Home » Amazon, Legal Stuff, Mike Shatzkin » The dominance of Amazon needs to be addressed but it is far more attributable to natural circumstances than it is anybody’s fault

The dominance of Amazon needs to be addressed but it is far more attributable to natural circumstances than it is anybody’s fault

8 May 2018

From veteran publishing consultant Mike Shatzkin:

As things evolve in an era of rapid change, it is human nature to assign credit or blame for any drastic alterations in circumstances. And so we have the book business, with its last remaining chain store behemoth, Barnes & Noble, in a period of obvious decline and presenting the clear possibility that the book publishers’ single biggest brick-and-mortar account might suddenly disappear.

This is a very unpleasant notion to contemplate for all publishers and, perhaps surprisingly, to Barnes & Noble’s erstwhile competitors among independent bookstores. Today, the head of the trade association that represents bookstores (mostly independents), Oren Teicher of the American Booksellers Association, is quoted in The New York Times saying, “It’s in the interest of the book business for Barnes & Noble not just to survive but to thrive.”

The op-ed in which Teicher’s quote appears is a piece by columnist David Leonhardt basically blaming the US Department of Justice for Amazon’s growth and the consequent reduction of market share available to all other retailing competitors. There is a lot of history and context not discussed in this piece but I have a nominee for the single most glaring omission. At just about the turn of the century, Barnes & Noble made a deal to buy Ingram, the biggest book wholesaler and distributor in the world, which was shot down by an activist Department of Justice. This is not mentioned.

And, in 1998, when the purchase was announced and B&N specifically cited its need to strengthen its ability to sell online as part of the reason for the purchase, the American Booksellers Association was vigorously opposed!

. . . .

It has long appeared from here (here’s a piece from 2012) that the existential issue in the book business in the 21st century has been “when does Amazon’s share growth stop, and who will be left standing when it does?”

Although definitional and data ambiguities make this an imprecise statement, it is likely that we’ve reached a day when more than half of the printed books sold through retailers are sold online, not in stores. Ebooks added into the mix for the narrative reading portion of the published material constitute a further erosion of the brick-and-mortar store sales base.

The shift of habits from buying in stores to buying online is not restricted to books, of course. Because of Amazon, it largely started with books. But books also have other characteristics that make them better than most things for online purchase, from a consumer point of view.

. . . .

So buying a specific book that you know you want online just makes sense to most people. Of course, Barnes & Noble has had its own online bookstore operation since the 1990s. They have steadily lost online purchasing share to Amazon for decades.

It is true that Amazon cut prices below what many brick retailers charge. And I even think I identified the moment when that strategy kicked in. See the same piece linked above. If I’m right, then they did it specifically to discourage independent stores from using the same Ingram capabilities they used to launch an online sales effort. (In fact, discussing the “low price” challenge that exists for publishers in 2018 without mentioning the self-publishing world which is the primary price restraint mechanism in the market, assuming no disingenuousness, displays serious ignorance of the marketplace realities.)

But the way things looked in then 1990s, with online retail in its infancy, was that it didn’t constitute a threat to brick-and-mortar. Many physical retailers ignored the opportunities and threats of online competitors. Borders, at about the same time that the Department of Justice was killing the deal by which B&N bought Ingram, was partnering with Amazon to deliver its online offering!

With those realities, does it make sense to be blaming the DOJ for not seeing the threat?

Much is made of Amazon’s pricing practices and the possible fallacy inherent in looking at consumer prices as the be-all and end-all indicator of whether a marketplace is working right. But even that argument is just not so simple. More than a decade before Amazon was launched, the retailing chain Crown Books (not to be confused with the then-indie publisher now an imprint of PRH) was aggressively discounting bestsellers. They grew fast in the 1980s. Until the superstore era began in the late 1980s, and the massive selection in the big Borders and B&N stores became the “killer” consumer attraction, this variation of the Amazon strategy (using bestselling books as loss leaders to pull in customers, to whom Crown sold remainders and bargain books to generate the margin to operate) was upsetting the old order.

. . . .

It is not hard to support Leonhardt’s idea that Internet monopolies, even if they result at least partly from the natural power law forces of Internet economics, will have to be regulated, as I suggested in another forum recently. (I publish the stuff that is not mostly about books in other places.) Perhaps the first step with Amazon is to ban them from the publishing function. And because they are a vital path to the consumer for all publishers, it would be helpful for the government to be sure that their sales terms are fair among the publishers competing for their customers (a concept that wll get increasingly tricky as Amazon’s physical store footprint expands).

