I have refrained from commenting on the ongoing dispute between Hachette and Amazon mostly because it’s boring. Watching two for-profit companies compete with each other for the right to exploit authors as much as legally possible is not my idea of entertainment. If anything, such efforts have become routine in both market segments as evidenced by the Justice Department’s conviction of Apple and a gang of publishing houses on price-fixing charges last year. Because Amazon’s market position is so dominant it doesn’t need to conspire with anyone to fix prices, but that’s the only way to describe what Amazon is trying to do with Hachette, and what it tried to do several years ago with MacMillan. (Detailed explainer here. Latest update here.)
To be clear, Amazon has that legal right. It can refuse to sell products at prices it doesn’t agree with. It also has no obligation to be nice simply because of its market dominance, which verges on monopoly. On the other hand, Amazon’s strident position is obviously predicated on the fact that Hachette can’t sell as many books via other pipelines, and Amazon knows this, so it’s playing hardball when it might otherwise have to take competition into account.
What continues to amaze me is that the main publishing houses (and record companies, and film companies) have not yet banded together to create an independent — and perhaps even not-for-profit — company that could handle online and offline distribution of everything from novels to movies to music. Even if the enterprise only broke even it would would necessarily create competition for Amazon that would improve the negotiating position of those content producers. (I don’t for a minute see this is artist-friendly given the history of predatory practices in those industries, but am simply agog that they are not doing this in their own best interests. There is nothing new to be learned about ordering and distributing products using the web, and I am confident there are plenty of ex-Amazon workers who happy to join such an organization. All the content producers have to do is drop money and they’re in business.)
My main reason for believing the time might now be right is that the once impenetrable branding of Amazon seems to finally be splintering. What used to universally be considered a customer-friendly site is now, more and more, being seen as a bully, opening the door for other players in that space — particularly if the cost of goods is no more than what you would pay from Amazon.com. Given that publishers and other content distributors can set prices on their own site at or lower than those on Amazon, yet pay none of the percentages, fees, kickbacks or other middle-man costs, I’m not sure how Amazon could compete over the long haul, and at the very least I think its negotiating position would be weakened.
If that also allowed independent authors to use the same pipeline for a reasonable percentage or fee — as is already the case on CreateSpace (an Amazon subsidiary) and Smashwords — that in turn would be of real benefit to writers who didn’t want to sign what are often exploitative contracts with publishers. Win-win.
— Mark Barrett
Mick Rooney says
“What continues to amaze me is that the main publishing houses (and record companies, and film companies) have not yet banded together to create an independent — and perhaps even not-for-profit — company that could handle online and offline distribution of everything from novels to movies to music.”
This is being tried by RHP but publishers just don’t see themselves in the role of direct sellers. I can understand the economics for print books, but not for e-books. To me – it’s a no-brainer. The reluctance is that publishers want to portray themselves as something more akin to libraries and literary curators. That’s a romantic idea that died decades ago with the advent of the dime paperback at the drugstore.
“Given that publishers and other content distributors can set prices on their own site at or lower than those on Amazon, yet pay none of the percentages, fees, kickbacks or other middle-man costs…”
They can, but the point is most publishers shy away from the direct sell option. The few who do – to a cent – sell far higher than any online retailer.
I can understand publisher reluctance about getting into direct selling and order fulfillment, but I also think it’s a no-brainer to fund a dedicated third-part/independent company to handle those needs. Instead of trying to turn Amazon into an old-school business partner so content can keep being fed into the pipeline as usual, content creators at all scales need to think about how best to connect themselves with customers — and Amazon is clearly no longer the best way. It’s the dominant way, but what Amazon is doing across all product lines can easily be replicated for the original market niche(s) that Amazon first exploited. (In effect, over the past couple of decades Amazon has shown publishers how to use the internet. Now they just need to do it.)
Honestly, every time I think come upon the last layer of calcification in publishing another is revealed. Yes, the internet still seems like a brave new world in the context of books, but despite its relative youth the cyclicity of the internet is already baldly apparent. Companies move into a space, dominate the space, go public, spread out, then try to keep from becoming obsolete by leveraging their capital to fund acquisitions. Yet sooner or later a new company comes along and does it all better, cleaner, and with less hassle than the last company. Geocities begets AOL begets MySpace begets Facebook, which is already passe but will be able to hang on for another ten years.
The entire online ecosystem is converting from desktop/laptop to mobile right now. Amazon’s website is a cluttered mess packed with features designed to do nothing but dominate search results through affiliate link pollution. The best thing it has going for it is customer laziness, not branding, but customers are fickle things. Start a new company that sells content only (no spatulas, no lawn furniture), make it trendy and hip so the kids are attracted, and presto: you’re in the game. At best you make some money, at worst you are able to pipeline your own products when Amazon throws another hissy fit.
Seriously: what would the Amazon vs. Hachette conversation look like right now if there as a reliable distributor for Hachette’s work that Hachette could direct consumers to? Not only would Amazon look like crap, but the press would dutifully carry news of that site to the world for free, providing millions of dollars in free publicity.
You would think, after generations of controlling the literary pipeline and abusing that process and acting as sanctimonious gatekeepers that the one thing publishers would know would be to never let anyone do that to them. And yet here they are, once again begging Amazon to play nice.
Although the headline is overblown, there’s some good analysis here: