The Anti-Amazon Campaign Jumps The Shark

The anti-Amazon stories seem to be coming thick and fast at the moment. Salon posted an article on Sunday written by Alexander Zaitchik called Amazon’s $1 million secret which contained the sensational allegation that Amazon donates $1 million to various literary and non-profit groups.

A more complete list of beneficiaries is here, but it includes the Brooklyn Book Festival and PEN; journals like The Los Angeles Review of Books, One Story, and Poets & Writers; 826 Seattle (a tutoring program aimed at kids) and Girls Write Now (a mentoring program for girls); as well as various other associations such as Lambda Literary (supports LGBT literature), Words Without Borders (international literature), and Voice of Witness (human rights).

Wait. Hold on one second. This sounds like a good thing! Even the Salon piece says:

At a time when independent publishing is struggling to survive, in part due to the influence of Amazon, recipients say that these grants offer crucial — if ironic — life support. Sometimes the grants pad out thin margins of survival, and make it possible for worthy programs to maintain their tiny staffs. And there’s no question the grants support legitimately important work: Literature in translation, international poetry, smart criticism, youth literacy efforts.

So far, so good, right? I mean, they used the word “ironic” in there, which makes me think that some bad stuff is coming, but giving all this money to good causes can only be a positive thing, right? Wrong, according to Alexander Zaitchik:

Is the program simply a calculated corporate response to past accusations of stinginess? Is it part of a long-term strategy to divide and conquer the last bastions of Amazon’s critics, while winning over some of the very people Amazon may find useful as it develops its print-on-demand and e-book business?

It depends whom you ask. Of more than a dozen grantees Salon interviewed, some completely disassociated Amazon’s charity from its business practices. Others were more conflicted, but saw nothing to gain by dwelling on the source of the funds or turning their cash-strapped offices into an Ethics 101 seminar. Others saw Amazon’s grant giving as something to be feared: An evolutionary skill developed by a natural and intelligent predator growing ever stronger off the blood of its prey.

Okay. So, some people interviewed didn’t agree with Alexander Zaitchik’s theory that Amazon’s grants are part of some nefarious plan to buy silence as they destroy the publishing business and our literary heritage, but, to make sure the readers don’t focus on that, he quotes plenty of those who have a problem with it. Like this (unnamed) guy:

“The grants are a blatant attempt to buy goodwill from an industry that they’ve ravaged,” said one veteran indie publisher who asked not to be identified because he’s involved in an Amazon-funded project. “They are a rapacious, horrible company from top to bottom. But they have all this excess capital, so $25,000 here and there is nothing to them. And it’s working. People say, ‘Oh, look, they’re funding a translation prize, what could be wrong with that?’ Yet everything about them is still evil.”

In case you skipped over the dubbing of Amazon as rapacious, horrible, and evil, Alexander Zaitchik helpfully follows up in the next sentence by calling them “the devil.”

The basis for these opinions of Amazon is outlined briefly, covering the same tired ground of allegations of monopoly (which I dealt with here) and Scott Turow’s wrongheaded attack (which I picked apart here).

However, there is some new information, which made additional headlines last night when PaidContent picked up the story, disclosing further details. According to Alexander Zaitchik, for the first time, two of the “Big Six” publishers have refused to sign their annual contract with Amazon:

The main sticking point is exorbitant increases in “co-op promotional fees” for e-books that the publishers see as an illegal gouge by another name. One person familiar with the details of the proposed 2012 contracts that Amazon has submitted to major New York publishers described them as “stupifyingly draconian.” In some cases, he said, Amazon has raised promotional fees by 30 times their 2011 cost.

I’m sure this news will provide Amazon-haters with plenty of ammunition, but a basic analysis shows why that would be extremely misguided.

In case you aren’t aware, the “co-op promotional fees” they are referring to are the online version of paying for placement in physical bookstores (such as face out instead of spine out, or prime position on front tables, etc.).

On Amazon, this translates into those ads you see in various parts of the Kindle Store, books being featured on the homepage or various other pages, as well as inclusion in the targeted email blasts to Amazon customers or in lucrative programs such as the Kindle Daily Deal.

This exposure on the Amazon site is a huge driver of sales. The Kindle Daily Deal alone regularly places the chosen book into the Top 10 in the overall Kindle listings. (Indeed, they appear to have the power to do that with any book, so there is a real scramble to be included.) While publishers agree to cut the price of the featured book, that price is usually returned to normal the following day, making the publisher a staggering amount of money on the way back down the charts.

