The 2010s were supposed to bring the ebook revolution. It never quite came.

PG’s last post on December 24 was about the following Vox article that purported to talk about what a bust ebooks have turned out to be.

If you missed it in the holiday rush, there were some good comments and, yes, it is a Vox article, so you can assume the author was born yesterday.

From Vox:

At the beginning of the 2010s, the world seemed to be poised for an ebook revolution.

The Amazon Kindle, which was introduced in 2007, effectively mainstreamed ebooks. By 2010, it was clear that ebooks weren’t just a passing fad, but were here to stay. They appeared poised to disrupt the publishing industry on a fundamental level. Analysts confidently predicted that millennials would embrace ebooks with open arms and abandon print books, that ebook sales would keep rising to take up more and more market share, that the price of ebooks would continue to fall, and that publishing would be forever changed.

Instead, at the other end of the decade, ebook sales seem to have stabilized at around 20 percent of total book sales, with print sales making up the remaining 80 percent. “Five or 10 years ago,” says Andrew Albanese, a senior writer at trade magazine Publishers Weekly and the author of The Battle of $9.99, “you would have thought those numbers would have been reversed.”

And in part, Albanese tells Vox in a phone interview, that’s because the digital natives of Gen Z and the millennial generation have very little interest in buying ebooks. “They’re glued to their phones, they love social media, but when it comes to reading a book, they want John Green in print,” he says. The people who are actually buying ebooks? Mostly boomers. “Older readers are glued to their e-readers,” says Albanese. “They don’t have to go to the bookstore. They can make the font bigger. It’s convenient.”

Ebooks aren’t only selling less than everyone predicted they would at the beginning of the decade. They also cost more than everyone predicted they would — and consistently, they cost more than their print equivalents.

. . . .

When the Kindle entered the marketplace in 2007, Amazon had a simple sales pitch: Anyone with a Kindle could buy all the ebooks they wanted through the online marketplace, and many of those ebooks — in fact, all New York Times best-sellers — would cost no more than $9.99.

$9.99 is a steal for a new book. At the time, most hardcovers were averaging a list price of about $26, and many cost more. But for Amazon, this price point was an apparent no-brainer. The first generation Kindle was expensive, and value conscious customers needed some incentive to buy into it. Why would anyone spend $399 on an e-reader if they couldn’t expect to make up at least part of the cost in a discount on ebooks?

And while this point is often glossed over, Amazon was actually following a precedent set by publishers in its pricing model. In her opinion for US v. Apple, Judge Denise Cote noted that before 2009, most publishers discounted ebooks by 20 percent from the price of a hardcover, which often led to a suggested list price of around $9.99.

But by 2009, publishers had changed their minds. Now they considered the idea of $9.99 ebooks to be an existential threat. Printing and binding and shipping — the costs that ebooks eliminated — accounted for only two dollars of the cost of a hardcover, publishers argued. So the ebook for a $20 hardcover book should cost no less than $18. And according to publishers, by setting the price of an ebook at $9.99, Amazon was training readers to undervalue books.

. . . .

Before we delve further into the weeds here, a quick primer on how book prices are set. Print books are generally sold under a wholesale model, which works like this: First, the publisher will set a suggested list price for a book; say, $20. Then it will sell the book to resellers and distributors for a discount off that suggested list price. So if Simon & Schuster wants to sell a $20 book to Amazon, Amazon might negotiate a discount of 40 percent for itself and end up paying Simon & Schuster only $12 for that book.

But once Amazon owns the book, it has the right to set whatever price it would like for consumers. The $20 list price that Simon & Schuster set was just a suggestion. Under the wholesale model, Amazon is free to decide to sell the book to readers for as little as a single dollar if it chooses to.

Until 2010, ebooks were sold through the wholesale model too. So if Simon & Schuster was publishing a $20 hardcover, they could choose to set a suggested list price of $18 for the ebook — two dollars less than the hardcover — and then sell that ebook to Amazon at a 40 percent discount for $10.80. And Amazon could, in turn, feel free to sell that ebook for $9.99 and swallow a loss of 81 cents.

To be clear, the numbers we’re using here to get a handle on how pricing works are imaginary. (Amazon negotiates different discounts for itself at different times from different publishers, sometimes around 40 percent, but at other times higher and at other times lower.) But we do know that Amazon was making very, very little money off ebook sales in 2010, and was in fact probably losing money on most of them.

. . . .

“Amazon can still discount whatever they like on the print side,” explains Jane Friedman, a publishing consultant and the author of The Business of Being a Writer. On the ebook side, however, Amazon now lists publisher-mandated prices, often with the petulant italic addition “Price set by seller.” “So the market is very weird, and often the ebook costs more than the print,” Friedman says. “Sometimes it feels like Amazon is trying to make the publishers look ridiculous.”

And because ebooks are often more expensive than Amazon’s heavily discounted print books, traditional publishing’s ebook sales seem to have fallen off — and Amazon is more dominant than ever in the print book market. “It’s so much cheaper,” says Friedman.

In this new market, high ebook prices make it harder than ever for young authors in particular to survive. “The split has really hurt debut novelists,” says Friedman. “It’s hard to ask readers to take a chance on someone unproven at that high price point, and since the ebook market does lean towards fiction, it’s hurting the new people.”

Self-published authors, meanwhile, are flourishing. They’re allowed to set their own ebook prices just like publishers are — and consistently, they set their prices very, very low. “It’s a shadow market,” Friedman says. “Novelists with huge backlists go and put them out as ebooks independently. And if a reader has a choice between reading this great series at $2.99 a pop or a $12 novel, what are they going to pick?”

Antitrust law professor Christopher Sagers argues that the outcome of the DOJ’sebooks case shows that the real problem with the industry is not just that Amazon has a monopoly. The big trade publishers, he says, have a monopoly too.

“There used to be hundreds of publishing companies. They’re now mostly owned by five,” Sagers says. (After that Department of Justice lawsuit, Penguin merged with Random House, and the Big Six became the Big Five.) “Why are ebooks expensive? It’s not because Amazon is vicious. It’s because there’s no competition at the wholesale level.”

. . . .

The Big Five publishers “are huge, and they have been able to put in place practices that are kind of unfair and that authors have to put up with,” Friedman allows. “That said, they need that kind of size to be able to effectively deal with something like Amazon. If you look at an indie publisher, I wouldn’t want to be one of them.”

Link to the rest at Vox and thanks to DM for the tip.

PG notes that the OP devotes one paragraph to independent authors and that paragraph implies that indie authors are primarily publishing their revered backlist titles.

Unlike Big Publishing, nobody is really beating any publicity drums for indie authors.

One other point the OP doesn’t discuss is that Barnes & Noble is still cratering and, when it finally goes down the drain, retail bookselling via physical bookstores will take a huge hit and publishers who have failed to develop their chops selling ebooks and encouraging readers to buy them will regret that their profitability will take an enormous hit.

Audible Appoints New CEO

From Publishers Weekly:

Audible founder Don Katz will turn over the position of CEO to former IDG and Dun & Bradstreet executive Bob Carrigan on January 2. Carrigan will assume day-to-day operations for Audible’s global operations, while Katz will transition to executive chairman.

