Is Amazon’s game totalitarianism?

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Franklin Foer and Scott Turow recently made comments which suggest Amazon is in the process of ushering in a totalitarian book economy.

Is Bezos, as Hitler was in the 1930s, biding his time, playing a long game, one that will lull the masses into a false sense of bookish security? Are we appeasing him, letting him take over the continent bit by bit? Is the blitzkrieg less than a decade away?

If you listened to a recent Intelligence2 debate, you would have heard Foer-Turow claim that, yes, that’s exactly where we are headed. On the other side of the debate were Joe Konrath and Matthew Yglesais, arguing that Amazon is the reader’s friend.

Konrath and Yglesais made some good points. But they left the central Foer-Turow argument standing like a citadel. It was left standing because much of what they had to say, as good as it was, frittered around the edges or went off into beer land.

But the Foer-Turow argument is not a citadel. It’s a house of crackers.

Here’s why: publishers, authors, readers, and entrepreneurs all have brains. And somehow, in their threat assessment, Foer-Turow forgot that.

How could they forget something so fundamental?

Well, their argument went like this.

  1. Amazon right now provides an amazing service that’s far and above anything any other bookseller currently provides. They have made more books more accessible to more readers than anyone else ever in history. Readers, of course, love this. But this is a bad thing.
  2. It’s bad because Amazon is becoming a monopoly–it already has 41% of all new book and 67% of all e-book sales, and in many divisions of those markets it has even more.
  3. If Amazon were an enlightened ruler like Aslan, okay. But Amazon is a business, and as a business it only cares about its profits. And the way to make profits is buy low and sell high. So when Amazon finishes consolidating its hold on the market, it will force publishers and authors to take less of the pie.
  4. In fact, Foer-Turow claim Amazon wants to not just reduce the share of the pie publishers get, it wants to kill off the publishers and take their share of the book pie completely. In addition to being very poor manners, this is bad for three other reasons.
  5. First, authors of non-fiction books that take a long time to research will never be able to get the money they need to do that research. Publishers are the only ones who can give them that money, which they do in the form of an advance.
  6. Second, few authors of fiction will be able to afford good editing, marketing, and book design, and so the many voices that could have been heard will be stifled, or never rise out of the crap to their true potential.
  7. Third, and this is the nefarious Nazi part, if Amazon is the only place you see books, they can control which books you see, which means they will exert enormous control over our culture because they will be able to suppress some books, and therefore the ideas in those books, and promote others. Foer-Turow claim Amazon has already done this.
  8. Finally, because it’s a business and has a goal of profit, when Amazon covers the land, it will probably eventually charge readers more. In fact, it may charge them a lot more. It can’t avoid it; it’s a business.

So Amazon is taking over more and more book territory. When it’s taken over enough territory to be unassailable, it will then proceed to ruin our culture because its model of book selling will suppress quality non-fiction and fiction alike. And then it will gouge readers.

Sounds depressing.

Sounds like Orwell’s 1984 or global warming.

The only problem is that there is a big honking flaw in all of that.

Like BIG and HONKING.

And I’m not talking about the issues like the idea that publisher advances are the only way non-fiction writers can be funded, or that publishers are the only way the vast majority of fiction writers can obtain quality book covers, marketing, and editing. Or that one internet site has the power to put a choke hold on ideas.

No, it’s about something else.

You need to know I’m not an Amazon groupie. Nor am I a hater of publishers. I am a businessman. I’m looking for good partners. And I recently wrote a post pointing out that it’s delusional for authors to think Amazon is their BFF with pinky rings. They are just, at the moment, a great indie partner. But their interests and mine are not perfectly aligned. Our love is definitely not written in the stars.

So I’m not here to stand up for Amazon. I’m here to say that the scenario Foer-Turow paint is fantasy.

Why?

Because they’ve set up a chess board and assumed that Amazon is the only player.

Monopoly

How does a monopoly stay a monopoly?