The Salon article, the PaidContent piece, and a subsequent story in the Bookseller are all short on details, but it’s safe to assume that Amazon wants to raise the price for these various marketing programs, causing uproar among publishers.

This raises a number of questions. First of all, isn’t Amazon fully within their rights to charge what they like for advertising on their site and marketing to its customers? Do publishers think they can name their price and Amazon must accept? What planet are they on?

It makes perfect sense that Amazon would raise their prices. In the last twelve months, the e-book market has grown dramatically. I think it’s safe to assume that the number of visitors to the Kindle Store has also risen by a huge amount. If a newspaper doubled its circulation, wouldn’t it be prudent of them to raise their advertising rates?

Amazon has greatly expanded their own publishing program in the last twelve months. I think it’s also safe to assume that they are keeping an increased amount of this co-op for their own titles – which makes sense, and which they are fully within their rights to do (and, indeed, if I was published by Amazon, I would mad if they didn’t).

This is a fake scandal. There are less co-op spots available now. The amount of traffic to the Kindle Store has increased dramatically. It’s perfectly logical that the price would go up. Anyone who claims otherwise is simply not thinking.

The anti-Amazon PR campaign really jumped the shark with that Salon piece – a ham-fisted attempt to spin Amazon’s support of a variety of literary organizations into some nefarious attempt to buy silence.

I shake my head at all these Amazon stories – all of a sudden, Big Publishing cares about small presses and independent bookstores! – and the cynic in me wonders about their provenance. Is all of this an attempt to distract attention away from the investigation of (alleged) price-fixing and collusion between several large publishers and Apple?

If so, they failed.

Because the Department of Justice filed their antitrust lawsuit this morning.

About David Gaughran

David Gaughran is Irish, living in Prague, and the author of Mercenary, A Storm Hits Valparaiso, Let's Get Digital, Let's Get Visible, and this here blog.
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79 Responses to The Anti-Amazon Campaign Jumps The Shark

  1. some nefarious attempt to buy silence.

    So, their silence can be bought? Um, it would not appear so … since that one guy got a bunch of money from them and then said, “Yet everything about them is still evil.”

    I’m less concerned about the internal moral strife of Amazon-fundees than I am about the outcome of the lawsuit. Not tremendously pleased when the government gets involved in commerce at any level, but I’m hoping that the outcome is good for writers and readers.

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  2. B Magnarella says:

    “Illegal gouges”? I guess the Big Six believe their titles deserve Amazon’s coveted promotional spots by simple right of birth.

    I haven’t commented recently, David, but your posts (and arguments) on this topic have been intelligent and edifying.

    Keep up the good work!

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  3. loulocke says:

    Bravo!

    I noticed that a lot of those charities supported budding authors of all backgrounds. How nefarious of Amazon to continue to encourage the writers of the world to believe their voices should be heard, even if New York editors and multi-national corporations don’t think they are worthy of their respect and business.

    And didn’t the Big 6 think Amazon would notice that the only reason they made any money last quarter was through the sales of ebooks–probably on the Kindle–benefiting from the audience that Amazon has spent enormous amounts of money to grow?

    And as you and others have often mentioned–where are those reporters’ pieces on how the Big 6 are making those profits because they refuse to give authors a fair share of their ebook income and enforce draconian non-compete clauses that preclude those authors from finding alternative outlets for their writing.

    Thanks for the great article, stirred my blood right up!

    M. Louisa Locke, author of Maids of Misfortune and Uneasy Spirits

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    • J. A. Self says:

      Good points. From the “illegal gouge” and “stupifyingly draconian” comments you’d think Amazon was trying to corner the markets on food and gasoline and raise the prices thirty times higher. Also, that “veteran indie publisher” who has such hate for Amazon is odd. Imagine how hard it would be to find a source like that. You know, instead of making it up. Just saying.

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  4. AGClaymore says:

    eBooks are a disruptive tech – just like digital film. Amazon gets that, which is why their business model is working so well. The older publishers are heavily invested in an older method and don’t really know for sure what kind of role they can play in the new model. They’re in a bit of a panic and it makes them feel like they are doing something usefull when they sling mud at the one company that managed to rise to the top.

    They need to put some serious thought into what they can still bring to the table. Their stable of big name authors (Brown, Turtledove, Cornwell, Follet, Snooki😉 can still bring in the customers but they need to join the rest of the 21st century world of business first.

