Amazon destroys the book industry again

[HappyMartin]

Originally Posted by rhadin

It would be almost impossible for a new startup to compete against Amazon. The cost to build a competitive business would be beyond nearly all businesses and entrepreneurs, largely because of the infrastructure that Amazon has built. Even if it could be done, it would take years to successfully build a competitive business. During that building period, Amazon would strike back and bankrupt the newly emerging company, return to its high prices while preparing a battle plan for the next startup that seeks to challenge it.

To blithely say that someone will come in and battle Amazon once Amazon has a monopoly is to ignore the realities of business creation. The only way any competitor would have a chance at survival would be if the Department of Justice brought Amazon to its knees as it did with Microsoft and IBM.

I agree with you as far as pbooks go but not ebooks.

[DiapDealer]

Can someone please give me some examples of corporations that achieved a monopoly-like status by undercutting all the competition, and subsequently jacked up their prices so high that no-one could afford to buy the products they sold anymore; thus slitting their own throats and killing an entire industry. Surely there must be dozens.

Or is the rationale; "don't let Amazon become the first"?

[HarryT]

Originally Posted by DiapDealer

Can someone please give me some examples of corporations that achieved a monopoly-like status by undercutting all the competition, and subsequently jacked up their prices so high that no-one could afford to buy the products they sold anymore; thus slitting their own throats and killing an entire industry. Surely there must be dozens.

The textbook example is "Standard Oil" in the US in the late 19th and early 20th century. It did precisely that until it was forcibly broken up by the US Supreme Court in 1911. It was the business practices of Standard Oil which led to the introduction of anti-trust legislation in the US.

In the process, it made John D. Rockefeller the richest man in the world.

[DiapDealer]

Originally Posted by HarryT

The textbook example is "Standard Oil" in the US in the late 19th and early 20th century. It did precisely that until it was forcibly broken up by the US Supreme Court in 1911. It was the business practices of Standard Oil which led to the introduction of anti-trust legislation in the US.

In the process, it made John D. Rockefeller the richest man in the world.

You're saying that Rockefeller got rich by selling a product at a price that no-one could afford to buy? Just teasing, actually, but you get my drift; if no-one can afford it... no profits can be realized. Especially luxury-type items.

I was hoping for some examples under the current anti-trust laws—since that's what Amazon would be bound by.

[HarryT]

Originally Posted by DiapDealer

You're saying that Rockefeller got rich by selling a product at a price that no-one could afford to buy? Just teasing, actually, but you get my drift; if no-one can afford it... no profits can be realized. Especially luxury-type items.

I was hoping for some examples under the current anti-trust laws—since that's what Amazon would be bound by.

He got rich by forcing the competition out of business by undercutting them and then, when he'd achieved a monopoly, massively raising prices. People had no alternative but to buy from him. There was no other source of fuel.

[cfrizz]

Originally Posted by HarryT

The textbook example is "Standard Oil" in the US in the late 19th and early 20th century. It did precisely that until it was forcibly broken up by the US Supreme Court in 1911. It was the business practices of Standard Oil which led to the introduction of anti-trust legislation in the US.

In the process, it made John D. Rockefeller the richest man in the world.

So some people are all foaming at the mouth about what happened over 100 years ago that hasn't been allowed to happen since because the US govt stepped in to stop it from happening with Bell, IBM, Microsoft, etc?

Some of you aren't giving the govt, and us consumers enough credit to think and act for ourselves. There is simply too much competition out there with different books to buy that DON'T come from the big 6 with more springing up all the time. I haven't bought one in years not only due to expense but also lack of choice, variety.

If you can't live without having to buy books only from the big 6, if you are not willing to expand, grow, adapt, change and find other affordable books to read, then you are just as bad as the big 6 and deserve to be miserable if they eventually fail due to their greed and unwillingness to adapt to the new world of publishing & book buying.

