Amazon’s Book Monopoly : A Threat to Freedom of Expression?

[fjtorres]

Publishing apologists arguing that they can't stop doing business through Amazon because too much of their business depends on Amazon are being disingenuous (some say intellectually dishonest) because the only reason Amazon is such a big part of their business is because their actions and policies make everybody else a smaller player.

Do we need to rehash the list of trade publishing's "crimes" against retailers and consumers yet again?

If Amazon has "too much power" over that subset of the publishing world it is because those publishers keep hurting and killing off their competitors.

Witness the latest fiasco: BPH ebook revenues dropped by 15% over 2015 (and since Agency Deux came on staggered, the full effects will only be felt this year) and since ebooks provided 30% of their revenues, that corresponds to a ~5% drop. The goal was to help B&M, but all the B&M retailers combined saw was a 2.3% increase on what is maybe half of the BPHs total business; they shifted (maybe) 1.7% of their revenue to run through B&M channels!! Applause all over! B&M bookselling is back! The ebook fad is over!
(No mention of how much of that 2.3% is is sales of toys, pillows, and markers for the coloring books.)

Uh...
So where did the other 3% of BPH sales revenue go?
Not Apple--they don't sell pbooks.
Not Google--ditto.
Kobo? Nope. (Rakuten just took a write-off becsuse of their declining book value.)
Nook? Riighhhttt...

Anybody care to guess where those revenues that used to flow though Amazon competitors went? (B&N online? No growth there: they're still cleaning up their new website. They should be done by 2020. Maybe.)

So far, the tally of Agency Part Deux (with apologies to the HOT SHOTS) is big growth by Indie, Inc, decent growth for Amazon in both digital and print, measurable losses at Amazon's ebook competitors, and maybe a few crumbs to the B&M retailers forced to go distributirs becsuse they're too small for tradpub to bother with. (Some of which get better prices and service restocking from Amazon than Ingram.)

With enemies like those Amazon barely needs friends.

Reminds me of the rise of MS Office in the late 80's.
Gates went out, hat in hand, begging Word Perfect and Lotus to support Windows 3.
No dice. They were supporting Unix. NextStep. OS/2. Even Amiga and Atari.
"You have too much of our business!We need alternatives Let them run the DOS version!"

So MS Word became Word for Windows,MS did Excel for Mac and Windows, they bought PowerPoint, and Office was born. And then Dell asked to bundle a copy of office with their Windows PCs...

This has happened before.
It will happen again.
Railing against successful companies hurts them none but often helps them by misleading their competitors.

Print is back. Digital is fading.
Yup, keep repeating that, tradpubbers.
Windows is fading too.
So is Google.
Facebook.
iPhone...

Even them newfangled automobile carriages...

Keep on railing against the future.
(And the present.)

[fjtorres]

For the record: 15% of BPH ebook revenues is around $400M...
...that shifted to indie, Inc.
That is about 100M *added* sales for Indies.

Small number: big impact.
BPH authors lost royalties: $70M.
Indie author gains: ~$250M.

If anybody needs to know *why* the hate for ebooks...

"Follow the money."

[Cinisajoy]

Originally Posted by dgatwood

True, but when you have a large market share, you're under a microscope. Anything you do that prevents competition becomes potentially problematic.

In this case, three things that Amazon has done, each of which is, when examined on its own, perfectly legal, conspire to make it essentially impossible to distribute the exact same book through other stores that you distribute through Amazon, simply because you can't use their tools to generate a MOBI for other stores, and you can't use anybody else's tools to generate a MOBI for Amazon's store.

So I would argue that the resulting combination of those policies effectively creates an exclusivity clause in Amazon's relationships with its vendors. Those are legal under many circumstances, but if you are a monopoly or a near-monopoly, they aren't. And the fact that you can sell a different product to other distributors (e.g. in EPUB format instead of MOBI) doesn't negate that.

Mind you, this isn't an open-and-shut antitrust violation, but it is enough of a grey area that Amazon should probably change their policies to stay well clear of the line.



Right now.




Actually, Amazon already limits freedom of expression. They ban pornography, for example. The only thing standing between them and other limits on free expression is that their current management believes in free expression to some degree. But that can turn on a dime. Just look at SCO for a great example of how a management change can turn a tech pioneer into a lawsuit engine, and you'll understand why it is important that no single company be responsible for three-quarters of all eBook sales.