. . . .

So while it is absolutely true that Amazon is gaining a level of market share, and therefore a level of power and control, over the book business that is frightening for those of us in it and not a good thing for society, this does not make them evil or make everybody who failed to stop them stupid. Through a remarkable series of brilliant moves — the first ones putting books online with a huge master catalog and providing “promise dates” for each individual title so the customer knew when to expect delivery but then continuing onto Prime and Kindle and harnessing their own print-on-demand and, most of all, enabling self-publishing by individual authors that delivered meaningful revenue — they have achieved what sometimes looks like imminent hegemony.

Link to the rest at The Shatzkin Files

Large market share and dominance is something Amazon is developing in a variety of different fields besides books.

From MarketWatch:

Amazon.com Inc. may already be the largest apparel retailer and could still grow to sales between $45 billion and $85 billion by fiscal 2020, according to Instinet analysts.

Instinet analysts led by Simeon Siegel estimate overall apparel and accessories sales at above $1 trillion with “above average” online penetration and “leading gross margin” compared with other categories.

“We believe Amazon has the largest [total available market] TAM (ever), doesn’t carry socio-economic retailing stigmas, can stock a limitless number of goods on its virtual shelf and knows customers better than they do,” Instinet wrote. “Amazon’s path to book dominance provides a potential road map for apparel success, with its fiscal 2007 media progress sharing similarities to its fiscal 2017 apparel achievements,” the note said.

PG notes that the “socio-economic retailing stigmas” refer to Walmart, previously the largest apparel retailer and now generally regarded as #2.

PG includes the apparel dominance Amazon has built as evidence Amazon is very good at understanding what customers want and how to deliver it to them at a reasonable price.

Amazon didn’t start selling books online with the goal in mind of becoming a publisher. However, in the face of illegal price-fixing by major publishers and other anti-Amazon activities calculated to bolster an outmoded, inefficient and expensive (for consumers and authors) publishing industry, Amazon innovated.

Prior to KDP, the self-publishing business was dominated by shady operators like Author Solutions and its companions whose business model focused on exploiting would-be authors. Instead of exploiting authors, KDP offered them much higher royalties they could earn in the traditional publishing business – 70% of the amount received by Amazon for KDP ebooks is a prime example.

Unlike traditional publishers that use a long and opaque supply chain which substantially reduces the amounts received by the publisher and thus the amounts received by authors, Amazon sold directly to consumers. Author royalties were quite close to 70% of the amount readers paid for author ebooks. (PG notes that some traditional publishing contracts {although fewer than in former days} calculate author royalties based upon the suggested retail price of the author’s printed book. Ebooks, books sold at a discount to discount retailers like Costco, Sam’s Club, etc.,  and some or all types of paperback sales are typically calculated based on the amount received by the publisher. Royalties calculated on the amounts received by publishers are virtually always much lower than royalties calculated based upon the suggested retail price of a book.)

For readers who really want to support authors they like, buying ebooks or CreateSpace books through Amazon is a much more effective means of doing so than buying books from a bookstore that takes its cut and acquires books from a wholesaler who takes its cut who acquires books from a publisher who takes its cut and passes a relatively small amount of the retail price of a book to the author.

Indeed, if we consider the annual incomes of all the people involved in the traditional publishing supply chain, it is quite likely that the author is the lowest-paid individual working in that business, even including clerks at Barnes & Noble.

PG suspects the traditional publishing practice of paying royalties to authors every six months may subtly influence authors to feel they’re earning more from their writing than they really are. Receiving a $6,000 royalty check in the mail feels psychologically like a larger amount than a $500 salary check every two weeks, particularly after taxes, social security and other deductions.

PG just did some quick calculations and discovered that a worker earning the US minimum wage of $7.25 per hour working 40 hours per week is earning more money than an author who receives a royalty check of $6,000 twice per year. If the author isn’t receiving a royalty check of over $7,500 every six months, the author would be financially better off working in a convenience store.

PG is not going to perform the calculations, but will note that the minimum-wage convenience store employee only pays 6.2% of wages for Social Security and 1.45% for Medicare (with the employer paying the same amount) while a self-employed author pays twice as much because she’s obligated for both the employee’s and the employer’s portions of those taxes.