    That means playing nice with vendors like Amazon and pricing their titles reasonably. No more 60% premium over the paperbacks.

    Otherwise, they will end up buried next to Kodak…

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    • “The older publishers are heavily invested in an older method and don’t really know for sure what kind of role they can play in the new model.”

      I’ve always found that point of view confusing–because the majority of Amazon’s book sales (both print and electronic) are published by those “older publishers”. In other words, traditional publishers are a *key part* of the “new model”.

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      • AGClaymore says:

        Sure, they provide a ton of eBooks, but they would rather sell the paper. It seems like Amazon forces some common sense on them in terms of pricing. I’ve seen paperbacks for ten dollars at Indigo where the online eBook version (Kobo) is fourteen or higher.

        The same eBooks at Amazon often sell for nine dollars.

        Who really believes that an electronic book should cost anywhere close to a paper version, let alone more?

        The traditional publishers do sell through Amazon but they rail against them at every turn because their methodologies are out of sych.

        Sure they provide a lot of titles now, but how many potential new Kings or Rowlings will simply bypass their draconian contracts and royalty rates and try the independent route? For that matter, how long will the big publishers be able to hold onto their top authors? I have no idea who publishes Ken Follet or George RR Martin but I know their names. The author is the brand, not the house they sell through. How long before they take a long look at all the money they leave on the table and decide it’s time to get 70% royalties on their next titles?

        The tradPubs need to sort out what they’re doing, and fast!

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  5. patricefitzgerald says:

    It does boggle the mind that all of these folks are suddenly so concerned with independent presses and small bookstores. Because, you know, traditional publishing is all about art, merit, and supporting LITERATURE (Snooki, anyone?) in the face of the rampant capitalism of… Amazon. Right? Making money… hmm… no on ever thought of it until we had Kindles.

    And speaking of “stupifyingly draconian,” that would be an apt phrase to describe the astoundingly one-sided contracts traditional publishers have offered authors for decades. Back when we had no choice but to come hat in hand, offering the fruit of our years of writing labor, for a pittance.

    You know? We’re done with that.

    Amazon. A profit-making company. What a shocker.

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    • I am so giving you a standing ovation right now! We writers are done with being treated as second class citizens begging for crumbs.

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    • “Amazon. A profit-making company. What a shocker.”

      “And speaking of “stupifyingly draconian,” that would be an apt phrase to describe the astoundingly one-sided contracts traditional publishers have offered authors for decades.”

      Publishers. Profit-making companies. What a shocker. Since both are “profit-making companies”, I’m assuming you’re just uncomfortable with the difference in the *amount* of profit each entity makes.

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      • patricefitzgerald says:

        Well, traditional publishers would prefer to make all the profit, ThankYouVeryMuch.

        Because they are the keepers of ART.

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    • “Because, you know, traditional publishing is all about art, merit, and supporting LITERATURE (Snooki, anyone?) ”

      I know of several modest, “traditional” publishing companies in my part of the country, and they’re run by fantastic, unpretentious people who would laugh heartily at your dismissal of their work in that way.

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      • patricefitzgerald says:

        Of course, I didn’t dismiss their work in any way. I dismissed the work of those traditional writers who are not, in fact, the keepers of art, as demonstrated by the books they publish.

        I’m a publisher myself, as you may not realize, because I am so modest. Even “traditional” in the sense that I publish print books as well as ebooks. I know how hard I work every day to put out books that I can be proud of, along with my authors.

        So you needn’t lecture me about your fantastic, unpretentious friends.

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      • patricefitzgerald says:

        Edit: Traditional *writers* should read traditional *publishers.* Sheesh. Editing!

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  6. Tyler Wills says:

    Reads to me like Zaitchik has shares in a publisher…or two.

    Like

  7. bruceblake says:

    Does no one remember when Apple was on the brink of bankruptcy years ago? Who bailed them out? Microsoft, the company that put them there in the first place.
    This classic example of looking a gift horse in the mouth is sickening. Perhaps it’s time for the Big 6 to stop pointing fingers and start looking in the mirror.

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    • “Does no one remember when Apple was on the brink of bankruptcy years ago? Who bailed them out? Microsoft, the company that put them there in the first place.”

      Nope. Microsoft invested $150 million in non-voting stock, and Apple’s “near bankruptcy” happened years before that. Apple has also invested millions in Microsoft, by the way.

