Archive for April, 2012

Amazon, Apple, The Big Five (or is it Six?) and the Government

April 12, 2012

I’m sure everyone who cares has already noticed, but the Department of Justice (DoJ) has filed suit against Apple and major publishers for price fixing. Okay, not a big surprise. It’s something that’s been rumored for months, while some other folks are already hitting them with a civil suit because they just can’t buy their ebooks cheap enough.  What this will boil down to, as TPM wraps it up, is that the agency pricing model will likely go out the window, or be much more difficult to do. Media Decoder, over at the NYT,  has a nice article up detailing the case being made by the government.

What’s not getting talk about, though, is that Amazon is just as bad for the book business, and has been operating just as ruthlessly. The LA Times article just linked has gobs of additional links inside of it, including this one to a series done by the Seattle Times about Amazon. Did you really think Amazon was making any money selling eBooks for $10 a pop when no one else was able to sell them for less than $13? They weren’t, and they weren’t caring. Their goal was, and likely still is, to push as many other companies out of the eBook business as possible, corner the market, and charge what they want in the end, both to you, the consumer, and from the publisher – if they still exist.

It’s something I have grown increasingly uncomfortable with supporting. I’ve never been a big Amazon fan (I always bough more books through ebay, if I bought online, but I buy the majority of my books through brick and mortar stores).  I love second hand shops, and any price I could get on Amazon could usually be matched, once shipping and handling was included, by a local shop. Even if it couldn’t, there was the added effect of getting the book right then and there, having something tangible in my hands. ebooks are a bit of a different creature, though.

What is there that is tangible to a digital file? Not a whole lot, that I’ve found.  Because of this lack of tangibility, I think it becomes all too easy to overlook the repercussions of our purchasing an item through this retailer instead of that retailer. We lose sight of how important our actions are.  The truth is, Amazon kills community bookstores. It kills community. It is the new Wal Mart. Do you sell something that could be sold online? well, you’re in the crosshairs. People will walk into you store, look at your merchandise, and then buy it for five cents cheaper from Amazon after using an app to check online prices. And when your store is out of business, they will wonder why, and where they are going to have to go now to preview the novel they aren’t sure about buying, or the television, or the couch or whatever else. You get the idea.

Amazon isn’t doing any  favors for your community bookstores (from the little independent to Barnes & Noble). How is Amazon hurting publishing, though? By pushing harder and harder deals on publishers to sell their books. the cost for printing a physical copy of a book isn’t the biggest money sink. You have to pay the author, the editor, proofreaders, marketing, tech people to run the growing digital side, etc. So, let’s take Amazon’s $10 price. Amazon wants to take 30% right off the top, so we’re down to seven bucks. The other gets around a buck of it (10%) so we’re down to $6. From that $6, a cut is taken out to pay for all of those things listed above, plus everything else (building maintenance, secretaries, security, taxes,…). In other words, the profit margin is pretty damn slim. At some point, the costs of doing business are going to eclipse the returns they get from sales, and Amazon’s pricing structure will go a long way towards expediting that.

I began writing this last night, and I’m not surprised that I woke up to find this in my newsfeed this morning. Amazon is already looking to slash prices again in an attempt to gain greater market share.

This isn’t to say that  publishers are faultless. This article from the Atlanta Journal Constitution talks about how publishers have made it very difficult for libraries to expand their ebook lending. Give how one of the problems with Amazon is their work to gain a monopoly on ebooks, making them more readily available from libraries would seem to be a solid way of fighting that – especially if they adopt an open format that isn’t tied to any one device, allowing consumers more latitude in selecting their ereaders. one of the better ideas I’ve seen (other than just not dealing with Amazon) is to give away a free digital edition with the purchase of a print edition. So, instead of paying $10 for a digital copy, pay $15 for a trade paperback and get a digital copy for free. You put a balance against the ebook market, while also pushing sales for the print version the publisher seems to want to move more.

Alright, somewhat rambly post is over. I know there are gobs of stuff that I haven’t touched on, but I have only so much space and time. The short of it is that I think we’re jumping from the pan and into the fire by going after Apple and the publishers, and shifting power towards Amazon. They’re not a cuddly gentle giant looking to do right by readers everywhere, they’ll looking to make just as much money and grab as much power as anyone else. They can’t be trusted, just as we know we can’t really trust Wal Mart, and the effects of shopping with them are larger than we may initially perceive. If things continue, I won’t be surprised to see more brick and mortar stores close, publishing houses fail, and the quality of products (literature) slip, while the Cult of Amazon grows.Personally, I find it to be a bit of an ugly future.