Quick internet research didn’t disclose the average income of an author in the US, but in 2015, The Guardian calculated that the median earnings of professional authors in the UK fall below the minimum wage.

Do the median earnings of publishing executives fall below the minimum wage? Other employees working for publishers? How about median earnings of employees of book wholesalers? Delivery drivers that bring books to bookstores? Bookstore clerks?

So exactly why should the federal government take action to protect the traditional book publishing and selling industry at the expense of Amazon if that industry consistently fails to pay authors a living wage? Why penalize Amazon when it consistently pays authors more than traditional book publishing does?

Amazon, Legal Stuff, Mike Shatzkin

54 Comments to “The dominance of Amazon needs to be addressed but it is far more attributable to natural circumstances than it is anybody’s fault”

  1. “It’s in the interest of the book business for Barnes & Noble not just to survive but to thrive.”

    Not the writers, not the readers, but the ‘book business’. That would be the qig5, other trad-pub, agents, printers and ‘bookstores’ – the middlemen.

    I suggest that if those middlemen can’t bring anything worthwhile to the table they should get out of the way of the writer reaching their readers.

    Amazon right now is a fairly useful middleman in me reaching my readers, the road blocks of agent/trad-pub/bookstores are not. (Before someone claims gatekeeping means only the best books please recall that poor Harry Potter had a hundred or better rejections and they did print 50shades.)

    If B&N isn’t stocking what I and other readers are looking for at a price we like then let them go the way of Borders.

    Oh, and for that ‘The Guardian’ nonsense, if you figure in all the rejection slips as $0 wages, the median earnings of professional authors anywhere has never been anywhere near the minimum wage.

  2. “Perhaps the first step with Amazon is to ban them from the publishing function.” Thus destroying indy publishing in one fell swoop. As you might guess, not something I am going to cheer on.

    • Amazon has it’s own imprints, and books they bring out are published. If you upload to Kindle Direct, *you* are the publisher, and Amazon is the retailer. It also annoys me when people refer to payments from Kindle Direct as “royalties”. Royalties are paid by an entity that has purchased rights, and with KD Amazon has done no such thing.

      • The email received by authors every month says “KDP Royalty payment notification”. Perhaps your annoyance is misplaced?

      • DaveMitch, Amazon might not be listed as the “publisher” in the book’s frontmatter, but KDP certainly counts as a “publishing function”!

        Re: the use of the word “royalty payment” for KDP payments to copyright owners:

        Investopedia defines Royalty Payments as “…a payment to an owner for the use of property, especially patents, copyrighted works, franchises or natural resources. A royalty payment is made to the legal owner of the property, patent, copyrighted work or franchise by those who wish to make use of it for the purposes of generating revenue or other such desirable activities.”

        They further say: “The terms under which royalties are based on is called a license agreement. The license agreement defines the limits and restrictions of the royalties, such as its limitations pertaining to geographic territory, how long the agreement will last or the type of products with particular royalty cuts.” (Source: https://www.investopedia.com/terms/r/royalty.asp#ixzz5F1XiwzXj )

        Authors self-publishing through KDP agree to grant a license to Amazon that allows Amazon to sell their content. In exchange, they receive a payment based on a percentage of each sale. That meets the definition of a “royalty payment”. (see “5.5 Grant of Rights” from the KDP Terms & Conditions https://kdp.amazon.com/en_US/terms-and-conditions)

      • Yes, but in a very similar way, the tax forms you file with the IRS are a voluntary confession that the IRS cannot constitutionally force you to make. Try to get away without declaring your taxable income, though, and you’re likely to die in prison for your trouble.

    • I think they mean Amazon’s imprints, which are given benefits indie authors do not get.

      There’s even a precedent for it, when the Supreme Court forced the movie studios to divest themselves of their movie chains. This caused enormous disruption in the supply chain, and that plus the rise of television doomed the studio system.

      Other than that, I can’t imagine what they can do to Amazon, other than restrict their pricing.

      • Felix J. Torres

        Any restriction on Amazon pricing will only result in higher consumer prices.

        And if they force APub to stop they’ll have to force B&N to shut down Sterling Publishing because they’ve tried to sell it for over a decade and nobody wants it. And it is questionable if the government can force anybody to stop publishing. There’s that pesky first amendment…

        • Felix , what does QIG5 mean? Thanks. Big 5 which are now 4?

          • Felix J. Torres

            Yes. That’s a term some commenters use for the BPHs substituting a Q for a P.

