2017/05/25

Amazon Terrifies the Big 5

A friend alerted me to an article published by Vox.com which purports to show that Amazon is an evil monopoly bent on destroying the publishing industry.

I greatly enjoyed this story, and not just because it's rife with the usual Amazon zombie memes. Here, Vox.com take their butthurt over the fact that their legacy publisher pals are terminal losers to new depths of bizarro world delusion by insinuating that the used book market is tantamount to piracy:
It used to be that when you were shopping for a new copy of a book and clicked “Add to Cart,” you were buying the book from Amazon itself. Amazon, in turn, had bought the book from its publisher or its publisher’s wholesalers, just like if you went to any other bookstore selling new copies of books. There was a clear supply chain that sent your money directly into the pockets of the people who wrote and published the book you were buying.
But now, reports the Huffington Post, that’s no longer the default scenario. Now you might be buying the book from Amazon, or you might be buying it from a third-party seller. And there’s no guarantee that if the latter is true, said third-party seller bought the book from the publisher. In fact, it’s most likely they didn’t.
Which means the publisher might not be getting paid. And, by extension, neither is the author.
If a retailer is selling books produced by a publisher without first buying those books from said publisher, then those books are either a) used, b) pirated, or c) counterfeit. Amazon's policy states that the buy box can only link to retailers that are selling new books, so that leaves options b or c. In which case, the retailers are breaking the law.

But the point of the article is to cast large subsidiaries of multi-billion dollar conglomerates as persecuted victims instead of feckless losers. Therefore, Vox.com can't cry piracy because that would imply a responsibility on the publishers' part to safeguard their authors' interests.

How, then, does Vox.com explain the baffling appearance of these publishers' new books in third party retailers' inventories while also ruling out piracy? Simple. They do a bit of hand-waving to the effect of saying that "they don't seem to have bought their books from publishers" and link to The Huffingtong Post:
Third-party sellers may have obtained the books they sell in any number of ways. They might be a used bookstore that buys stock back from consumers at a cheap cost. They might troll book bins where people recycle books. They might have relationships with distributors and wholesalers where they buy “hurts” (often good enough quality to be considered “new condition”) at a super low cost. They might have connections to reviewers who get more books than they can handle who are looking to offload. And this goes on and on.
The last time I saw that many weasel words was in an MRK rant. To translate from the demagogue, they don't know. Note to Huffpo: "And this goes on and on" is not a data point.

What Vox.com and Puffho are studiously overlooking here is the minor detail that, if any of these speculative scenarios are true, all of the books ultimately came from the publisher. The most risible theory is that unscrupulous reviewers are able to sell ARCs because review copies aren't marked "not for resale". Apparently, protecting their copyrights isn't worth the expense of a ten dollar rubber stamp.

Vox.com then rehashes the "Amazon's low prices are driving down the value of books!" zombie meme:
This policy is part of Amazon’s ongoing, years-long quest to drive down the price of books. If Amazon succeeds, fewer people will be able to make their living as writers. That means fewer and worse books will make it to the marketplace.
Amazon routinely takes a loss on its book sales, often charging customers less per book than it pays publishers and swallowing the difference. It’s a priority for the company to be your preferred bookseller, even if it has to take a hit; its business model can accommodate the loss, because it generally makes up the extra dollars on the last-minute impulse buys customers toss into their shopping carts. Meanwhile, on the e-book side of things, Amazon’s low prices help drive sales of its Kindle. But that also means it has set certain customer expectations: Many Amazon customers now believe that books should be cheap — cheaper to buy than they are to make.
It is already punishingly rare for writers to make a living wage from their books. As Amazon drives down the cost of books, it will become ever more rare. That means fewer people will be able to invest the time and effort it takes into becoming a writer, which means a lot of talented writers — especially working-class writers and writers of color — will go unheard. All of which means that you, the reader, will be missing out on some excellent potential books.
The value of commodities like books is subjective. If enough customers believe that a book should be a certain price, then guess what? That's how much a market-facing retailer should charge for it. They cover that in econ 101, but it looks like Vox.com was sick that day.