. . . .

Katz founded Audible in 1995 and sold it to Amazon in 2008. In his new role as executive chairman, he will work closely with Carrigan on overarching strategies, while also focusing on Audible’s global content strategy and social and public policy objectives in Newark, where Audible is based, as well as at other company locations.

Link to the rest at Publishers Weekly and thanks to Jan for the tip.

Billions of items ordered worldwide this holiday season

From Amazon:

This holiday season was record breaking for Amazon, thanks to customers around the world who purchased billions of items, including tens of millions of Amazon devices. Some of the best-selling products and brands this holiday season were the Echo Dot, Fire TV Stick with Alexa Voice Remote, Echo Show 5, L.O.L. Surprise! Glitter Globe Doll Winter Disco Series with Glitter Hair, iRobot Roomba 675 Robot Vacuum, HAUS LABORATORIES, Carhartt, AmazonBasics, and Champion items. Popular departments customers shopped in Amazon’s Stores in the U.S. were toys, fashion, home, and beauty with more than half a billion total items ordered.

. . . .

  • This holiday season Amazon added more than 250,000 full and part-time seasonal roles across its global customer fulfillment network, with the company now employing 750,000 employees worldwide.
  • Nearly 19,000 employees worldwide across Amazon’s Operations team were promoted this year.
  • Amazon has 150 delivery stations in the United States that employ more than 90,000 Amazon Logistics associates.

. . . .

  • Customers asked Alexa for recipes and cooking advice tens of millions of times this holiday season as Alexa helped make holiday feasts, cookies, and cocktails. Some of the most popular recipes this holiday season included Thanksgiving Turkey, Chocolate Chip Cookies, and Fluffy Mashed Potatoes.
  • Customers received hundreds of millions of doorbell and motion announcements via Alexa this holiday season from carolers to delivery drivers and holiday guests.
  • The most searched-for holiday movie on Fire TV with Alexa was Home Alone, followed by Elf and The Grinch.
  • Alexa helped turn on holiday lights tens of millions of times.

. . . .

  • According to Amazon Charts, the most read and most sold book in the U.S. during this holiday season was The Guardians by John Grisham, and the most wished for books in the U.S. during this holiday season were A Warning by Anonymous, The Starless Sea by Erin Morgenstern, Diary of a Wimpy Kid: Wrecking Ball by Jeff Kinney, Harry Potter and the Goblet of Fire: The Illustrated Edition by J.K. Rowling & Jim Kay, and Where the Crawdads Sing by Delia Owens.

Link to the rest at Amazon

Kindle: A Year in Review

From Day One – The Amazon Blog:

Kindle was the first of its kind in so many ways when it was introduced in 2007: it was the first time you could think of a book and be reading it in 60 seconds; the first time you could connect to a cellular network to download something and not get billed for the data; the first time you could access an entire store of books while on the go; and the first time you could take your full library with you anywhere you went.

Over the years, while the design and features of the device have evolved, what hasn’t changed is Amazon’s singular goal of making reading more available and enjoyable to people around the world. Today, we offer readers millions of e-books on Amazon.co.uk, and we continue to invest in developing new features and benefits that readers love. We want it to be easy for customers to find their next favourite book and get more out of their reading experience as well as make it easy for authors to connect with readers. Worldwide, we see customers buying more e-books from a widening variety of authors and publishers. Kindle book sales grew again in 2019, in thanks to independent publishing, Kindle Unlimited subscriptions and Amazon Publishing.

. . . .

This year the range of titles available in Kindle Unlimited expanded, with more than a million titles now in the service, including even more of Britain’s best-loved authors and books. Along with all seven books from the original Harry Potter series, books by David Walliams, Agatha Christie, Bernard Cornwell, and many more now feature. We also launched full magazine subscriptions within Kindle Unlimited including BBC Good FoodBBC Top GearNational GeographicMarie ClaireTime, and more.

July saw the launch of Amazon Charts in the UK, a weekly bestseller list that shares the most read and most sold books across all formats each week. The Top 20 Most Read list is the first ever bestseller list to measure which Kindle and Audible titles Amazon.co.uk customers are reading and listening to.

Link to the rest at Day One – The Amazon Blog

Amazon supply chain model disrupts entire industry

From TechTarget:

By now, it’s no surprise that Amazon’s business model is not only disruptive but driving established businesses and business practices to extinction.

Take global supply chain, for example. The Amazon supply chain model has affected the entire supply chain and logistics industry in the same way that the retail industry has been changed utterly.

As with retail, this will produce losers that cannot match the pace of change and adapt to the Amazon supply chain model. At the same time, however, new businesses are formulating to either ride Amazon’s wake or provide alternatives that try to match the changes brought on by the Amazon effect.

In that vein, there has been a lot of attention on fulfillment and how Amazon has changed consumer behavior. But what’s less seen and even more important is what’s happened behind the scenes that has changed supply chain behaviors significantly to both meet the demands from Amazon and compete against the tech behemoth, said Rosemary Coates, founder and president of Blue Silk Consulting, a global supply chain consultancy based in Los Gatos, Calif.

The traditional supply chain was built around companies sourcing raw materials and turning them into components or products, with production planned months and even up to a year in advance, Coates said. The process was much more predictable, and companies knew what and when they were going to produce, and the various channels they were going to use for shipping products.

. . . .

Then Amazon came along and taught consumers to expect goods to be delivered overnight, which snapped a bullwhip effect throughout the entire supply chain. One result of such an expectation is that companies now have to invest in bigger stocks of inventory to have products ready to ship when demand increases, which also means they have to build new warehouses and implement new logistics strategies.

“[The Amazon supply chain strategy] has had an effect all the way down the supply chain,” Coates said. “Production planning may be disrupted or has to switch to a build-to inventory model instead of a build the fulfillment model. That means there may be a difference in production runs — instead of small runs that keep work in process and minimize investment to larger production runs that are going to build inventory.”

The traditional supply chain model taught manufacturers to minimize inventory through methods like Kanban or just-in-time manufacturing where parts are brought to the assembly line only when needed.

“You wanted as little as possible from an investment perspective and also to keep the line moving, to keep manufacturing moving along, so that it was a kind of a constant ongoing repetitive sort of environment,” Coates said.

If they’re going to be a link in Amazon’s supply chain, manufacturers need to rethink where they should invest in supply chain resources. For example, they need to decide if they want to stock enough inventory in regional locations in case they need to fulfill Amazon orders, Coates said.

. . . .

In addition to changing manufacturing strategies, the Amazon supply chain model is completely changing the logistics industry, Cowan said.

“First and foremost, Amazon is conditioning end customers that they should get their goods delivered the same day, and may be measured in hours, instead of days,” Cowan said. “This is a significant sea change overall. And frankly, if you’re not Amazon today and you don’t have a strategy to get products into your customers’ hands that same day, you’re probably going to have a significant erosion of your business.”

. . . .

The Amazon effect is allowing procurement to go outside of traditional systems, which has led to companies rethinking strategies, Gardner said.

