets each month. The service, which has a presence in over 650 towns and cities, today counts heavily-backed Paytm  as one of its biggest rivals. Paytm, which entered the movie ticketing business three years ago, has been able to eat some of BookMyShow’s market share by offering cashback on each ticket purchase.

The media and entertainment business in India is worth $23.9 billion, a report from EY-FICCI said in March this year, which noted that consumer spendings on the web is increasingly growing. More than 50% of all tickets sold by the top four multiplex chains in the country in recent years have occurred on the web.

. . . .

Last month, Amazon introduced a new feature that allows Amazon Pay users to pay their mobile, internet, and utility bills through Alexa. This is the first time Amazon is offering these functionalities in any market — it plans to bring this to the U.S. in coming months.

Link to the rest at TechCrunch

Congress Looking into Anticompetitive Behavior in the Digital Library Market

31 October 2019

From Publishers Weekly:

The American Library Association (ALA) has delivered a written report to the House Judiciary Committee telling lawmakers that “unfair behavior by digital market actors,” including Amazon and some major publishers, is “doing concrete harm to libraries.”

The report, delivered last week to a House antitrust subcommittee investigating competition in the digital market, comes as lawmakers are taking note of the growing backlash to Big Five publisher Macmillan’s decision to impose a two-month embargo on new release e-books in public libraries.

. . . .

Under Macmillan’s new policy, which is scheduled to go into effect on November 1, public libraries are allowed to license a singe discounted, perpetual access e-book for the first eight weeks after a book’s publication. After eight weeks, libraries can purchase multiple two-year licenses at the regular price (roughly $60 for new works). Librarians, however, say that not being allowed to license multiple copies upon publication unfairly punishes digital readers, and will only serve to frustrate users and will hurt the ability of the library to serve their community, especially if other publishers follow suit.

“Libraries are prepared to pay a fair price for fair services; in fact, over the past ten years, libraries have spent over $40 billion acquiring content,” the ALA report reads. “But abuse of their market position by dominant actors in digital markets is impeding essential library activities that are necessary to ensure that all Americans have access to information, both today and for posterity. If these abuses go unchecked, America’s competitiveness and our cultural heritage as a nation are at risk.”

. . . .

“The worst obstacle for libraries are marketplace bans: refusal to sell services at any price,” ALA officials notes, pointing to Amazon Publishing. “The e-book titles from Amazon Publishing are not available to libraries for lending at any price or any terms. By contrast, consumers may purchase all of these titles directly from Amazon. This is a particularly pernicious new form of the digital divide; Amazon Publishing books are available only to people who can afford to buy them, without the library alternative previously available to generations of Americans.”

. . . .

A “related problem,” ALA asserts—though it is surely the primary problem libraries face on a day-to-day basis—is the increasingly restrictive, and costly market for e-books from the major publishers.

. . . .

The inquiry comes after the House Judiciary Committee launched its investigation into competition in the digital market on June 3, 2019, with Chairman Jerrold Nadler (D-NY) citing “growing evidence that a handful of gatekeepers have come to capture control over key arteries of online commerce, content, and communications.”

Link to the rest at Publishers Weekly

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