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  8. “Do publishers think they can name their price and Amazon must accept? What planet are they on?”

    That’s exactly the question publishers are asking, with the names reversed.

    But David, the article reads as quite reasoned to me, and Salon tends to publish good pieces. This isn’t a hit piece on Amazon, by any means. And let’s be honest–large corporations lay waste to small competitors and then donate a pittance back into the industry all the time. $1 million is chump change, as we say in America. Nobody so far (even the article’s writer) are arguing about the causes Amazon donates to–they’re discussing Amazon’s *intentions*.

    What’s troubling to me is that many self-published writers cheer Amazon when they unequivocally destroy independent bookstores and small presses. It’s not an allegation–it’s fairly clear that it’s happened (and still happens).

    And what’s wrong with calling the support “ironic” if it’s clear that Amazon is donating small amounts to some of the businesses it’s destroying? He didn’t say ALL recipients, and obviously the 826 project (a Dave Eggers effort) isn’t competing with Amazon.

    And what’s “Big Publishing”, really? If Amazon is one of the biggest of all, it’s clearly a flagship member of “Big Publishing”. With current trends, Amazon will BE “Big Publishing”. Why are we calling everybody *but* Amazon “Big Publishing”?

    So–why all the hate and counter hate about Amazon? I’m guilty of it myself, but I’ve decided to give it a rest. It’s become absurd and polarized to the point that most readers now sit with arms crossed on side of the fence or the other and just point and yell at the others. Both sides are wrong, and doesn’t serve the needs of anybody.

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    • “What’s troubling to me is that many self-published writers cheer Amazon when they unequivocally destroy independent bookstores and small presses. It’s not an allegation–it’s fairly clear that it’s happened (and still happens).”

      I know not of these self-published authors (and I know many of them) who cheer the closing of any bookstore- that is just not right. What they do get upset about is that bookstores are so imbedded with the big 6 that many refuse to carry self-published books (and frankly there are better books out there than ever before in this free market-keyword “FREE”) let alone display them. Because a self published author does not have the $ to buy all the shelf space in the stores. The big publishing monopoly to push only the drivel they want people to read is done and over with. And I don’t mean drivel in a way to deride great authors who are published by them-but what I mean is that their monopoly on what free citizens choose to read is over! Thank God!

      Like

    • asraidevin says:

      “What’s troubling to me is that many self-published writers cheer Amazon when they unequivocally destroy independent bookstores and small presses.”

      Please … book-stores are another casualty in the digital world. No one cried like this when all the music stores closed down, or when most video rental places stopped renting. Why are independent bookstores so venerated? I thought that sort of thing was reserved for banks.

      Once upon a time, when you wanted to contact someone across the country you had to write them a letter, wait weeks for it to travel to them, then someday when you’d forgotten about it, a letter would arrive back for you. Then the phone was invented and for a small fortune you could get in contact with someone almost instantly (eventually). And then the computer and Internet came along and you could jump on and let everyone know your opinion with a few clicks of your keyboard. And the mail system has been all but decimated, unless you want to advertise or send a physical object or a bill (but even a lot of those have gone digital).

      There are countless industries that have went through changes like this when technology changes. Businesses have closed down because there was no market. We usually call it PROGRESS.

      Perhaps this is just one more example?

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      • “Please … book-stores are another casualty in the digital world…Why are independent bookstores so venerated?”

        Wow. Just…wow.

        “There are countless industries that have went through changes like this when technology changes. Businesses have closed down because there was no market. We usually call it PROGRESS. ”

        Independent bookstores are dropping like flies because of “technology”? I’m sorry–that doesn’t even make sense, and absolves the human actors of all responsibility in what happens in society.

        Social darwinism is a fantasy. Independent bookstores aren’t disappearing because of “e-books”, they’re disappearing because of AMAZON. Why? Because Amazon sells books online–and most of those books are still–yes, *still*–print books. In other words, as of today, most of the books Amazon’s sold are print books. And they sold them cheaper than small bookstores, and continue to strong-arm publishers into making them even cheaper.

        As a writer, I’m not clear how that’s going to help me, in the long run. As a writer, I’m also not clear how dismissing the contribution of bookstores to the social and economic fabric of real communities helps me, either. I live in the city with the largest independent bookstore in the world, and it fights everyday to keep the doors open against the ongoing discounting war Amazon wages.

        Based on your comment (and many others), I don’t expect you to “get” independent bookstores. That’s fine. But trying to cast the world as a set of mechanical parts that an invisible hands forces upgrades upon is just plain silly.