[HarryT]

Originally Posted by cfrizz

So some people are all foaming at the mouth about what happened over 100 years ago that hasn't been allowed to happen since because the US govt stepped in to stop it from happening with Bell, IBM, Microsoft, etc?

Yes, that's precisely the point. It was because Standard Oil WAS so bad that it hasn't been allowed to happen again.

Personally I don't think that there's the slightest chance that Amazon will become a monopoly, or anything close to it. There will always be rivals.

One thing to note - which rivals really should watch and learn from - is that Amazon have loyal customers because they offer superb customer service. People appreciate that, and keep going back to Amazon because of it.

[fjtorres]

Originally Posted by rhadin

No, not bad Amazon; bad competitors. The competitors need to grow balls and fight back. Now that Amazon has a publishing arm and is in direct competition for authors with the Big 6, I think the Big 6 would be justified in not permitting Amazon to sell any of their books in any format.

And they should just get together in one place and announce it at the same time. Preferably Washington, DC, in front of the DOJ building, with network cameras rolling.

[DiapDealer]

Originally Posted by fjtorres

And they should just get together in one place and announce it at the same time. Preferably Washington, DC, in front of the DOJ building, with network cameras rolling.

Hee, hee.

[fjtorres]

Originally Posted by Phogg

And slide rules.

Now let's not get carried away here.
Slide rules are valuable collectibles; objects d'art for those who can understand and appreciate the precision multi-scales on the laminated bamboo upscale models. Or the sheer elegance of the ultra-rare round and cylindrical slide rules.
They are nothing like buggy whips or B&M retailers. Nothing!



http://www.sphere.bc.ca/test/unusual.html

Actually, the slide rule is still useful in education for teaching basic principles of math. And they are still being manufactured and sold:

http://www.sphere.bc.ca/test/circular.html

B&M retailers should spend the time they waste lambasting Amazon (to no effect) doing something productive, like advertising their stores. Even if it is just walking the streets with a sandwich board.

"Read at Joe's".

That would at least achieve *something*.

Seriously: when was the last time you saw a bookstore advertise?
I can't even remember...

Might be good for a poll or thread somewhere.

[mr ploppy]

Originally Posted by Andrew H.

This *never* happens. It's a myth trotted out by people who are trying to find a downside to lower prices.

Walmart drove out many businesses and didn't jack up its prices. Big box stores (Borders, B&N, Toys "R" Us, Best Buy, etc.) drove out the competition and didn't jack up the prices. Amazon is no different.

What about Ebay? They drove out all the competition and put their prices up. This month alone their selling fees went up more than 10%.

[mr ploppy]

Originally Posted by HarryT

What the article strangely fails to mention is that Waterstones, by completely dominating the UK B&M book landscape, have themselves put countless small independent booksellers out of business.

I also liked the line at the end that said new writers need Waterstones to gain popularity. I didn't even know they stocked non-corporation published books. But anyone who can find a book like that hidden behind all the publisher-sponsored promo displays would be just as likely to find it on Amazon too.

[SteveEisenberg]

Originally Posted by Andrew H.

This *never* happens. It's a myth trotted out by people who are trying to find a downside to lower prices.

Walmart drove out many businesses and didn't jack up its prices. Big box stores (Borders, B&N, Toys "R" Us, Best Buy, etc.) drove out the competition and didn't jack up the prices. Amazon is no different.

To really discuss this, we would have to come up with price statistics for each of your example companies. I agree with you on general merchandise bought at WalMart. But, impressionistically, as I parent I do recall what seem tremendous toy price increases from child to child

As for your *never* statement above, you don't fly much, do you? Evidence of tremendous price increases when US Airways gets an exclusive route out of Philadelphia is overwhelming.