            Technically there’s still five since the media “promoted” Hachette USA to the BPH ranks even though it is smaller than other Big publishers like Scholastic. But it is foreign owned, unlike Scholastic, so it’s a better fit with the Manhattan Mafia. 🙂

            (They probably would love to expel S&S for the club but then they’d all be euro-owned. They need a token.)

            • thanks Felix, appreciate it. I kept reading and reading it and listening to the subtext which sounded like it was a neg. appelation but I wasnt sure what.
              THanks again also for the explantion of how hachette got in there.

              • Felix J. Torres

                Just a reminder: Hachette USA is the old Warner books that Hachette Livre bought in 2006. Since then they’ve bought a bunch of smaller distressed publishers like Hyperion and Pegasus. That’s how they grew their US share to measurable numbers.

                And they’re still the least profitable of the so-called big 5. Also the most dependent on Amazon.

          • A joke I’d made up and used here a while back.

            ‘The big5’, which I called ‘The pig5’ because of their actions and dropping the bar.

            Someone here said I was now insulting pigs, so I turned the ‘p’ around and ended up with ‘The qig5’ …

            • thanks Anonymous, the etymology is really interesting; hope you document that for the slang dictionary. Priceless

          • The explanation Allan F gave when he came up with it was thus: the big5 are more like the pig5 because of their reprehensible behavior, but calling them that would be an insult to pigs. So since they are so backward in their business practices and technological skills, the p should be turned around the other way, which results in qig5.

            That’s the explanation I remember anyway.

      • If they were to try splitting Amazon from their imprints then the same rules should force Comcast to split the channels they own from their cable/internet services. Hmm, maybe any publishers and their printers?

    • This is exactly what trad publishing wants. They want the indie revolution stopped in its tracks. They want the disruption gone. How convenient. Here is the retailer that has enabled the single most important change leading to a more egalitarian publishing environment — how American, that!– and they want to be rid of it–how Un-American, that!

      • “They want the indie revolution stopped in its tracks.”

        So true, and they know there’s no way it will happen. Even if they ‘could’ kill Amazon (they can’t) we’ve seen it ‘can’ be done and done well. Another will fill in the gap.

        Actually it’s not Amazon they need killed but that internet thingy. Before the internet you only knew what was going on by what the papers/radio/TV told you, all easy enough to control with a few friends and a little money. Today they put out a book/song/movie and less than an hour later there will be people talking about how good – or bad it was – and they have no control over that …

        Their own bad choices of what to print too often dooms them because they print what they think might sell but doesn’t, the indies just steal eyes that one time might have glanced their way.

  3. I read that long assed title and I thought “The Shatz is back”.

  4. This explains why I’m seeing some daft stuff on Twitter, like the small London-based publisher advocating that all small and medium sized publishers shut down their Amazon accounts. Presumably without reference to their writers. They seem to think this will ‘dent Amazon’s armour’. I probably won’t be popular for pointing out that it would make about the same dent as a peashooter on an elephant.

    • Ah, but it will hurt the writers of those publishers that are dumb enough to pull out of Amazon. A thought, has that ‘small London-based publisher’ suggesting this pulled their books out of Amazon yet? 😉

  5. Cutting out middlemen angers them. They slash back with the refrain, “Unfair!” Even when it is they who have been unfair to authors as much and as often as they can get away with it.

    Does me such good to see them squirm. Not for their dominance in times past, but for their continued arrogance then and now.

    ‘Submit’ to a traditional agent or publisher, and you will know exactly what you’re worth.

  6. [N]ot a good thing for society…

    Which society?

  7. Felix J. Torres

    The BPH apologists need to be very, very, careful in calling for federal action against Amazon. Because once the feds start investigating for the *third* time since 2010, they almost certainly won’t stop with looking at Amazon. They’ll want to get to the root of the matter once and for all. And that is not Amazon.

    Shatz is trying to thread the needle by prescribing a “solution” by fiat, without an investigation. Not going to work.

  8. > needs to be addressed

    They should have done that 25 years ago, instead of pointing and hooting and declaiming how they were real “brick-and-mortar stores” instead of “just a web site.”

    They’ve spent an entire quarter century in denial. And most of them *still* don’t want to follow their customers online.

    Amazon didn’t strut in and kick sand in their faces. It just picked up the sales tradpub didn’t want. Emphatically didn’t want. And kept on reiterating it endlessly.