“Like we saw in enterprise IT with AWS cloud, people started using it with their credit card, but it was under the radar,” Gardner said. “But then people started to look at it more strategically and said, ‘Let’s evaluate this like with any other IT approach.’ The same thing happens when it comes to the purchasing of goods and services — people started using Amazon or other online retailers to purchase things ad hoc with petty cash or non-discretionary spending.”

It makes sense for businesses, particularly SMBs, to use Amazon for purchasing because of price and efficiency gains, but Gardner cautions against handing over too much strategic activity to any one company.

Link to the rest at TechTarget

You Might Be Buying Trash on Amazon—Literally

From The Wall Street Journal:

Just about anyone can open a store on Amazon.com and sell just about anything. Just ask the dumpster divers.

These are among the dedicated cadre of sellers on Amazon who say they sort through other people’s rejects, including directly from the trash, clean them up and list them on Amazon.com Inc.’s platform. Many post their hunting accounts on YouTube.

They are an elusive lot. Many The Wall Street Journal contacted wouldn’t give details about their listings, said they stopped selling dumpster finds or no longer listed them as new, didn’t respond to inquiries or stopped communicating. Some said they feared Amazon would close their stores.

So the Journal set out to test whether these claims were true. Reporters went dumpster diving in several New Jersey towns and retrieved dozens of discards from the trash including a stencil set, scrapbook paper and a sealed jar of Trader Joe’s lemon curd.

The Journal set up a store on Amazon to see if it could list some of its salvaged goods for sale as new.

It turned out to be easy.

. . . .

Amazon’s stated rules didn’t explicitly prohibit items salvaged from the trash when the Journal disclosed the existence of its store to the company last month. The rules required that most goods be new and noted that sellers could offer used books and electronics, among other things, if they identified them as such.

“Sellers are responsible for meeting Amazon’s high bar for product quality,” an Amazon spokeswoman said. Examples the Journal presented to Amazon of dumpster-sourced listings “are isolated incidents,” she said. “We are investigating and will take appropriate action against the bad actors involved.”

She declined to comment on the Journal’s store.

Late last week, Amazon said it updated its policy to explicitly prohibit selling items taken from the trash, adding to its list of unacceptable items any “intended for destruction or disposal or otherwise designated as unsellable by the manufacturer or a supplier, vendor, or retailer.”

. . . .

Amazon exerts limited control over its third-party marketplace, which connects buyers with millions of merchants around the world. The company has said it isn’t liable for what these merchants sell, saying in court cases Amazon itself isn’t the one selling the products listed by third parties.

“We had an internal saying: Unless the product’s on fire when we receive it, we would accept anything,” said James Thomson, who helped oversee the Fulfillment By Amazon program—under which Amazon handles logistics for third-party sellers—before leaving in 2013. He is now a consultant to brands with Amazon accounts. In his view, he said, “Ultimately consumers are the police of the platform.”

The Amazon spokeswoman said Mr. Thomson’s “statements are demonstrably false.” Mr. Thomson said he stood by his assertions.

Wade Coggins, near Beaverton, Ore., said he finds items to sell on Amazon and eBay in store clearance sections, abandoned storage units and dumpsters. He said he has salvaged cardboard boxes, bubble wrap and peanuts from trash bins to package his orders.

Blemishes need to be cleaned off, he said, adding that some people shrink-wrap items to make them look more legitimate. “When you send stuff in to Amazon,” he said, “it needs to look brand new.”

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

In several different news articles over the past few months, PG has noted that Amazon spokespeople have become much more corporate in their statements. If he recalls correctly, in former days when Amazon was responding to reports about questionable items sold on its platform, it was more common for someone in charge of running the relevant business to respond instead of a PR drone.

One of the attractions of earlier Amazon for indie authors was a sense that the company’s reflexes were basically decent. If a problem was reported, the company investigated and fixed it. The platform was improving on a regular basis. In light of the misbegotten attempt by major publishers to sink Amazon’s book business, the people running the indie publishing operation were vocally supportive of indie authors.

It is notoriously difficult to maintain a high-quality company culture over time. Once the original founder pulls out, unless s/he has carefully chosen and trained a group of top-tier managers, the business can wander off into the wilderness.

PG remembers this process playing out when Sam Walton, the founder and CEO of Walmart, died and the company wandered in the wilderness for several years without very good management. Mr. Sam appeared to have shaded out a lot of those who might have had the ability to continue keeping Walmart on track.

PG had a business meeting with one of the Walton children on one occasion and was able to discern none of the storied business acumen of Sam. His impressions were similar to those he has experienced when he met heirs to great wealth on prior occasions – people who were not necessarily very smart and were immersed in a lifestyle focused on the acquisition of art and private jet travel rather than operating a challenging business.

For the general public, the revelation of Jeff Bezos’ marital problems came out of the blue. Perhaps because PG is concerned about corporate succession in light of Bezos’ apparent prompt withdrawal from heavy personal involvement in the management of the company, he has noticed an increase in the number of stories like the OP that appear to reflect that various parts of Amazon are diverging from its former standards and practices.

Kobo’s 10th Anniversary

From Publishing Perspectives:

On Sunday (December 15), Rakuten Kobo [reached] its 10th anniversary.

. . . .

In any week, [Kobo CEO Michael] Tamblyn says, Kobo will deliver ebooks to some 150 countries. “Over the course of a year,” he says, “we’ll hit all the countries the United Nations recognizes and a few others.”

. . . .

The operation also has localized merchandizing and/or other partnerships in some 25 countries. The catalogue available through the retailer comes in at between 5 and 6 million titles.

At the end of November, another new market was opened: Vincent Chang in the Singapore Straits Times welcomed the introduction of Kobo’s e-readers to the island nation

. . . .

And that factor in itself—leading with a line of e-reading devices—is a clue to how Kobo has become the most purposefully internationalized player in the digital reading industry.

“It’s been really interesting too look back over the development of the company, you know,” Tamblyn says, “to look at how we achieved the position that we have and what were some of the decisions we’ve made that resulted in that. Out of all the startups that we were on the starting line within 2009, why are we still standing? So many others have gone away. And we need to take that point of retrospective as we get ready for the next 10 years.

“One of the things we’ve learned is that this is a business that rewards scale,” he says. “It definitely helps to be one of the big players in the space. But it also rewards diversification.

“We see a third of our sales coming from Asia, a third from the Americas, north and south, and a third from Europe.

“We do see ups and downs in individual territories,” Tamblyn says. “We see individual markets peak and then plateau. We see other ones start slowly and then accelerate. And spreading ourselves out—realizing that this is a long game as opposed to something to be won in a couple of years—has given us a lot of resilience and diversification. And that’s allowed us to keep going when a lot of others didn’t find themselves able to get that critical mass.”

. . . .

The January 2018 announcement of Kobo’s partnership with Walmart in the United States drew widespread attention in the world industry.

Already well recognized for its emphasis on international expansion and partnerships, Tamblyn had taken a turn into a market he’d effectively conceded years earlier to Amazon’s dominance. What made the Walmart arrangement clever, of course, was that it integrated the Kobo offer into Walmart’s growing online retail effort, meaning that Kobo had landed, effectively, as the big-box retailer’s in-house vendor in the field.