Sure. The problem is that most censorship tends to be subtle and gradual. As long as there are only a few new people complaining about censorship every year, it is likely that no one would pay them much attention—"First, they came for the Socialists" and all that.




You misunderstand. I'm not saying that they're an enemy of free expression. I'm saying that the existence of any near-monopoly, no matter how benevolent it might be, is inherently a threat to free expression.

First off, the exclusivity for vendors is completely the vendor's choice and has to be renewed every 90 days. Amazon offers a few perks to get vendors to go exclusive.
Secondly: what are you considering pornography? No, you can't get the triple x stuff but a quick search just told me you can get adult videos. And as far as books are concerned, there are only 239,500 in the erotica section. 115,173 are in Kindle Unlimited.
Also unless I go exclusive with Amazon, there is no reason, I can't upload my book to other distributors. Of course, it will be formatted to go with their particular store.
Now if I want to do Smashwords, I can do all three of the most common formats.

[Phogg]

Originally Posted by fjtorres

For the record: 15% of BPH ebook revenues is around $400M...
...that shifted to indie, Inc.
That is about 100M *added* sales for Indies.

Small number: big impact.
BPH authors lost royalties: $70M.
Indie author gains: ~$250M.

If anybody needs to know *why* the hate for ebooks...

"Follow the money."

All of which parallels the movement of recorded music to digital distribution, and the subsequent loss of control by the old recording industry.

Which many here were forecasting long ago. The process isn't complete, but the destination will be the same.

[Rizla]

Originally Posted by Phogg

All of which parallels the movement of recorded music to digital distribution, and the subsequent loss of control by the old recording industry.

Which many here were forecasting long ago. The process isn't complete, but the destination will be the same.

There is an important difference between audio and books.

Music was already digitized via CD and there was no perceivable or actual difference between downloaded music and playing from a CD.

But reading a paper book is very different to reading on an electronic screen, even the best e-ink screens available. Surveys show that most people prefer to read on paper.

The vast majority of books are still read on paper.

[Phogg]

Originally Posted by Rizla

There is an important difference between audio and books.

Music was already digitized via CD and there was no perceivable or actual difference between downloaded music and playing from a CD.

But reading a paper book is very different to reading on an electronic screen, even the best e-ink screens available. Surveys show that most people prefer to read on paper.

The vast majority of books are still read on paper.

Single songs sold on the internet back in the late 90s were typically 128bit or 256bit. There was a huge fidelity difference, yet still they still sold. I bought a lot.

The popularity of music downloads drove higher fidelity file standards, and music sales probably contributed significantly to the development of greater and faster bandwidth on the internet as a whole.

[HarryT]

Originally Posted by Phogg

Single songs sold on the internet back in the late 90s were typically 128bit or 256bit. There was a huge fidelity difference, yet still they still sold. I bought a lot.

I very much doubt that. Perhaps you mean "kbit", rather than "bit"?

[dgatwood]

Originally Posted by Cinisajoy

First off, the exclusivity for vendors is completely the vendor's choice and has to be renewed every 90 days. Amazon offers a few perks to get vendors to go exclusive.

The exclusivity I was talking about has nothing to do with KDP Select. I was talking about the fact that it is impossible to ship the exact same Kindle book via Amazon's store and any third-party store because of a combination of Amazon's policy that submissions have to be produced with kindlegen and their policy that you can't use kindlegen to produce content for sale outside of Amazon's store.

In effect, the combination of those two policies means that the Kindle version of your book, as sold on Amazon, must be an Amazon exclusive, which in a monopoly or near monopoly situation is legally problematic at best.

Originally Posted by Cinisajoy

Secondly: what are you considering pornography?

I'm just reading Amazon's policies. I have no opinion on what is or is not pornography, nor on whether it should or should not be sold. I'm merely pointing out that it is, in fact, a limitation of speech, albeit one that most people are okay with.

[HarryT]

Originally Posted by dgatwood

The exclusivity I was talking about has nothing to do with KDP Select. I was talking about the fact that it is impossible to ship the exact same Kindle book via Amazon's store and any third-party store because of a combination of Amazon's policy that submissions have to be produced with kindlegen and their policy that you can't use kindlegen to produce content for sale outside of Amazon's store.

I really don't think that many people would consider Kindle books to be "exclusive" if the same book by the same publisher is sold in ePub format in other bookstores.

[dgatwood]

Originally Posted by fjtorres

But Amazon isn't either.
The US publishing world is much much bigger than ebooks, and much bigger tgan trade publishing.

Amazon's total share of the total publishing market distribution channel is barely 15-20%. ($4-5B vs $27B).

That is hardly near-monopoly numbers.

That's completely irrelevant to whether Amazon is a monopoly or near-monopoly in eBook publishing. Electronic books do not compete against blogs except in the eyes of social scientists speculating about why people are reading fewer books.

From a legal perspective, monopolies are defined within a single industry or industry segment in which the products are fungible, not across broad, unrelated markets. In this case, we're talking about the eBook market, of which Amazon has about a 75% share.

So yes, that is a near monopoly.

Originally Posted by fjtorres

And when it comes to free speech, the arenas where Amazon doesn't play (Textbooks, journals, newspapers, online...) are all more important to free speech than how many adult coloring books Amazon ships out to stressed-out customers.

That's certainly a valid point, with caveats. Those other channels are much harder to monetize, to such an extent that they're dying off. By contrast, eBook sales are a growing market. So when you take a long enough view, most of the arenas in which Amazon doesn't play probably won't even exist, whereas the arenas in which Amazon does play probably will.

Originally Posted by fjtorres

Back when Penguin and Random House announced they were shacking up there was some squeaking from agents about how the merger would harm "free speech" by reducing the number of deep pocket bidders for titles. The feds laughed and rubber-stamped the deal because even though, combined, the randy penguin started out with nearly half of the trade publishing sector,

No, in fact, combined, they make up only about a quarter of the English language book business—nowhere near half. Contrast that with Amazon's 75% of the eBook market. It really isn't comparable.

Originally Posted by fjtorres

the *relevant market* for antitrust purposes is the entirety of US publishing, not the narrow segment that relies on retailers and airport newstands.
And the number of publishers active is way too big for any single publisher (or distributor) *acting alone* to harm consumer interests. (Conspiracies are a different matter.)

No, the entirety of U.S. publishing is most certainly not a market for antitrust purposes. It is hundreds of unrelated markets that don't compete against one another at all from a consumer perspective.

Antitrust law requires consideration of cross-elasticity of demand. If you look at Golden Gate v. Pfizer, the courts actually said that prescription drugs was a bogus market because it was too broad, because people who buy drugs for one illness are not likely to substitute drugs for a different, unrelated illness because of changes in their relative prices. So antitrust suits would need to be about much narrow markets, e.g. Alzheimer's drugs.

By that standard, the eBook market is likely to be too broad for the courts, not too narrow. A science fiction eBook is not necessarily interchangeable for a romance novel, and it is certainly not interchangeable for a textbook. So the courts would likely consider textbooks to be a separate market from fiction books at the very least, and certainly not in the same market as (for example) newspapers, magazines, blogs, or telephone books.

Originally Posted by fjtorres

People in publishing have this quaint idea that Amazon has some sort of obligation to carry their products, at Amazon expense, under *their* terms as if they were some public utility or a broadcaster utilizing public airwaves. They need to disabuse themselves of that silliness.

Ah, but when you have 75% of the market, and when Amazon is the primary mechanism through which users discover content, they are in a position of great power, and with that power comes great responsibility. They don't have an obligation from a legal perspective, but as long as they're in a near-monopoly position, they do have a moral obligation to allow the sale of anything that doesn't violate any laws.

Originally Posted by fjtorres

One. More. Time: censorship is about government institutions.

No, it isn't. The first amendment right to free speech is about government institutions exclusively. However, the concept of censorship is in no way exclusively about government censorship. Censorship by corporations might not be a violation of people's constitutional rights, but it is still censorship.

[dgatwood]

Originally Posted by HarryT

I really don't think that many people would consider Kindle books to be "exclusive" if the same book by the same publisher is sold in ePub format in other bookstores.

But from a legal perspective, that Kindle book is exclusive, in the same way that Wal-Mart demanding that electronics vendors build a special SKU specifically for them makes that SKU exclusive to Wal-Mart, even though substantively similar models are available through other channels.

[darryl]

Originally Posted by dgatwood

But from a legal perspective, that Kindle book is exclusive, in the same way that Wal-Mart demanding that electronics vendors build a special SKU specifically for them makes that SKU exclusive to Wal-Mart, even though substantively similar models are available through other channels.