    • It just picked up the sales tradpub didn’t want. Emphatically didn’t want. And kept on reiterating it endlessly.

      That’s the best short definition of disruptive innovation that I have ever seen.

  9. Idaho Power is the only company I can buy power from. They raise their prices every year. The same for cable internet, I am only allowed to buy from Cable One. This isn’t because of competition but government regulation. No one is allowed to open another power company or cable company here.

    I can shop at Wal-Mart, Amazon, Target, you name it. And on any given day I will shop at all of them (well not Target because I am not Mr. Money Bags).

    If someone wants to dislodge Amazon all they have to do is exactly what Amazon has done. They don’t even have to be better at it.

    But they won’t. Why? People are greedy and predictable. It takes vision to build a company like Amazon and it is far easier to build a company that doesn’t provide customer service, easy returns, and awesome prices.

    The people will decide when they’ve had enough of Amazon because unlike Idaho Power and Cable One, I have a choice. I don’t have to shop at Amazon. The second their customer service starts sucking and their prices go through the roof I will shop somewhere else.

    What I would love is if people would stop WHINING about Amazon. It would be nice to go through the day without hearing how evil they are ABOUT to be. How we need to save B&N (an actually terrible company) and use the government to stop Amazon.

    Meanwhile, over at Apple, they control 50% of the market but I hear no calls for government control. No daily lynchings about their horrible working conditions and low pay. (The lowest anyone at Amazon is paid is 14.50 an hour while Apple Store employees are lucky to get 11). I don’t hear people talking about the slave-like labor conditions at the Chinese factories where their phones are built. Or how Apple has commandeered the police to raid private homes without warrants.

    But d**n Amazon to hell for driving the publishers out of business and giving consumers the best price. EEEEEVVVVIIIILLLLL!

    Of the two companies which one has actually lost an Anti-trust suit?

    Hint: Not Amazon.

    • Actually, having Amazon for competition has improved Walmart’s online practices. I used to have to wait longer than a week for a Walmart delivery, when I had 2 days with Prime. So, of course, I shopped Amazon.

      Now, Walmart has 2-day. So, when some item on Walmart is better priced than Amazon, and I can reach the free-shipping mark, I order Walmart.

      It’s all about get it to me quick and sell it to me cheaper. Then I’ll patronize you.

      I remember when I was pretty much Amazon-only, as they did, for a spell, have the best prices on just about everything I needed to order from online. That changed. Now, I have a few places I shop online who send promptly. I just compare prices and whichever has it best gets my business.

      If Barnes & Noble had kept watch on trends and changes and evolved, they wouldn’t be in this mess. I bought Nook Color BEFORE I bought any of my 6 Kindles. I liked my Nook Color fine. I hated the B&N website. Very inefficient. Not user friendly. I then got a Kindle. Efficient. User Friendly.

      And then they went and took away my laptop reading app. I like reading on my laptop. I emailed them to complain back when they did it. I got the most unsatisfying response about how I could still read on my Nook. Gee, thanks.

      Kindle still has pc app and Read Now Cloud reader. Makes life easy.

      So, guess why I have ONE Nook and SIX Kindles? And I only buy a Nook Book these days when someone–ignorantly–gives me a B&N gift card (remembering the days I went there every weekend for browsing and buying). I have to keep reminding them I don’t do B&N anymore. Gimme Amazon gift cards. 😀

      • Felix J. Torres

        WalMart vs Amazon is exactly how the system is expected to work.

        WalMart isn’t going around all “woe is me” looking to bribe politicians into protecting them from Amazon. They took a look at what Amazon is doing and figured out where they can match or better them.
        They up their game and force Amazon to do the same.

        Consumers win.

        • Walmart should have looked at its own practices sooner. Instead of being forced to by other companies. If they had, they would be ahead of Amazon.

          Ditto the publishers. They should have been leading the revolution. Now they complain about being left in the dust.

          Amazon decided consumers deserved better service, and set about figuring what that would mean. And worked very hard at it, and tried lots of different things.

          Even now (with howls from cheating authors and bots and scams) they are trying to keep their review system useful to said customers – free of paid-for reviews and hidden bias. Daily someone complains about getting ‘caught up’ when some new-fangled algorithm decides their reviews are bogus or unreliable, but usually there is something in the way they phrase their howls that makes me wonder if they doth protest way too much about being innocent. If people write at length, the little incriminating details start to surface.