Walmart had the same reason Kobo did to want to build its online presence in the American market: Amazon.

“Walmart, when you look across its entire portfolio of e-commerce,” Tamblyn says in his interview, “is really pushing hard on being that strong competitor in the US. They’ve been a great partner to work with, and there’s still a lot more we can do in that channel. So really this past year has just been getting us started.”

But asked if the success of the Walmart partnership doesn’t turn on the fact that Kobo can ride the energy of that huge company’s online expansion, Tamblyn has another approach.

“There were a couple of pieces” to the arrangement, he says.

“One is that we want to be where readers are, where books are getting purchased, where people are showing up and making shopping decisions about reading—so we can introduce ebooks and audiobooks to them. And we can do that in a place where they’re already showing up for that reading experience every day.

“So that has us looking at each individual market in terms of where is there a great retailer who has access to that customer in a privileged way. At the same time, who sees themselves as being in a competitive battle with those big ecosystem players—Amazon, Google, Apple—and wants to hold on to that customer and retain that reading relationship with them over time?”

Link to the rest at Publishing Perspectives

Kindle Unlimited Per-Page Rate Jumped in November 2019

From The Digital Reader

The Kindle Unlimited funding pool increased by one hundred thousand dollars in November 2019, to $26.1 million, from $26 million in October 2019.

At the same time the per-page rate royalty jumped to d $0.004925, from $0.0046763  in October.

  • November 2019: $0.004925
  • October 2019: $0.0046763
  • September 2019: $0.0046799
  • August 2019:  $0.004387
  • July 2019 –  $0.004394
  • June 2019 – $0.004642
  • May 2019 – $0.0046598
  • April 2019 – $0.0046602
  • March 2019 – $0.0045124
  • February 2019 – $0.0047801
  • January 2019 – $0.0044227
  • December 2018 – $0.0048778
  • November 2018 – $0.0052056
  • October 2018 – $0.0048414
  • September 2008 – $0.004885
  • August 2018 – $0.0044914
  • July 2018 – $0.0044936

Link to the rest at The Digital Reader

Amazon surprises hundreds of charities with donations

From The Amazon Blog:

Amazon is surprising hundreds of charities—which support causes from STEM education, to homelessness, hunger, disaster relief, youth organizations, sustainability and more—across the U.S. by fulfilling products requested on each of their AmazonSmile Charity Lists. Amazon is donating hundreds of thousands of items to charities from their AmazonSmile Charity Lists through the end of the year to ensure they have what they need to round out the holiday season, and to get a jump start on the new year.

Some of the total items donated include:

  • More than 5,000 blankets, sheets, and pillows.
  • More than 30,000 toys and educational items for kids.
  • More than 40,000 pairs of socks, outerwear, pajamas, pairs of shoes, and other apparel items.
  • More than 60,000 food and pantry items from water to canned goods.

. . . .

“Amazon’s generosity will allow us to meet a portion of the great needs of people experiencing homelessness on our borough’s streets, in the ferry terminal, in our churches, and especially the children and families in our Staten Island shelter,” said Reverend Terry Troia, President and CEO of Project Hospitality. “We are grateful to have a compassionate partner in the midst of great human need.”

Link to the rest at The Amazon Blog

US vs. Apple

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

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

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”

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

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

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

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

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

Amazon’s Profit Hurt by Push to Speed Up Shipping

From The Wall Street Journal:

Amazon.com Inc. ’s profit machine sputtered again after more than two years of surging growth, weighed down by the tech giant’s heavy investment into reducing shipping times for retail customers.

Amazon on Thursday said its third-quarter profit fell 26% from a year ago to $2.1 billion, or $4.23 a share, missing analysts’ consensus estimate of $4.59 a share, according to FactSet. That was its first profit decline since 2017, and followed a second quarter in which the company ended its streak of record quarterly profits and missed analyst expectations.

Revenue in the latest period rose 24% to $70 billion—better than analysts’ estimates—compared with a 20% increase three months earlier. The third quarter included Prime Day, a July shopping event created to sign up new Prime subscriptions by offering members steep sales discounts.

Amazon’s profit miss sent shares down more than 7% in after-hours trading Thursday. Before the late-afternoon report, the stock was up nearly 16% this year, giving the company a market value of around $881 billion.

“Investors were beginning to get used to the new Amazon of getting better bottom-line upside. Now, we’re back to the old Amazon, which is bottom-line downside but big investments,” Jefferies analyst Brent Thill said. “For short-term investors it’s a bummer, but for long-term investors, they realize that with Amazon these investments usually pay off.”

. . . .

Amazon’s world-wide shipping costs jumped 46% to $9.6 billion from the previous year as the company processes higher expenditures related to its one-day shipping program for Prime subscribers. Online sales growth has accelerated as Amazon has invested more into one-day shipping. Sales in online stores rose 22% in the third quarter, double the growth rate a year earlier.

In the fourth quarter, the company expects to spend roughly double what it did in the second quarter on one-day shipping, or $1.5 billion, to facilitate the program, Chief Financial Officer Brian Olsavsky said on a call with media Thursday.

In addition to getting product closer to customers by having inventory dispersed among its warehouses, Amazon saw a steep hiring increase for the quarter, with employment reaching 750,000 workers. Mr. Olsavsky said this jump was more pronounced this year because of the onset of one-day Prime shipping.

. . . .

Amazon’s advertising business registered $3.6 billion in sales, a 43.7% increase from the year-earlier period. The unit, which sells advertising space in the form of sponsored products in search and display ads, has become another cash cow for the company.

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

Congress Looking into Anticompetitive Behavior in the Digital Library Market

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.

. . . .

The ALA comments break down what it sees as potentially “anticompetitive” behavior in the digital realm into two sectors—public and school libraries, and academic and research libraries. And no surprise, the two issues topping the list of ALA’s concerns: Amazon’s exclusive digital content, which is not available to libraries; and restrictions by the major publishers in the library e-book market.

“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. This includes the “delayed release” of e-books to the library market, the ALA report states, pointing to Macmillan’s two-month embargo on new release e-book titles, scheduled to take effect on November 1, and “abusive” pricing for library e-books, where titles can often run more than four times the consumer price for two year licenses.

“Denying or delaying new content to libraries certainly is a market failure,” ALA states. “It also prevents libraries from accomplishing their democratizing mission of providing equal access to information to American citizens.”

. . . .

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

Bezos will ‘break up his own company’ before regulators do

From CNBC:

Amazon CEO Jeff Bezos could break up his own company before regulators do so themselves, Atlantic writer Franklin Foer predicts.

Foer, who wrote the Atlantic’s November cover story entitled “Jeff Bezos’s Master Plan,” said in an interview Tuesday on CNBC’s “Squawk Box” that people close to the CEO believe spinning off Amazon Web Services from the e-commerce business “would be the obvious thing for [Bezos] to do in the face of this.”

“I think that eventually Bezos, who is seeing around corners, is going to break up his own company,” Foer said. “AWS exists as its own fantastically profitable business. There’s no reason that it needs to be connected to Amazon the e-retailer. And as he looks at what’s happening in politics, where there’s this increasing bipartisan consensus that Big Tech is a problem, I’m pretty sure he’s going to say, ‘OK fine.’”