Amazon is the biggest bookseller int he world. They have more and better market data than anyone else in the business. Their pricing practices aren't arbitrary. They're what the market wants. If the Big Five publishers weren't ossified incompetents, they'd find ways to reduce costs so as to enable more competitive pricing by, say, moving out of their astronomically expensive Manhattan offices.

But the most egregious deception in the whole piece is the glib assertion that lower prices will lead to fewer authors making a living from writing. This is not only illogical--stores run sales to increase revenue--it's contradicted by hard data.

Author Earnings - $50k

As the Author Earnings chart shows, authors who self-publish on Amazon are far more likely to earn a living wage from their writing than authors who publish with the Big Five. Not only that, tradpub's $50k per year earners are mostly name authors who've been in print for the better part of a century. The leftmost blue bar is especially impressive when you consider that self-publishing has only been viable for about a decade.

Thanks almost entirely to Amazon, more books are being published each year than ever before, and more authors are making a living with their writing than at any time in human history.

To dispense with the "low prices are bad" canard, the folks inhabiting those big blue bars are pricing their eBooks within Amazon's suggested $2.99-$9.99 range. It was the Big Five who badgered Amazon to move from wholesale pricing to an agency model where the publishers got to set the prices of their books.

The New York cabal promptly jacked up the prices of their digital versions to paperback or even hardcover heights. Now they're whining because reader-centric indie authors are murdering them in the marketplace. And you've got to love the "poor people and minorities hardest hit!" zinger at the end.

Vox.com missed the real story here, which is that Amazon, for all its faults, is at least market-facing. Meanwhile, the big New York publishers are hapless dinosaurs who go crying to their fellow travelers in the fake news media whenever the laws of economics fail to bow to their paper distribution monopoly.

UPDATE: Author and publisher Russell Newquist weighs in on Vox.com's wankery from a business perspective. Here are some choice excerpts:
That’s not how this works. That’s not how any of this works.
Like most big corporations, Amazon engages in a primary business and a few dozen complementary businesses.
Ms. Grady’s post shows that she seems to have some understanding of these concepts. But she’s gotten it all backwards. Amazon’s loss leader isn’t books. Books (and, these days, other digital content such as movies and television) is Amazon’s primary business. Amazon may, indeed, occasionally take a loss on specific books. It most definitely does not do that on a general basis with books. Pay attention: Amazon sells more ebooks than print books, and has since 2011. EBooks tend to sell for less money. But because it spends less on distribution and storage costs, Amazon makes a lot more profit off of them. The same is true of streaming music and movies. Amazon has focused on the primary business of delivering digital goods for years now.
Amazon selling books through third party distributors isn’t a big deal for indie publishers or self published authors. As Brian notes, there’s no way for a third party distributor to get our books in the first place except through us – unless they’re engaging in practices that are already both illegal and against Amazon’s terms of service. This is just one more way for Amazon to sell more of our books. Ultimately, that’s a good thing.

Related: I happen to have a well-received series of reasonably priced books available on Amazon.

Brian Niemeier - The Soul Cycle

@BrianNiemeier

11 comments:

  1. Brian

    Thanks again for an informative article. You hit on an item that irks me to no end as a reader. Why should I pay 15-25$ for an ebook?

    What possibly justifies such prices? There are no physical constraints of ink,paper, storage or transport cost. Further it'seems a le to cry for the poor publishers. It's not like they scrimping for cash. On the contrary it'seems the authors I have some sympathy but they now have choices.
    It's worse in Europe where some countries l8ke France want to save totally useless bookstores from Amazon.

    Dudes lower the prices increase the back lists and publish what people really want to read and not choices from literary prize juries.

    Thanks again. I'll re-read the post again

    xavier

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    Replies
    1. I'll let you in on a little secret. The big publishers don't want you to pay that much for eBooks. They don't want you to buy eBooks at all.

      Traditional publishers' whole business model revolves around having a monopoly on paper distribution. They're not in the storytelling business. They're in the lumber business.

      The Big Five don't dominate eBook distribution. Amazon does. That's why they harangued Amazon to give them agency pricing--so they could charge prohibitive prices for eBooks in a foolish attempt to force readers back into the tradpub-controlled print channels.

      It's backfiring, which is why the legacy media is reporting the "decline of eBooks". The Big Five's eBook sales are falling. But people aren't going back to print. They're turning to small and indie eBook publishers.