Most of the examples I was thinking of for getting a monopoly, through loss leaders, and then tremendously jacking up prices, came from transportation. And transportation may be a little like books. Just as P.D. James doesn't, except to a small degree, compete with Erik Larson, New York-Atlanta doesn't really compete with New York-Boston. I don't think these are comparable to markets where the goods are closer to being a commodity, as when, say, WalMart sells Ibuprofen or Best Buy sells a 25 inch TV. Also, Best Buy, WalMart, B&N, etc. never got as big a market share as I think Amazon has the potential to get in books.

[Kali Yuga]

IMO Waterstones has one very valid point buried in his article, namely that Amazon is manipulating the tax system in order to gain a huge competitive advantage. They pay almost no UK taxes, especially on ebooks (Amazon charges a 3% VAT instead of the standard 20% VAT because they're officially based in Luxembourg). It also prevents the UK from receiving significant tax revenues, thus it's valid to portray Amazon as a bad corporate citizen.

Some of what Mr Waterstones is saying is hyperbolic rhetoric, but he does have cause for complaint.

That said....

Originally Posted by rhadin

I will make, yet again, the same suggestion to publishers that I have made before. Simply stop selling to Amazon.

1) It's way too late for that. E.g. Amazon has 25% of the market in the UK, so if they refused to supply Amazon it would be an utter nightmare for the publishers. They'd lose significant sales, Amazon would make hay over being mistreated by the "evil" publishers, and the public would blame the publishers. Amazon also sells lots of other stuff, so it would hurt the publishers far more than it would hurt Amazon.

2) Unless this is a permanent position (which would be suicidal), there isn't much they could gain over this. Publishers already control pricing and retailer's cut for ebooks -- and that's gone over real well with MobileRead posters. It's also illegal to discriminate on price based on anything other than volume (http://en.wikipedia.org/wiki/Robinson-Patman_Act). I.e. if Amazon and B&N order roughly the same number of books, they can't charge Amazon 10% more than they do B&N.

3) They can't prevent Amazon from selling paper books. If Amazon can't get them directly from the publishers, they can get them from the distributors. In fact, Amazon drop-ships from distributors all the time.

4) If they did blockade Amazon from getting ebooks, then consumers would switch to Apple and perhaps one other store, e.g. B&N in the US. I.e. it would produce more consolidation in the market, not less.

The publishers can't do jack about Amazon, except compete for authors and market their books better than Amazon.

I'm not even sure it's their responsibility to take out Amazon. If you don't like Amazon and you think they're doing something wrong, start a boycott. Pretty much everything they sell, except for a handful of book titles, is available somewhere else. Convince other people to do the same.

If you can't convince people to voluntarily change their choice of retailer, and as long as Amazon's behavior is legal, then I have to ask -- who are you to dictate someone else's preferred retailer?

Originally Posted by rhadin

It would be almost impossible for a new startup to compete against Amazon.

That's what people were saying about Barnes & Noble in 1994.

B&N had all the advantages against Amazon -- size, influence, relationships, capital, infrastructure, brand awareness and market dominance. Now, Amazon is on the verge of putting B&N out of business.

If a startup would have a tough time against Amazon, it's not solely because of those advantages. It's also because Amazon executes really well, and is unlikely to give anyone an opportunity. And again unless they're doing something illegal, and as long as those goods are available elsewhere (even with a handful of exclusives), I'm not sure why there's a problem.

[ProfCrash]

I failed to feel sorry for Borders when they went out of business.

I fail to feel sad for Waterstones.

Amazon being ruthless = Amazon being a profitable business trying to make more money. That is called Capitalism. It has its faults but it is better then the alternatives. In 20 years we might very well be talking about the company that drove Amazon out of business.

Today we laud the robber barons of the past because of the charitable foundations they developed (Rockefeller, Carnagy, and others) but in their time they were the ruthless Capitalists that drove others out of business and treated their workers poorly. Today their legacy is to give millions in charity and help all sorts of causes. Don't be surprised if 50-100 years from now people talk about Bill Gates, Steve Jobs, and Jeff Bezos in the same way.