. . . .

AWS accounted for 13% of Amazon’s total revenue in the second quarter of 2019, but a whopping 52% of its $3.1 billion in operating income for the quarter.

Link to the rest at CNBC

PG says antitrust investigations can and have hamstrung lots of large, successful companies, even if they don’t result in sanctions.

The antitrust investigations and suits against Microsoft in 1994 and 1998 arguably prevented MS from exploiting internet opportunities that were taken by others. Google Chrome displaced Internet Explorer as one example. Ironically, during its early years, Microsoft benefited from antitrust lawsuits against IBM in the 1980’s.

If Bezos can avoid serious antitrust actions by voluntarily breaking up the company, the minified-Amazons might continue the company’s success free of any throttling constraints.

ISBN Registrations Jump 40% After Createspace is Merged Into KDP Print

From The Digital Reader

Bowker, the private company responsible for issuing ISBNs in the US, released its annual report on the number ISBN’s sold last year.

The data doesn’t tell us as much as some would think, but it did show that Amazon’s Createspace (aka KDP Print) bought the lion’s share of ISBNs in 2018. Out of 1,677,781 ISBNs registered in 2018, a total of 1,416,384 were sourced through Createspace. That is a jump of about half a million ISBN registrations from 2017, when Createspace accounted for 929,295 out of 1,192,345 ISBNs registered.

The increase is probably due to Createspace being bundled into KDP last year, and reflects authors taking the opportunity to create print editions for their existing ebooks.

Bowker concluded that the increase meant that “Self-Publishing Grew 40 Percent in 2018”, but I would be willing to bet any amount of money you cared to name that they are wrong. (I count print and ebook editions of a title as one, not several.)

The data is of course limited to mainly self-published authors in the USA, and is far from complete. For example, there’s no mention of Ingram Spark, a POD service that competes with Createspace slash KDP Print. That is probably because Ingram Spark recommends that everyone buy their own ISBN, preferably directly from Bowker.

Link to the rest at The Digital Reader

PG just noticed a typo in the title and fixed it.

Amazon’s Fourteen Leadership Principles

Customer Obsession
Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.

Ownership
Leaders are owners. They think long term and don’t sacrifice long-term value for short-term results. They act on behalf of the entire company, beyond just their own team. They never say “that’s not my job.”

Invent and Simplify
Leaders expect and require innovation and invention from their teams and always find ways to simplify. They are externally aware, look for new ideas from everywhere, and are not limited by “not invented here.” As we do new things, we accept that we may be misunderstood for long periods of time.

Are Right, A Lot
Leaders are right a lot. They have strong judgment and good instincts. They seek diverse perspectives and work to disconfirm their beliefs.

Learn and Be Curious
Leaders are never done learning and always seek to improve themselves. They are curious about new possibilities and act to explore them.

Hire and Develop the Best
Leaders raise the performance bar with every hire and promotion. They recognize exceptional talent, and willingly move them throughout the organization. Leaders develop leaders and take seriously their role in coaching others. We work on behalf of our people to invent mechanisms for development like Career Choice.

Insist on the Highest Standards
Leaders have relentlessly high standards — many people may think these standards are unreasonably high. Leaders are continually raising the bar and drive their teams to deliver high quality products, services, and processes. Leaders ensure that defects do not get sent down the line and that problems are fixed so they stay fixed.

Think Big
Thinking small is a self-fulfilling prophecy. Leaders create and communicate a bold direction that inspires results. They think differently and look around corners for ways to serve customers.

Bias for Action
Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk taking.

Frugality
Accomplish more with less. Constraints breed resourcefulness, self-sufficiency, and invention. There are no extra points for growing headcount, budget size, or fixed expense.

Earn Trust
Leaders listen attentively, speak candidly, and treat others respectfully. They are vocally self-critical, even when doing so is awkward or embarrassing. Leaders do not believe their or their team’s body odor smells of perfume. They benchmark themselves and their teams against the best.

Dive Deep
Leaders operate at all levels, stay connected to the details, audit frequently, and are skeptical when metrics and anecdote differ. No task is beneath them.

Have Backbone; Disagree and Commit
Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly.

Deliver Results
Leaders focus on the key inputs for their business and deliver them with the right quality and in a timely fashion. Despite setbacks, they rise to the occasion and never settle.

Amazon’s  Leadership Principles

Publishing Your Book Is Changing on IngramSpark

From The Book Designer:

I continue our saga about a new upload of a self-pub book to the standard folks. What if you haven’t done this in the last couple of years? What’s new?

I discussed the Amazon Kindle print book/ebook in some detail in my last post, which was Publishing Your Book is Changing on Amazon Kindle.

. . . .

So, is there a publishing life beyond Amazon Kindle? The answer is a definite yes, from my perspective. Moreover, authors play an important role in keeping our publishing system healthy by succeeding with a diversity of suppliers.

I want my printed books to be sold in independent bookstores, such as Book Passage, near me in California. They could do a direct order from Ingram or get consignment books from me.

I want a print-on-demand (POD) manufacturing source that would be acceptable to independent bookstores, plus chain bookstores, such as Barnes & Noble. I want a manufacturer who supplied libraries.

For all this I need Ingram. I also want some “Ingram-manufactured” books to sell to individuals and at events where the folks may not be “Amazon-friendly.” There are raging controversies about the book-selling ecosystem, as you probably know.

I also want my ebook version in iBooks, B&N, Kobo, and other ebook retailers beyond Amazon. For my ebook-for-everyone-beyond-Amazon, I chose Smashwords. I’ll discuss Smashwords next time in my “every-five-weeks” column in Joel’s publishing ecosystem.

. . . .

So, is there a publishing life beyond Amazon Kindle? The answer is a definite yes, from my perspective. Moreover, authors play an important role in keeping our publishing system healthy by succeeding with a diversity of suppliers.

I want my printed books to be sold in independent bookstores, such as Book Passage, near me in California. They could do a direct order from Ingram or get consignment books from me.

I want a print-on-demand (POD) manufacturing source that would be acceptable to independent bookstores, plus chain bookstores, such as Barnes & Noble. I want a manufacturer who supplied libraries.

For all this I need Ingram. I also want some “Ingram-manufactured” books to sell to individuals and at events where the folks may not be “Amazon-friendly.” There are raging controversies about the book-selling ecosystem, as you probably know.

I also want my ebook version in iBooks, B&N, Kobo, and other ebook retailers beyond Amazon. For my ebook-for-everyone-beyond-Amazon, I chose Smashwords. I’ll discuss Smashwords next time in my “every-five-weeks” column in Joel’s publishing ecosystem.

. . . .

The big new decision with Ingram, of course, was whether to move my four earlier books from their Lightning Source world over to the newer IngramSpark realm. Then I would place the new book also in Spark. After studying this, it appeared to me that a change was appropriate. So I requested it.

The Ingram response on this was fairly hospitable. As in all systems, the quality of your Customer Service experience can vary.