        I wonder what writers who dismiss independent bookstores will do when Amazon’s helped to close down all bookstores, and you’re left with one main option for buying books? Or more importantly–what do you think *Amazon* will do? Three guesses–first two don’t count.

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      • I’m a huge fan of independent bookstores. I work hard to ensure (code for: take money out of my pocket) that when I sell my books through them, they have an opportunity to undercut Amazon and Barnes & Noble.

        I don’t think they are dying either. The chains are screwed, but that’s a totally different situation.

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      • “I don’t think they are dying either. The chains are screwed, but that’s a totally different situation.”

        I agree. And the same social darwinism argument the commenter made was made when national chains began the process of dismantling local, independent bookstores. I don’t have much interest in large chain stores.

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      • Well, part of the process in dismantling local, independent bookstores was a series of illegal and secret agreements between the large publishers and some of the larger retailers (including B&N), for which they were sued by the ABA (and won $25m, if I recall correctly). So it wasn’t “straight” business. In short, the large publishers were offering deeper discounts to the big stores, and then not offering the same terms to the indies. So there was no level playing field.

        It’s not quite analogous to what’s happening with e-books because (a) many indies don’t sell e-books and (b) Amazon weren’t benefiting from better terms from publishers, they were swallowing the discounts themselves.

        On a separate note, compare and contrast the reaction to Amazon’s charitable donations to something that genuinely threatens indie bookstores: the bait-and-switch pulled by Google, shutting indies out of their e-bookstore platform. That didn’t receive one tiny fraction of the negative press that the above did.

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  9. Traditional publishers are losing control and face an uncertain future. Just a business fact, but expressed in nasty, meaningless name-calling. I am personally thrilled by the changes in publishing–which will benefit me–but I recognize many people (not-rich people) have been and will continue to be hurt by the transition. Nonetheless, the transition is inevitable, and it behooves everyone to accept it and figure out how to make it work for his/her/their interests. “Resistance is futile!”

    Like

  10. David,
    Well said. The latest news I saw also indicated 14 or so individual states are also joining DOJ in the suit.

    Like

  11. Jaye says:

    I’d say it boggles the mind, but this crap is so old hat I can’t even get worked up about it.

    It does make curious as to what the writers of such hit pieces hope to achieve? If Amazon is crushed, how will the world be a better place?

    Like

  12. mkpelland says:

    Consider the source. Salon has typically bent toward hype and sensationalism. The article’s arguments are ridiculous. The piece made me laugh out loud. Giving money away to organizations in need is draconian?
    Amazon has issues/ Doesn’t every huge, expanding company? But if they are the devil incarnate, there are a powerful lot of people frantically trying to shop their way into hell.
    In the words of that silly fiction writer who told the media everything digitally published is crap, I say, “Crap.”
    —mkp
    Ontext.com

    Like

  13. janna hill says:

    “This is a fake scandal” summed it up for me. Instead of reiterating I’ll say see SusanKayeQuinn comment.

    Like

  14. I won’t get a chance to jump into the comments until later, but you seem to be doing just fine without me. Carry on!

    Like

  15. At our church, we built a community garden in the back alley. When we needed funding, Triscuit gave us a few grand to buy what we needed.

    Triscuit.

    Was Triscuit underhandedly beating us into buying processed foods by funding us? Were they giving us help with one hand and taking our money with the other?

    Sure. But I made a really nice butternut squash at the harvest barbecue and everyone loved it.

    No one spent a second cursing out Triscuit. There might have even been some wheaty salty crackers on the table.

    Like

  16. Matthew Iden says:

    Could we see the sum total of Big Publishing philanthropy to worthy writers’ programs over the last 30 years? I’m sure it must be stunning.

    Sarcasm aside, if they gave even a nickel, Big Pub would be lauded for their efforts. When Amazon does it, it must be part of a nefarious plot. How could anyone write that Salon article with a straight face? It’s the worst kind of rumor-mongering.

    Like

  17. Martin Lake says:

    It’s a classic case of those with existing riches and power using everything they can to protect themselves while at the same time pulling the ladder up behind them. They are willing to recruit any number of gullible foot-soldiers to their cause.

    Like

  18. Great well written, well researched piece. The big publishers remind me of Hem and Haw in the parody Who Moved My Cheese.