          Even though people who get ARCs are supposed to indicate they got a free book in exchange for their review – and the FTC requires it – readers and book bloggers don’t always comply, and then they and the authors get all huffy when a review is removed.

          It’s a dilemma: do I go back and ask a reviewer to do some more work and add the disclaimer? And risk angering a reviewer or having them remove their nice review and never get around to replacing it? I don’t – I leave sleeping dogs strictly alone – but if Amazon removes those reviews (I think they have done so a couple of times), I know I don’t have a leg to stand on. Instead, I’m grateful.

  10. Ashe Elton Parker

    $6,000 every 6 months is $12,000 a year. Wow. Just Wow. As a Veteran of my nation’s Navy, I get about $13,200 a year.

    Definitely not going to go tradpub if it means I’ll get less and still have to do all the work they don’t do any longer anyway. I’m better off funding my publishing myself.

    • Exactly. If they were doing their job (everything other than writing) and doing it well, that would be one thing. But they now expect authors to do the publicity, promotion, platforming, seeking reviewers, buying ads, etc. No, that’s why they get the 90% plus, not the 10% or less. Because they are supposed to be doing everything but writing.

  11. Felix J. Torres

    All the hyperventilating about Amazon by Mr Shatzkin and the other BPH apologists ignores one itsy-bitsy fact: Amazon doesn’t actually dominate US book publishing.

    The Manhattan Mafia likes to pretend they’re all of publishing but they aren’t even a third of the full market. Their stagnant sales add up to something like $9-10B (depending on who they’ve bought up lately) in a market that is $27-30B big.

    Now, Amazon does move about half the consumer books from the BPHs but that means they barely move as many books as the Randy Penguin sells.

    And it wasn’t that long ago that antitrust enforcers the world over rubberstamped the merger that created the Randy Penguin because the combined entity would not be big enough to control the market.

    Apply that same guideline to Amazon, who don’t actually own most of the books they sell and it’s hard to say their 17% of book sales is a particular issue for the feds.

    The only way you make a (fake) antitrust case against Amazon is by limiting the relevant market to that corner of the book market that Amazon does control, ebooks, and willfully ignore all other competitors.

    That is the same tactic deployed against Microsoft circa 1995 where all other computing markets (workstations, servers, infrastructure, mobile) and competing OSes like Solaris, QNX, and Linux were preemptively excluded from the “relevant” market. So they proclaimed that they had a monopoly position to try to break MS apart. (Which would have been monumentally stupid because the biggest drag on MS power was actually their focus on integration around Windows, as demonstrated by their recent resurgence under their new cross-platform approach.)

    History has shown that all the drama around Windows did nothing to hurt Microsoft’s Windows sales and instead led them to expand their focus to databases, network management, document management, and gaming. They weren’t killed but rather made more diversified, stronger, and durable.

    All that was achieved was a few big payout for roadkill companies.

    An antitrust case against Amazon, if it materializes, would be equally ineffective: lots of sound and fury, signifying nothing.

    The big bone sticking in Shatzkin’s craw, Apub, is already run as an entity independent of the retail arm. Spinning it off woukd change nothing except letting it run an IPO to raise enough money to buy S&S. Or a dozen mid-sized publishers and their catalogs. Apub is not going away any more than WalMart, Microsoft, Facebook, or Google, the other “pariah” companies that are “too successful to tolerate” have vanished.

    All the ADSers are doing is wasting time ranting that would be better used trying to compete.

    It can be done. The just need to go and actually do something instead of waiting for the Universe to take care of them.

    • “It can be done.”

      But only if they are willing to put forth the effort – and the money.

      We (and they) watched the poor RoI on Amazon those first years as Jeff built it up until it was self propelling.

      They and their stockholders don’t want to spend that type of effort and money to update their own companies; whining is much easier, as is blaming someone else for their problems.

      I did laugh at the title though as Mike tried to shield his followers. It was ALL their fault. Without the ‘limited’ slots, bad contracts, agents telling writers to sign those bad contracts, bookstore shelf limits and all the rest gave Amazon the perfect storm of writers ready to bypass the gatekeepers for just a chance to reach their readers. Yes, Amazon got nudged by other companies to give better returns, but even their base offerings were still better than a trad-pub contract.

      Yes there are other ebook sellers out there, but they aren’t pulling in the eyes Amazon is.

      • Felix J. Torres

        Are they?
        Then who is moving the other $25B+ in US book sales that Amazon isn’t moving. 😉

        • If Amazon’s not really that big a deal, what’s Mike and his followers crying about?