Here is what happened:

  • Ingram said they would add an opt in to change to Spark on my Lightning Source page, with the words Learn About Spark. This did appear, upper right center, in small type on my page. I almost missed it.
  • The “migration” from LSI to Spark proceeded smoothly and in an orderly way. I was required to sign the Global Distribution agreement and an Ebook Agreement, even though I was not uploading an ebook at this point.
  • Once I made the migration from LSI to Spark, they said it would be one-way. You are not coming back. That was OK. I did not plan to go back.
  • The prices for printed books would be the same, they said. I always choose the 55% discount because that is what is needed to get bookstore sales.
  • It appeared that with Spark I would avoid the $12/year Market Access fee that LSI charged for each of my titles each year. That would be welcome.
  • It appeared that, as a member of the Independent Book Publishers Association (IBPA), I would have a code and could avoid book setup fees. That would also be welcome. The book setup was a $49 cost. Later updates of the interior or cover file would incur a $25 charge, however, as I understood it.
  • I had a personal rep in LSI, but never used the service. So I felt no loss without a personal rep in Spark.
  • I had options for bank credit payments, etc. in LSI for large orders, rather than a simple credit card, but never used it. So, no loss. I could continue dreaming of imagined bulk purchases of my books. You will be among the first to learn about this when the lightning strikes.
  • Spark also appears to be an ebook-selling structure, not an option at LSI. I noted this, but did not intend to use Spark for selling ebooks at this time. I’ll watch to see how the Spark ebook option develops.
  • A welcoming note from Spark was encouraging. It had lots of their self-pub educational resources listed. Amazon Kindle, IngramSpark, and Smashwords are all major author-learning ecosystems if you take advantage of their how-to posts and videos.
  • When I engaged Spark in an online chat, they always sent an email follow-up with all the chat documentation written out. That was helpful. The chat was always so immediate that I had little desire to call by phone.
  • In one chat, for example, their rep confirmed that my book in IngramSpark would automatically show for librarians in the Baker & Taylor library listings, even if I did not spend $85 to advertise my book in their Ingram/Baker & Taylor catalog. That was good to hear.

I uploaded my new book in the PDF form requested. The system appeared to save everything as I moved forward. I first posted all the book data and then uploaded the interior file. All was saved.

Link to the rest at The Book Designer

Amazon Intellectual Property Accelerator

From dayOne, the Amazon Blog:

Today, we’re excited to launch Amazon Intellectual Property Accelerator, a new program that helps brands more quickly obtain intellectual property (IP) rights and brand protection in Amazon’s stores. We created IP Accelerator specifically with small and medium businesses in mind, and IP Accelerator helps these entrepreneurs by making it easier and more cost effective to protect their ideas.

Expert legal guidance is critical for businesses to protect their brands and avoid costly mistakes in the trademark filing process. IP Accelerator solves this challenge by connecting businesses with a curated network of trusted IP law firms that provide high quality trademark registration services at competitive rates to help brands secure a trademark. When businesses use these law firms to file trademark applications, Amazon provides their brands with accelerated access to brand protection in Amazon’s stores.

. . . .

Amazon has vetted the participating IP law firms for experience, expertise, and customer service, and all have agreed to competitive, pre-negotiated rates for the standard services involved in obtaining a trademark registration. These law firms help ease the trademark filing process, including researching a brand to see if anyone else is already using it and filing trademark applications to protect it. In addition to trademark applications, these firms can also help with additional IP needs such as copyright registrations, design patents, and broader IP protection strategies, making it easy for businesses to get tailored solutions for their brands.

“We’re very excited Amazon has a list of legal firms that can advise us in our trademark needs. We have struggled finding counsel for trademark specific questions as we are a small company and work with limited budgets. Having the peace of mind that Amazon has vetted these firms and negotiated pricing for us lets us focus on what matters—building our brand” said Sonali Nayak, owner of Indigo Paisley.

Using IP Accelerator takes the guesswork out of the trademark filing process. These law firms know the ins-and-outs of IP and can save businesses both money, and time—a proper, well drafted trademark application can significantly reduce the time required to secure a trademark registration. Amazon does not charge businesses to use IP Accelerator—they only pay their law firm for the work performed at the pre-negotiated rates.

. . . .

Because the participating law firms have been thoroughly vetted, when a business works with one of the law firms in IP Accelerator and a trademark has been filed on their behalf, they will be strong candidates for registration. As a result, Amazon will provide these brands with accelerated access to brand protections in Amazon’s stores, to better protect their brand months, or even years, before their trademark registration officially issues. Brands will benefit from automated brand protections, which proactively block bad listings from Amazon’s stores.

Link to the rest at dayOne, the Amazon Blog

Amazon is Shutting Down Kindle Matchbook, Its Print+eBook Bundling ProgramAmazon is Shutting Down Kindle Matchbook, Its Print+eBook Bundling Program

From The Digital Reader:

It’s only been a few short days since Amazon announced that Amazon Giveaways was ending, and now they’ve decided to shut down another promotion service.

. . . .

Starting October 31, we’re retiring the Kindle MatchBook program. If you have books enrolled in Kindle MatchBook, they’ll be unenrolled at that time.

Here are a couple things to know:

  • Readers will still be able to buy books in their preferred format (eBook or paperback).
  • We’ll issue payments from any remaining Kindle MatchBook sales on your regular payment schedule.

Best regards,
The Kindle Direct Publishing Team

Launched in 2013, Kindle Matchbook was a program where authors and publishers had the option of creating ebook+print bundles that combine a Kindle ebook with a print book sold by Amazon. The ebook could be given away for free, or sold for $1.99 or $0.99.

. . . .

Most authors have never heard of it, and the ones that do have books in the program report that there was little interest from readers. “I can see why they are retiring it. I’ve had all my books enrolled in Matchbook since the beginning, allowing people to get a free ebook copy of any paperback they buy,” Shawn Inmon wrote on FB. “I think I’ve given away maybe 20 copies in all those years. It just doesn’t seem to be something people are interested in.”

Link to the rest at The Digital Reader

At ‘Captions’ Hearing, Judge Hammers Audible’s Fair Use Argument

From Publishers Weekly:

If the decision to issue a preliminary injunction against Audible’s “Captions” program comes down to fair use, Audible may be in trouble.

Over the course of a 90-minute hearing on Wednesday, federal judge Valerie Caproni appeared thoroughly unmoved by Audible’s defense of its Captions program, and highly skeptical that Audible’s plan to scroll snippets of computer generated text alongside audiobooks in its app should be called anything other than what it is: reading.

Opening the day’s arguments, the plaintiff publishers’ attorney Dale Cendali told the court that Audible’s Captions program was “quintessential” copyright infringement, and was quickly engaged by Caproni, who questioned whether the “clunky” experience of Captions really competed with reading a book. Cendali, well prepared for the question, responded that Captions didn’t need to be “a substitute” for a book for it to be harmful. Captions “provides a reading experience,” Cendali stressed, “saying it is something other than that just doesn’t make sense.”

. . . .