    Like

  19. Pingback: The Anti-Amazon Campaign Jumps The Shark | The Passive Voice

  20. So let me get this straight … private companies (publishers) are upset because another private company (Amazon) is charging more money than they want to pay for their ads. And then, that same second company is giving away a million dollars (admittedly, a pittance for them, they can do better) to support writers/writer’s groups/organizations.

    As to Amazon being evil and publishers somehow being oppressed underdog? Like Barnes and Noble is now ‘the little guy’? You just have to laugh.

    Like

  21. “Is all of this an attempt to distract attention away from the investigation of (alleged) price-fixing and collusion between several large publishers and Apple?”

    Yes, David–Salon.com, that bastion of “hype and sensationalism”, has an ulterior motive–they now function as a strategic propoganda site. Are you serious?

    And about the DoJ suit: I’m glad that the DoJ did it, because it’s going to bring several issues to a head in the publishing industry, and settle a few overhyped issues.

    Like

    • I’ll jump into the comments properly in an hour or two, but I just wanted to point you to this quote from the PaidContent piece (linked above):

      “Zaitchik told me a “source within the publishing journalism industry” and a contact at a major New York publishing house alerted him to the dispute.”

      Timely, no? Especially considering negotiations began eight months ago.

      Like

      • I don’t get what you’re saying. Since the writer didn’t identify his source, he’s suspect? You’d better start making a long list of suspect journalists, then. Creating a conspiracy theory to label someone else a conspiracy theorist seems strange to me.

        Like

      • No. What I’m saying is that this Salon journalist was fed a bogus negative story about Amazon right at the time when the DoJ were investigating.

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      • I’m not saying it isn’t possible, but–how do you know that?

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      • The reporters own words, as quoted by Paid Content: “Zaitchik told me a “source within the publishing journalism industry” and a contact at a major New York publishing house alerted him to the dispute.”

        It’s not a slam dunk case, which is why I posed it as a question. I think it’s a fair one, given the above, and the softball interview Salon granted Scott Turow after his open letter.

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  22. Pingback: DOJ vs Apple et. al; my unsolicited opinions « Ragged Left

  23. Truly fantastic article. I appreciate blog posts that are structured like this – breaking down the article and addressing each salient point is far superior to a back ‘n’ forth you see on a lot of blogs. Thanks for putting the work into this, I really enjoyed it.

    One minor nitpick – raises the question versus begs the question.

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  24. Like many of you, I’m sure, I’m following the unfolding story that the DoJ has filed suit against five large publishers and Apple.

    The DoJ have stated that they were engaged in a “substantial conspiracy to fix e-book prices” and even deleted emails to cover up their actions. http://www.mediabistro.com/galleycat/publishers-allegedly-deleted-emails-to-avoid-leaving-a-paper-trail-in-agency-model-discussions_b49976

    Three of the publishers have apparently reached a settlement, which essentially means the end of agency (even though PW are trying to spin it as otherwise): http://publishersweekly.com/pw/by-topic/digital/content-and-e-books/article/51469-the-broad-strokes-of-the-hachette-harpercollins-and-s-s-price-fixing-settlement.html

    This leaves Penguin, Macmillan and Apple fighting the suit, and the rest settling.

    Eric Holder said the DoJ is “committed to ensuring that e-books are as affordable as possible.” http://www.mediabistro.com/galleycat/attorney-general-eric-holder-doj-is-committed-to-ensuring-that-e-books-are-as-affordable-as-possible_b50000

    Like

    • “Reaction from Amazon was also swift. Drew Herdener, a spokesperson for the e-tailer, called the DoJ’s decisions “a big win for Kindle owners,” adding “and we look forward to being allowed to lower prices on more Kindle books.””

      I still agree with David that agency is on it’s way out–but I get the strong feeling that something else is going to replace it. Ultimately, Amazon depends on these “colluders” for the bulk of the books it sells, and will for a long time. And if Amazon wants to keep raising its share of the pie, those colluders are going to build their own e-storefront and give Amazon the finger. Apple already has the infrastructure in place to do it.

      Like

      • Yeah, agency is toast. They might well try and replace it with something, but the DoJ is going to be watching very closely (there are all sorts of parts of the settlement where the defendants have to share all future correspondence on this and related issues etc.).