          (I do so wish we still got quarterly data dumps from AE … 😉

          • Felix J. Torres

            That Amazon is enabling Indie, inc.
            You did get that part, right?


            From the OP:
            (In fact, discussing the “low price” challenge that exists for publishers in 2018 without mentioning the self-publishing world which is the primary price restraint mechanism in the market, assuming no disingenuousness, displays serious ignorance of the marketplace realities.)

            Also, Amazon isn’t that big in the bigger market, but the BPH volume pricing policies have made *them* ever more dependent on Amazon and they are terrified of Amazon doing to them what *they* would do if they ran Amazon.

            They’re projecting.

            • Yup, I’m one of those enabled.

              Heh, I’ve projected a time or two for them as well.

              I think that agency thingy on ebooks was a great idea – for those not caught up in it – and I really wish Amazon would ‘agency’ the qig5’s paper and hardback books. They don’t have to do it for long, a month or three would do. 😉

              What could the qig5 do? Cry to the DoJ that Amazon is selling their books at the prices they had put on them?

              I haven’t seen one in a while, but this is one of those ramblings that needs to be torn apart line by line and laughed at. (‘Fisking’ or something like it?)

    • ~~Apply that same guideline to Amazon, who don’t actually own most of the books they sell and it’s hard to say their 17% of book sales is a particular issue for the feds.~~

      Thanks. Didn’t know their share was that small; 17% is hardly domination. LOL. I don’t see how they can get anywhere near antitrust justification with that.

    • Also, where do you get your 17%? I kept seeing the 60% or so figure for Amazon in terms of % of US book sales.

      • Textbooks, plus specialty books, plus “vanity press,” plus all the fiction and non-fiction, plus technical manuals would be my guess. But it is just a guess.

        • Felix J. Torres

          Which is the right guess.
          There’s all those museum gift shops selling books Amazon never sees, too.

          Here, this is from 2014:

          https://publishers.org/news/us-publishing-industry’s-annual-survey-reveals-28-billion-revenue-2014

          $28Billion.

          Doesn’t capture Indie, Inc or APub or a bunch of others and it’s grown a bit since, but it’s an indicator of the true size of the US book market compared to the Manhattan Mafia.

          Here’s the Randy Penguin numbers over time, M&A included:

          https://www.statista.com/statistics/272186/revenue-of-the-publishing-group-random-house-since-2005/

          That’s in Euros so figure them at about $4B in US dollars.
          So they’re one seventh to one eighth of the market and they are about half of the “Big 5” in sales, or roughly Amazon’s share.

          Not exactly dominant are they?

          For comparison, here’s the (official) top publishers in the world:

          https://www.publishersweekly.com/pw/by-topic/international/international-book-news/article/71268-the-world-s-52-largest-book-publishers-2016.html

          Amazon looks to be selling between $4 and $5Billion in books a year. Looks big to the BPHs but compared to the global market of $100B it is peanuts.

          Nobody is dominant in books unless you fake the accounting.

          https://www.ibisworld.com/industry-trends/global-industry-reports/manufacturing/book-publishing.html

          Note that the Amazon and BPH numbers are global sales while the $28-30 baseline I quoted is US. So the US share is much lower.

          • Felix J. Torres

            BTW, those numbers I’m throwing around aren’t meant to be seen as gospel truth. They’re order of magnitude indicators.

            Amazon’s share of US book sales is not going to be exactly 17% but it will be something in that range. It might be 12% or it might be 20%. (Though 12% is more likely than 20% because their international sales aren’t zero.)

            The key point is the DOJ/FTC/whoever isn’t going to pretend that the US Book market is ebooks-only or trade-books only. They will look at the *whole* market. And they will no more see Amazon as a dominant player than they see the Randy Penguin as a dominant player. There is plenty of competition out there if you don’t blind yourself to it.

            After all, one of the greatest SF books of the 20th Century (DUNE) was published by an auto parts catalog publisher (Chilton) and the top selling series of the last generation (and counting) came to the US via a publisher whose primary business is K-12 schoolbooks.

            Books have a lot of ways to get to market, now more than ever. Amazon is a big enabler of this but they are nowhere near the whole story or the entire market.

            A sense of perspective will be useful in navigating the rapids out there. ‘Cause the changes will keep on coming, BPHs or no BPHs.