Your argument has adopted such a narrow "market" as to make it meaningless for anit-trust law purposes. Let's take the market for canned chicken soup for example. Assume that "Super Market Inc", a supermarket chain, sells its own brand of chicken soup which is not available at any other supermarket. The relevant market in question may be as wide as the market for groceries. It may be as narrow as the market for chicken soup. At a stretch maybe even canned chicken soup. I certainly cannot see the anit-trust law operating in relation to the market for "Super Market Inc Home Brand Chicken Soup".

[HarryT]

Originally Posted by dgatwood

But from a legal perspective, that Kindle book is exclusive, in the same way that Wal-Mart demanding that electronics vendors build a special SKU specifically for them makes that SKU exclusive to Wal-Mart, even though substantively similar models are available through other channels.

It's not a form of "exclusivity" that is damaging to the consumer in any way, though, if the customer can buy a book containing precisely the same content in a dozen other bookstores. One could just as well say that books sold by Kobo or Apple are exclusive, too, because each of those stores sells books using its own DRM mechanisms.

[MikeB1972]

Originally Posted by dgatwood

The exclusivity I was talking about has nothing to do with KDP Select. I was talking about the fact that it is impossible to ship the exact same Kindle book via Amazon's store and any third-party store because of a combination of Amazon's policy that submissions have to be produced with kindlegen and their policy that you can't use kindlegen to produce content for sale outside of Amazon's store.

In effect, the combination of those two policies means that the Kindle version of your book, as sold on Amazon, must be an Amazon exclusive, which in a monopoly or near monopoly situation is legally problematic at best.

I think you are splitting hairs a bit too finely here.

Baen sell through their own site and Amazon and Kobo, selling mobi, epub, kf8 and kepub, as long as someone can read the book with the same words I don't think they care if the file is exactly the same or not.

Classifying a book sold in one format as exclusive when it is available elsewhere in equivalent formats is going to politician levels of stretching the facts.

[fjtorres]

Originally Posted by dgatwood

From a legal perspective, monopolies are defined within a single industry or industry segment in which the products are fungible, not across broad, unrelated markets. In this case, we're talking about the eBook market, of which Amazon has about a 75% share.


.

But ebooks and print books *are* fungible.
The BPHs are actively supporting that thesis with their high ebook prices intended to drive readers to print editions.

By your narrow definition Sony has a monopoly on Playstation gaming and Microsoft has a monopoly on Xbox games and Apple has a monopoly on iPhone games when the reality is they are all competitors, along with Google, Nintendo, Amazon, and (soon) even the revived Coleco. Gaming is gaming whether on consoles, PCs, phones, or wooden planks. Time spent gaming on one is time not spent on the others. They are all competitors for consumers' time and money.

Likewise with publishing.

Ebooks are just another edition of the exact same book. No different that a mmpbk ir hardcover or audio book. Same content, same product, and totally fungible.

Whether people read fiction or non-fiction, news or data, on paper, tablet, or TV screen is irrelevant; reading is reading. And a publisher in one segment has the ability to publish anything they choose. (DUNE was published by a car parts catalog publisher. Publishing is publishing. Period.)

And that is how the DOJ ruled on the randy penguin merger. And if they, who actually pick and choose what they bring to market and edit its content and control what ideas reach market and how... If they pass legal muster so does Amazon which is merely a distributor of those titles and has no control over the content.

So, no, no monopoly.

And since they exert no control over what gets published or what is inside they have no control over speech. All they can do is say what they will willingly distribute. And since (again!) they have no obligation to carry anything they don't contractually agree to carry, which makes it a matter of contract law. (And since the contract had expired during the Hachette catfight, they were under no obligation to lift a single finger on their behalf.)

No case for monopoly of free speech issues.
More, if you listen carefully to what the AU gang and other propagandists are saying, Amazon's real crime is they * don't* restict what gets published. That their sales suffer ar Amazon because Amazon *doesn't* give *them* preferred placement.

In the mid nineties during the day of the big box bookstores the ABA sued the BPHs, Borders, and B&N for antitrust violations and won a settlement. If their current claims were anything but propaganda they would have sued long ago.
But as one of the more vocal leaders admitted in an online discussion their lawyers have already told them they have no case.

Not under anti-trust, not under Patman-Robinson, and not under free speech.

No case. Period.