        Like

      • Andy says:

        But… isn’t that the argument against the groundless fears that so many folks (perhaps you, hard to keep all the commenters separate) seem to have that were Amazon to get too large a share of the market, they would just “jack up the prices” to rip everyone off because of their now monopoly status? I just don’t think you’re really thinking this through… Amazon’s bread and butter in everything they do is to put the customer first. Their entire brand is based on that. They allow other merchants on their own website to undercut their own prices, because they’d prefer that customers get the best price they can. They allow competitors to advertise on their site for the same reason. They have continually driven the lowest prices for customers that they can. They have the world’s best customer service and are extremely lenient about product returns etc, all so that the customer will have a good experience. Do you really think that they’d plot this nefarious plot to gain market share all as a dastardly lead up to jacking up prices using “monopoly” power, when they’ve spent so much time, energy and money building the brand, particularly when as you say, the barrier to entry to selling books on the internet is so low.? Do you really think they’d give Apple or Google that kind of opening when they’ve worked so hard to avoid it?

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  25. Hmmmmm…Well, in an Ayn Rand universe, giving to charity is viewed as the ultimate evil. So, there ya go. Maybe Amazon isn’t as Ayn Randian as others within the publishing world. When charity = evil, it’s time to rethink the system.

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  26. David,
    May I ask where you’re getting your information on the details of the co-op? I was under the impression that providing co-op content and paying fees were mandatory, mostly from this publishers weekly article. (http://www.publishersweekly.com/pw/by-topic/industry-news/bookselling/article/49874-is-amazon-pushing-publishers-to-brink-on-terms-co-op-.html)
    If it really is just the pricing for voluntary promotions, it wouldn’t make sense that IPG, and now these bigger publishers, are canceling their contracts completely. Wouldn’t they just stop buying co-op while keeping their books at Amazon? They have too much to lose.
    Livia

    Like

    • I think this is a totally separate issue from the IPG kerfuffle.

      I’m working on the assumption that co-op is not mandatory to list your books on Amazon. If you’ve seen anything to suggest otherwise, please point me to it. It’s my impression that co-op terms form part of the overall contracts negotiated between publishers and Amazon. I haven’t seen any evidence to suggest that publishers must pay these new co-op prices if they want to be listed on Amazon at all.

      I suspect publishers haven’t signed contracts as a negotiating position, rather than because Amazon is refusing to list their books unless they purchase a certain amount of co-op at a certain price.

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      • So it’s not completely clear, since nobody’s sharing details. But I’m getting a sense that it’s mandatory from the following quotes from the PW article:

        “Amazon has, as some sources explained, long been pressuring publishers to provide ancillary content on the pages where their books are sold, from videos and q&a’s to links to similar books. That content has always been something publishers have had to both pay for and provide. In the latest negotiations with Amazon, sources told PW, the price of providing that content has jumped to what sources say are astronomical percentages (but those sources would not provide specific numbers). ”

        “The demands regarding co-op have some particularly on edge. Not only are many publishers frustrated about being asked to pay more money for content they are providing, but the whole notion of co-op at the online retailer is unsettling. While the case can be made that co-op in a bricks-and -mortar store is a worthwhile investment–money is spent on getting books to physical areas of the store, such as front tables, where consumers will see those books first–it’s much less logical on a Web site. Does having a video or an author Q&A on a book’s page on Amazon really encourage a customer who has already clicked on that book to make a purchase? ”

        I know PW is biased, but even taking that into account, it doesn’t seem like they’re talking about an optional thing. LIke everyone has said — there’s so much at stake right now with the lawsuit, and Amazon has so much marketshare, I can’t see the Big Six refusing to sign over something as trivial as “too expensive coop.”

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      • I’ve read this a couple of times trying to make sense of it. PW seem to be claiming that publishers *must* purchase co-op (at prices obviously set by Amazon) to have their books listed. To be honest, I find that very difficult to believe.

        I suspect PW might be twisting things a touch here. I’m trying to wrap my head around it. Perhaps it’s the case that publishers traditionally negotiate co-op when setting things like discounts and bundle it all into the same contract, and they are *viewing it* as a case where they have to purchase co-op to list their books, or maybe they simply can’t conceive of listing books without co-op. Frankly, I don’t know; that’s all I’ve got.

        If anyone else can shed some light, please chime in. I’ll try and do some more digging tomorrow because the above just doesn’t make sense (to me).

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      • One final thought, that article begins with hammering Amazon on the price-check app – without mentioning that the app doesn’t apply to bricks and mortar bookstores – which leads me to think that the rest of it should be treated with suspicion, given the absence right now of any other sources confirming what they allege.