Cendali hit all the major points in the publishers’ complaint, finding a mostly receptive audience in Caproni. Captions is not transformative, she argued, and it is commercial in nature. Despite its “public benefit” argument, Audible is in fact seizing what should be a negotiated right to gain a competitive advantage over its competitors, Cendali stressed. If allowed to go forward, Captions would harm the market for books, e-books, and immersion reading; weaken rightsholders’ ability to license works in other markets; “devalue and cheapen” those rights by offering the feature as a free add-on; and the poor quality of the Captions program would cause reputational harm to authors and publishers who might be associated with a shoddy program, their works wrested from their control without permission.

The last point seemed to especially hit its mark with Caproni as an example of the kind irreparable harm—distinct from the market harm also in play—required to win a preliminary injunction. “As much as there might be a moral rights issue [in U.S. copyright law] this is a moral rights issue,” Cendali argued. “The damage this does would be impossible to measure. Money damages cannot make up for this. It affects the entire industry. This is a sea change, what they are trying to do. That’s why you have all these publishers, authors, and the agents here together. That shows you how dramatic it is.”

. . . .

Captions is designed to work alongside an audiobook, not “divorced” from it, [Amazon’s attorney] argued, and it does not provide a reading experience.

“What do you mean it’s not a reading experience?” Caproni interjected. “It’s words.”

What followed was a strained back and forth about what constitutes reading a book, with Reisbaum suggesting that seeing words as you listen to them is, well, something else.

“The fact that you can see the words doesn’t make it a book,” Reisbaum insisted at one point, trying to convince the judge that Captions is an enhanced audio experience, not a book experience—users couldn’t flip forward or back at their own pace, for example, nor could the text be stored, or shared, or skimmed. The experience was designed to increase comprehension of the “words” that Audible customers have paid for. Caproni didn’t appear to be buying it. “They paid to have the words read to them,” she pointed out.

. . . .

Cendali reiterated that none of the publishers’ agreements granted Audible the right to generate and distribute text.

But that’s a conclusion not supported by evidence before the court, Reisbaum insisted. The parties have acknowledged that they have valid license agreements. Captions is a program to be used with that licensed content. Without seeing those agreements, and where Audible is alleged to have breached them, how does the court know that speech-to-text is not covered under those licenses?

But perhaps the most surprising moment came when Caproni realized that Captions had not launched, and that a launch was not imminent. Why was she being asked to grant a preliminary injunction?

. . . .

The publishers strongly protested. “We beg you to rule on the motion,” Cendali pleaded with the judge, saying that the uncertainty surrounding the Audible program was already impacting the publishers, harming their ability to do other deals. Caproni replied that it was only a preliminary injunction at stake, that there would still be uncertainty even if she granted it. Why not get right to trial and resolve the issue?

“They can’t just do a head fake,” Cendali said referring to Audible’s still unannounced launch date, adding that not ruling on the motion would give Audible “a get out of jail free card.”

“It’s not a get out of jail free card,” Caproni responded. “I don’t have any get out of jail free cards. What I have is a chance card,” she said, pointing out that the publishers could possibly lose the motion. Caproni reserved ruling for a later date.

Link to the rest at Publishers Weekly

A ‘Grass Roots’ Campaign to Take Down Amazon Is Funded by Amazon’s Biggest Rivals

From The Wall Street Journal:

About 18 months ago a new nonprofit group called Free and Fair Markets Initiative launched a national campaign criticizing the business practices of one powerful company: Amazon.com Inc.

Free and Fair Markets accused Amazon of stifling competition and innovation, inhibiting consumer choice, gorging on government subsidies, endangering its warehouse workers and exposing consumer data to privacy breaches. It claimed to have grass-roots support from average citizens across the U.S, citing a labor union, a Boston management professor and a California businessman.

What the group did not say is that it received backing from some of Amazon’s chief corporate rivals. They include shopping mall owner Simon Property Group Inc.,  retailer Walmart Inc. and software giant Oracle Corp., according to people involved with and briefed on the project. Simon Property is fighting to keep shoppers who now prefer to buy what they need on Amazon; Walmart is competing with Amazon over retail sales; and Oracle is battling Amazon over a $10 billion Pentagon cloud-computing contract.

The grass-roots support cited by the group was also not what it appeared to be. The labor union says it was listed as a member of the group without permission and says a document purporting to show that it gave permission has a forged signature. The Boston professor says the group, with his permission, ghost-wrote an op-ed for him about Amazon but that he didn’t know he would be named as a member. The California businessman was dead for months before his name was removed from the group’s website this year.

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

Amazon Changed Search Algorithm in Ways That Boost Its Own Products

From The Wall Street Journal:

Amazon.com Inc. has adjusted its product-search system to more prominently feature listings that are more profitable for the company, said people who worked on the project—a move, contested internally, that could favor Amazon’s own brands.

Late last year, these people said, Amazon optimized the secret algorithm that ranks listings so that instead of showing customers mainly the most-relevant and best-selling listings when they search—as it had for more than a decade—the site also gives a boost to items that are more profitable for the company.

The adjustment, which the world’s biggest online retailer hasn’t publicized, followed a yearslong battle between executives who run Amazon’s retail businesses in Seattle and the company’s search team, dubbed A9, in Palo Alto, Calif., which opposed the move, the people said.

Any tweak to Amazon’s search system has broad implications because the giant’s rankings can make or break a product. The site’s search bar is the most common way for U.S. shoppers to find items online, and most purchases stem from the first page of search results, according to marketing analytics firm Jumpshot.

. . . .

Amazon’s lawyers rejected an initial proposal for how to add profit directly into the algorithm, saying it represented a change that could create trouble with antitrust regulators, one of the people familiar with the project said.

The Amazon search team’s view was that the profitability push violated the company’s principle of doing what is best for the customer, the people familiar with the project said. “This was definitely not a popular project,” said one. “The search engine should look for relevant items, not for more profitable items.”

. . . .

Amazon declined to say why A9 engineers considered the profitability emphasis to be a significant change to the algorithm, and it declined to discuss the inner workings of its algorithm or the internal discussions involving the algorithm, including the qualms of the company’s lawyers.

. . . .

Amazon executives have sought to boost profitability in its retail business after years of focusing on growth. A majority of its $12.4 billion in operating income last year came from its growing cloud business.

. . . .

Amazon’s private-label team in particular had for several years asked A9 to juice sales of Amazon’s in-house products, some of these people said. The company sells over 10,000 products under its own brands, according to research firm Marketplace Pulse, ranging from everyday goods such as AmazonBasics batteries and Presto paper towels, to clothing such as Lark & Ro dresses.

. . . .

One former Amazon search executive said: “We fought tooth and nail with those guys, because of course they wanted preferential treatment in search.”

For years, A9 had operated independently from the retail operations, reporting to its own CEO. But the search team, in Silicon Valley about a two-hour flight from Seattle, now reports to retail chief Doug Herrington and his boss Jeff Wilke —effectively leaving search to answer to retail.

After the Journal’s inquiries, Amazon took down its A9 website, which had stood for about a decade and a half. The site included the statement: “One of A9’s tenets is that relevance is in the eye of the customer and we strive to get the best results for our users.”

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

PG has previously expressed concern that one of the results of the breakup of Jeff Bezos’ marriage has been that Bezos has taken his eye off the ball at Amazon.