          • Yes, I had gone to statista, and the number for the US revenue was close to what Felix offered, but I couldn’t find Amazon’s cut. Mike is only using trade, whereas I think if it’s about book publishing “monopoly,” then ALL books should be included. Even if Amazon has 60% of ALL books published, I don’t see that as a monopoly as long as there are other venues to sell ebooks and print books–which there are.

            • Felix J. Torres

              Amazon’s total share has been quoted by DataGuy via Shatzkin himself as around 50% of the Trade Sector. And so has the Randy Penguin. Hence my guesstimate of $4-5B.

              The actual numbers don’t matter as much as the principle that we *know* the trustbusters look at the entire book market, not just ebooks or audio or narrative text.

              At this they’re just floating ideas they know won’t fly.
              At some point they’ll run out of lead balloons.

              • Felix J. Torres

                Worth revisiting:

                http://www.thepassivevoice.com/a-changing-book-business-it-all-seems-to-be-flowing-downhill-to-amazon/

                Data Guy says:

                On the print front, Amazon is indeed very close to half the US market: Our own Bookstat-derived total of 312 million print units sold by Amazon in 2017 is 45.5% of Bookscan’s total reported 2017 print sales of 687 million, which means Amazon sales now comprise the majority of Bookscan’s “Club & Retail” share. Even allowing for the other 15%-20% of US print sales that remain untracked by Bookscan, that puts Amazon’s US print share is at least 40%. And that’s ignoring another 10-15 million unreported Amazon print sales a year from CreateSpace titles that aren’t trackable through Ingram “expanded distribution.”

                —-

                Add Amazon’s share of ebooks and Audio books and you get somewhere close to 50% of trade book sales, which are a third of all book sales.

                Also worth considering is Shatzkin’s 4 year journey to quoting Data Guy from this:

                http://www.thepassivevoice.com/comparing-self-publishing-to-being-published-is-tricky-and-most-of-the-data-you-need-to-do-it-right-is-not-available/

                He’s got a ways to go but he’s already travelled pretty far from his ominous “agenda” days.

                Maybe in a few more years he’ll get to the point where he finally says: “Don’t look at Amazon, look in the mirror for the cause of your woes. “

  12. Terrence OBrien

    Consumers don’t care about publishers. They care about a wide selection of available goods at low prices.

    • Felix J. Torres

      “Look! A new book from Harper-Collins! I must have it!” said nobody, ever.

  13. I returned the item before receive around 2 months they did,t refund money.

  14. I actually like reading Shatzkin. I view him as an intelligent man almost blinded by a life spent as a publishing insider, not excluding his childhood as his father was also prominent in the industry. I think he is genuinely trying to understand what is going on, but his background makes it virtually impossible for him to do so. Many of us, myself included, see traditional publishing as an industry dominated by greedy, predatory and mostly amoral corporations. Not to forget smug and entitled agents choosing to act in their own best interests rather than the best interests of their clients and taking a hefty share for doing so. The big losers are of course the readers and authors. However, look at it from Shatzkin’s point of view. He has dealt with these organisations and their people for most of his life, and counts many of them as friends. And let’s face it, most of them are probably good people. But, of course, good people doing bad things, at least in my view. It is an interesting exercise to contemplate how normally decent people make some decisions on behalf of a corporation that they would never condone in their personal lives. Acting for the benefit of their shareholders is a mantra, though there often seems to be great difficulty in recognising that their own interests and those of shareholders are not always the same.

    But I ask myself if I could do any better than Shatzkin if I was in his position. I’d like to think I would. But when I just know my friends are good people and I want to see them as acting in the interests of the industry that my father was prominent in and that I spent my whole life in and that I love? I give Shatzkin marks for trying, though my main interest in his comments is in trying to come to grips with how this pre-historic segment of the industry is thinking. It is hard to believe the extent of their delusion if they seriously believe that Amazon is going to be punished in “Minority Report” fashion for future sins which may or may not occur.

    Personally I think the first anonymous comment to this post nailed it. The book business somehow seems to encompass the publishers and the agents and various middlemen but does not seem to extend to authors or readers. Yes, there are a few authors who will be disadvantaged when Barnes and Noble goes belly-up, but I suspect the vast majority will not be disadvantaged. In fact, it may prove to be a blessing in disguise for some of those authors who make little or nothing from their Big 5 books if it leads as I expect it will to a further decline in Big 5 market share and they are forced to seek more remunerative sales channels.

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