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    • With regard to IPG, that situation is somewhat different. IPG are distributor, used by many small presses. They even distribute e-books to Amazon. I’ve read plenty of articles about the dispute, but none with any hard information on what the previous terms were, and what the “draconian” new terms actually are.

      What I have seen is people crying “censorship!” when there is nothing whatsoever preventing these small prices from listing their books directly with Amazon. I can understand the logic of using a distributor to deal with individual bookstores, but why would you need to go through a distributor to get your books on Amazon. E-books too!

      I confess that I neither understand why this is such a big deal, or the point of using IPG in the first place. To my uninformed ear, it sounds like an extraneous middleman getting squeezed out by an innovative company. But I’m happy to hear opposing views on that.

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  27. rasputin42 says:

    The hypocrisy is astounding. They illegally collude to force Amazon to a) make more money and b) get less money themselves by artificially keeping e-book prices high so they can prop up their old dead tree business model and oh by the way gouge the shit out of their customers in the process.

    Meanwhile, Amazon wants to make money and has learned that a great way to do that is to provide customers what they want when they want it at a reasonable price.

    We can lament the death of the neighborhood bookstore without calling anyone evil.

    Also, fuck them.

    Like

    • “Meanwhile, Amazon wants to make money and has learned that a great way to do that is to provide customers what they want when they want it at a reasonable price.”

      So, $9.99 is a reasonable price, but $13.99 is outrageous? Yet customers still buy books at those higher prices by the hundreds of thousands? They must be the “unreasonable” customers.

      Or are you describing what *you* want to pay for a book?

      I’m puzzled by the talk of what prices are “reasonable”. If consumers are unhappy about price, then surely 99-cent books should be *the most popular books on Amazon*. But they’re not–not even close. Why not? They’re not even a dollar!

      So–the cheapest possible e-books aren’t the best selling e-books, but Amazon’s trying to help customers get a fair price? I’m confused.

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  28. The price fixing is not so alleged with three of the parties charged agreeing to a harsh settlement.

    But according to them (and their supporters who just happen to make a living from them) they’re the good guys and Amazon is “the devil”.

    Talk about bias. *snort*

    Like

  29. It should worry ALL writers that Amazon thinks it can can increase its advertising and promotional prices astronomically. It can only do this because it is a quasi monopoly with 65% market share.
    If Amazon reduced its premium royalty from 70% to 50% tomorrow, indies would do what the Big 6 are doing – mount a resistance. I’m with the Big 6 on this one.

    Like

    • B Magnarella says:

      Your point is well taken, Bernie. But the thing to remember is that Amazon can’t raise those prices indiscriminately. It can only do so to the extent that enough publishers are willing to pay Amazon’s prices for a limited number of promotional slots. Right now, some publishers are saying “too much.” If Amazon can’t sell out those slots, they’ll have no choice but to lower the price. Quasi-monopoly or no, market forces will still dictate the price — albeit a higher price than if there were more retailers with Amazon’s reach (and therefore appeal).

      The same is true with the royalty rate. Would a reduction to 50% please indies? Of course not. But most would still consider 50% a good deal considering what they’re getting: access to millions of potential customers and a global reach. What happens at 20%? 10%? Are the benefits still worth the cost? At the lower end, probably not. And that’s when indies start looking elsewhere.

      Like

    • B&N already pays 65%, as do some others. If Amazon drops its royalties, Indies will just switch over to the esellers who are offering the best royalties, and Amazon’s Kindle biz will collapse. And since they are too smart to let that happen, it isn’t likely to happen.

      Like

  30. tinabimbolina says:

    For those interested, Macmillan’s CEO John Sargent states his case here: http://www.macmillan-speaks.com/2012/04/11/a-message-from-john-sargent-3/
    (Macmillan being one of the publishers still in the lawsuit after deciding not to settle.)

    Like

  31. Dave says:

    Yeah, agency is toast. They might well try and replace it with something

    Now that’s a great prediction Dave. As an example: thanks to the blog-o-sphere, and writers now being able to survive on their own without fear of publisher reprisal, those of us who’ve followed trade mags and publishing “how-to’s” almost our enitre lives are only now learning what a “no-compete” clause is. Basically, Big Publishing’s code of silence is gone.

    Kris Rusch had a great post on new and improved “hidden” no compete clauses, now that every newb knows what they are.

    Expect some new “necessary business model” to now arise that continues to allow publishers to control costs despite what consumers want.

    Vote with your wallets folks.

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