PG takes this latest WSJ disclosure as further evidence that Bezos is mentally and physically absent from Amazon.

The tweaking of Amazon’s search algorithms to favor Amazon’s own products is pure MBA-conventional thinking, 180 degrees from the fresh and innovative ideas that brought Amazon to the top of a very competitive heap of online merchants. One MBA argument in the OP read as follows:

The private-label executives argued Amazon should promote its own items in search results, these people said. They pointed to grocery-store chains and drugstores that showcase their private-label products alongside national brands and promote them in-store.

Amazon didn’t reach the pinnacle of online retailing by emulating grocery-store chains and drugstores.

The revolt of the A9 engineering group is, perhaps, the best evidence that those calling the shots at Amazon have violated some basic corporate values. If Amazon is just another tech company, one whose vision centers on dollars and nothing else (“grocery stores and drugstores”), the best A9 engineers can find another job in Silicon Valley, probably with a higher salary, in about ten minutes.

When the brains start walking out the door, a tech company is in trouble. As the WSJ article points out, the majority of the income and profit for Amazon comes from its cloud computing business, not Amazon.com retail sales, so disaffection with Amazon among the engineering class could have much larger implications for Amazon’s future than a revolt among those involved in the tech details of Amazon’s search engine.

Antitrust Dangers

PG will also note that the OP indicates that Amazon’s lawyers opposed the changes the MBA’s demanded in the product search engine. As mentioned, one of the concerns of the lawyers was a variety of pending and threatened antitrust investigations.

If you wanted to take management’s attention away from running a company properly, you could hardly make a better choice than subjecting that company to a serious antitrust investigation and accompanying litigation.

IBM was enmeshed in a massive antitrust investigation and suit for 13 years during the 1970’s and 80’s. IBM actually won the lawsuit, which was dismissed in 1982. Many business observers contend that IBM did not recover from the effects of the investigation and suit until well into the 90’s because IBM continued to avoid any actions that might re-ignite antitrust actions. Among other challenges, while the suit was ongoing, IBM managers were often not permitted to reduce product prices to meet competition or increase sales.

Microsoft was also involved in lengthy and expensive antitrust litigation over monopolization of the market for operating systems in microcomputers. The investigation began in 1992. Microsoft was sued by the Justice Department in 1998, with antitrust regulators seeking to break up Microsoft. Microsoft lost at trial in 2001, with the district court judge ordering the company’s breakup. On appeal, that decision was reversed and the case was sent back to the trial court for yet another trial.

Bill Gates and CEO Steve Balmer had secretly decided to quit their jobs at Microsoft if the lawsuit was successful. While the case was being retried, Microsoft agreed upon a settlement that included outside monitoring of Microsoft’s systems, records and source code for a period of years, finally ending in 2009. Bill Gates retired from Microsoft in 2008.

Suffice to say, in PG’s monopolistic opinion, no sane person in a position of responsibility at Amazon should want to take any action that would result in an antitrust dispute. He will note that, in Microsoft’s case, in addition to litigation brought by the US Justice Department, nine states and the District of Columbia were also plaintiffs in the suit against Microsoft.

Book publishers sue Audible to stop new speech-to-text feature

PG has posted about this latest dispute between Big Publishing and Amazon before, but thought the OP was a good (though speculative) description of Amazon’s possible legal analysis supporting its offering of this new audiobook feature.

From Ars Technica:

Seven of the nation’s top book publishers sued Amazon subsidiary Audible on Friday, asking federal courts to block the company from releasing a new feature called Audible Captions that’s due out next month. The technology does exactly what it sounds like: display text captions on the screen of your phone or tablet as the corresponding words are read in the audio file.

The publishers argue that this is straight-up copyright infringement. In their view, the law gives them the right to control the distribution of their books in different formats. Audio is a different format from text, they reason, so Audible needs a separate license.

This would be a slam-dunk argument if Audible were generating PDFs of entire books and distributing them to customers alongside the audio files. But what Audible is actually doing is subtly different—in a way that could provide the company with firm legal ground to stand on.

The caption feature “is not and was never intended to be a book,” Audible explained in an online statement following the lawsuit. “Listeners cannot read at their own pace or flip through pages as they could with a print book or eBook.” Instead, the purpose is to allow “listeners to follow along with a few lines of machine-generated text as they listen to the audio performance.”

“We disagree with the claims that this violates any rights and look forward to working with publishers and members of the professional creative community to help them better understand the educational and accessibility benefits of this innovation,” Audible added.

. . . .

[A]n Audible executive explained that the technology was “built on publicly available technology through AWS Transcribe.” That’s Amazon’s cloud-based service for automatic text transcription.

So it seems that the Audible app is generating text captions in realtime as the user plays an audio file. The app sends snippets of audio files to an Amazon server and gets back corresponding sections of text, which it then displays on the screen one word at a time. (It’s possible that AWS Transcribe has an offline mode that allows the transcription to happen on-device, but I haven’t found any documentation about this. I’ve asked Audible about this and will update if they respond.)

Audible is likely doing this because it strengthens the company’s argument that it can do this without a license from publishers.

To see why, it’s helpful to review two of the most important copyright decisions of the modern era. The first was the 1984 decision of Sony v. Universal that declared the VCR legal. Hollywood argued that the “record” button on a VCR was an invitation for customers to infringe their copyrights. But the Supreme Court disagreed, arguing that copyright’s fair use doctrine allowed “time shifting”—recording a show now to play it later.

The courts built on this decision with a 2008 ruling known as Cartoon Network v. Cablevision. In that case, a bunch of media companies sued the cable company Cablevision because it was offering customers a “remote DVR.” Like a conventional DVR (or a VCR before that), Cablevision’s technology allowed customers to record and play back television shows at their convenience. But unlike a conventional DVR, the remote DVR was located in a Cablevision data center, not in the customer’s home.

Television content owners argued that Cablevision was infringing their copyrights by making unauthorized copies of their show on a massive scale. Cablevision disagreed, arguing that the copies were being made by customers, not by Cablevision. The physical DVR might be owned and maintained by Cablevision, but the customer was deciding which shows to record. And the customer was entitled to do that under the earlier Sony ruling. An appeals court ultimately accepted this argument.

The Cablevision ruling provided a legal foundation for cloud-based “storage locker” services that allowed customers to upload, save, and stream (but not share) their music and video collections.

. . . .

That brings us back to Audible’s new transcription technology. Audible doesn’t have the legal right to sell text versions of audiobooks to customers without publishers’ permission. But we can expect Audible to argue that it does have a right to sell software tools that allow customers to do speech-to-text conversion.

Audible’s case will likely be strengthened by the fact that its app never creates or saves a permanent, full transcript of an audiobook. Instead, the software only displays a few words on the screen at a time.

If Audible is sending audio files to Amazon’s servers for transcription, publishers are likely to argue this means Amazon—not users—are creating the transcripts. But this seems closely analogous to the Cablevision case: the conversion is being done by Amazon servers but only when explicitly requested by users. And each translation is only sent back to the user who requested it.

Link to the rest at Ars Technica