The government either legislates it. Or the company maintains their position by force. Or they own something that nobody else can get. Or the barriers to entering that market are so high nobody can get in to play. In all these scenarios, if people want the goods, they are forced to interact with the monopolies.

But has the government given Amazon a legal monopoly?

Um, nope. No charters here to be the only fur trappers in the West.

Does Amazon have an army of thugs who are going to beat people up and make them join Amazon Prime?

No. Well, maybe that’s what the drones are for, but they haven’t rolled them out yet.

Do they own something nobody else can get, like a piece of land? Are they sitting on the world’s largest reserves of cheap book oil?

Nope. They’ve got a great website and excellent logistics. But websites really aren’t that hard. And if we’re talking ebooks, you don’t need logistics.

What about the barriers to entry?

The big advantage Amazon has is that they usually have the lowest book prices around, the biggest selection (you can find almost any book you want there in any format it’s available in), and are incredibly convenient, providing samples, reviews, recommendations, and easy checkout. And they have the crowds.

It’s hard to get crowds. It’s hard to get all that content. It’s hard to beat their prices. Those are some dang good barriers that keep new guys out.

And Foer-Turow figured that’s all set. In stone.

Human Beings

But what happens if publishers have brains and are actually headed up by, like, real humans who aren’t just going to roll over and play dead? What would such folks do should Amazon keep killing off more and more of them and stealing their pie?

Amazon doesn’t own the rights to their books. As soon as any contract ends, publishers could simply say, we’re done. Our books will no longer appear in your store. If you’re faced with extinction or something else, what do humans normally do?

Amazon’s advantage is being the everything store. You can find every book imaginable there. So what happens when shoppers go there and can’t find the most popular books of our time? How long do they stick with Amazon when the shelves are empty? Anyone think about why Amazon kept selling Hachette books even when they were having contract disputes?

What happens if indie authors have brains and are real humans who aren’t going to roll over and play dead either? What would such folks do should Amazon keep squeezing more and more profits out of them? Could such folks pull their books (like many bestselling indies have from Kindle Unlimited), form a co-op, and create their own site?

What if everyone was talking about this awesome book that was all the rage, but it wasn’t stocked by Amazon? It was stocked on the indie site, and Apple, and all the others. How would that affect shoppers?

What happens if there are real human entrepreneurs out there or real humans leading other businesses, and they were all wanting to make a buck, and they see Amazon charging readers a ton and swimming in easy dollars? What happens when they see those tempting profits?

Do you think they might offer disgruntled publishers and authors better terms? Do you think they might give better deals to price-gouged readers?

So is Amazon going to kill publishers? Only if the humans have left the building.

Will they kill authors? Only if authors let them.

Will they gouge readers? Not when other folks see there’s money to be made by undercutting them.

Amazon is playing in a global market with the likes of Alibaba, Google, Apple, Walmart, etc. Amazon is playing in an internet economy where college students can come up with an idea and become billionaires. Equally important, Amazon owns nothing that somebody else can’t recreate. They have no legal monopoly. They have no army of thugs. What they have is a lot of content, a well-known URL, logistics for the hard copies, and good prices.

But what they do not have is a marketplace where everyone else involved is absent a brain.

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4 Responses to Is Amazon’s game totalitarianism?

  1. Good stuff, John. You have expressed much of my own thinking about this, especially the asset part, pointing out that Amazon isn’t sitting on the best oil reserve in the country. They have some servers, some software, and a cool name that everyone can remember. So here comes Nile.com or ColoradoRiver.com or whatever. Look out, Amazon!

  2. John Brown says:

    Right 🙂

  3. This is great, John. I’ve been avoiding the whole ruckus as much as possible, since both sides seem pretty unrealistic to me. Every time someone tries to convince me how evil Amazon is, how they are soon going to take over the world, all I can do is shake my head. A lot of those people do have brains, but in the case, they seem to have forgotten how to think. Sigh.

    • John Brown says:

      Right. And I think it’s too bad because so many seem to conflate their interests with the publishers or Amazon. But we have our own very separate interests. These guys are just business partners.