      Delete
    2. Yeah, I figured they were trying to bury the e-format. It was pretty obvious they weren't trying to actually sell books. The problem is the format is just too damn convenient for power readers. It won't die, it'll just not be THEIR books that will be bought.

      Delete
    3. "Traditional publishers' whole business model revolves around having a monopoly on paper distribution. They're not in the storytelling business. They're in the lumber business."

      This is why I won't buy physical books from the Big Five unless they are used. I'll buy physical and/or electronic versions from the indie or small press folks.

      Starve the Beaver! "Hey, Wally!"

      Delete
    4. @Chris Lopes: That's the tell. The Big Five aren't trying to sell books. Amazon is. I'll let you figure out which option is best for authors.

      @Man of the Atom: Outstanding. Don't give money to people who hate you.

      #StarveTheBeaver

      Delete
  2. Brian

    Thanks. I'm aware of how leery and unenthusiastic the Catalan and Spanish publishers are about ebooks. They cite piracy as a reason but when you insist on charging a similar price as the budget paperbacks, ya just encourage piracy. Worst is that a lot of the blacklists are so difficult to get your hands.


    I have a fascinating infograph on the Catalans publishing industry. It's from a cross-platform newspaper and it's really interesting.

    But as you point out nobody's really buying books either hardcover or paperback. Now the shills sniveling about buying used books (!).

    Yeah instead of selling books that people want to read ( how gauche!how pedestrian!) and move out to smaller towns the prefer to double down and ensure their demise.

    And I thought publishing was a business like any other

    ReplyDelete
  3. "It is already punishingly rare for writers to make a living wage from their books."

    Blame Big 5 contracts, Vox.com.

    "That means fewer people will be able to invest the time and effort it takes into becoming a writer, which means a lot of talented writers — especially working-class writers and writers of color — will go unheard. All of which means that you, the reader, will be missing out on some excellent potential books."

    You'll be there to employthem, Vox.com. Which means that they *will* be ignored. Who reads Vox.com except for LOLs?

    "But the most egregious deception in the whole piece is the glib assertion that lower prices will lead to fewer authors making a living from writing. This is not only illogical--stores run sales to increase revenue--it's contradicted by hard data."

    'Hard data'?! Are you mad, young man? Who in the Wide, Wide Wolrd of Sports (or Publishing) uses 'hard data'? Such an act might cost us those Manhattan offices of which you spoke!

    "Vox.com missed the real story here, which is that Amazon, for all its faults, is at least market-facing. Meanwhile, the big New York publishers are hapless dinosaurs who go crying to their fellow travelers in the fake news media whenever the laws of economics fail to bow to their paper distribution monopoly."

    Vox.com is merely Old Media in a New Plain Brown Wrapper. They realize their ultimate fate is tied to paper publishers because Vox.com and their brood aren't imaginative enough to regard the Internet as anything other that "Paper by Other Means".

    How the Big 5 fall will be how Vox.com falls. They are frightened. When animals are frightened, they often loose their bowels.

    Vox.com had a movement ... on Paper By Other Means.

    Nothing to see here. Move along.

    ReplyDelete
    Replies
    1. "How the Big 5 fall will be how Vox.com falls. They are frightened."

      Exactly. They wouldn't need the propaganda mills to prop them up if their position were secure.

      Delete
    2. Man of the atomic

      That also explains the vast majority of newspapers and magazines. They see the Internet as just fancier paper rather than it's own medium.

      Well thanks to the Internet i've come across some really great authors and musicians.
      @Brian

      Thanks for taking the time to write fun and interesting stories. As well as your blog. I learn a lot

      xavier

      Delete
  4. Brian

    Sorry to butt in again but here's the infograph I mentioned

    http://www.ara.cat/data/xifres-llibre-Catalunya-llums-ombres-sector-editorial_0_1783021929.html

    Keywords

    Oci= leisure
    Feina= work/job
    FacturaciĆ³=billing ( i think)
    If there are any other words just let me know.

    It'd be interesting to compare this infograph with American and British data separately.

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  5. Great post! Really insightful. I have not monetized by blog in any way, I didn’t even know where to begin. but you’ve given some helpful tips.

    ReplyDelete