Is Amazon’s game totalitarianism?

nazi_flagAmazatzi?

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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  • “Would I be more excited about this book if I…”

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    Everything I’ve learned about building expertise suggests that experts have internalized guidelines, patterns, and concepts. But in the beginning we don’t have those internal constructs. And so we often are benefited by exetrnal support in the form of diagrams, lists, etc. Sooner or later we internalize. And what used to be conscious becomes automatic.

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  • Who Will Play in The eBook Supply Chain?

    I was reading this Konrath post by Barry Eisler on the “Attack of the self-publishing memes” in which he argues that there isn’t an inherent conflict of interest for agents to also help authors epub their books. This got me thinking about the steps (tasks) in the current supply chain, who was going to provide them, and where the biggest value lay.

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    2. Negotiate contract with publisher

    EDIT MANUSCRIPT
    3. Story edit manuscript
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    5. Copy edit manuscript
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    PREPARE BOOK
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    9. Typeset book
    10. Print book

    MARKET BOOK TO WHOLESALERS, RETAILERS, AND LIBRARIES
    11. Establish book selling hierarchy (lead book, second lead, etc.)
    12. Obtain reviews from trade publications, newspapers, websites, authors, etc.
    13. Create sales catalog and other sales documents
    14. Contact book buyers and promote books (calls, visits, conferences, etc.)
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    DISTRIBUTE BOOK
    16. Ship to retail outlets and wholesalers
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    PROMOTE BOOK TO TARGET AUDIENCE
    19. Publicity, including free copies
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    SELF-PUB EBOOK AND POD PAPER CHANNEL TASKS

    EDIT MANUSCRIPT
    1. Story edit manuscript
    2. Revise for story edits
    3. Copy edit manuscript
    4. Revise for copy edits

    PREPARE BOOK
    5. Create cover design and art (which you could lump under marketing)
    6. Obtain ISBN
    7. Format book for ereaders and POD services (CreateSpace etc.)

    DISTRIBUTE BOOK
    8. Upload book to retail and library outlets
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    10. Process reader purchases & returns

    MARKET BOOK TO LIBRARIES AND TARGET AUDIENCE
    11. Obtaining reviews from trade publications, newspapers, websites, authors, etc.
    12. Publicity, including free copies
    13. Advertising, including website display etc.

    AUDIO BOOK CHANNEL TASKS
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    THOUGHTS
    I’m sure I’m missing some key steps somewhere. Somebody please supply them if you see gaps.

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    However, I do think there will be some interesting developments in the ebook/POD channel.

    Right now a lot of authors are spending time performing tasks 6, 7, and 8. Some literary agencies are wanting to charge 15% forever for those steps with maybe a little cover design. But tasks 6-8 are the tasks that require the least amount of skill and will soon be automated.

    Formatting for ebooks now is like coding html was for webpages 10 years ago–people in the code spending hours tweaking crap. Right now it takes you about a day to learn how to format a novel for the various ebook readers. Once you know how to do it, you’ll spend a day, maybe two, formatting your novel and uploading it. Or you can pay someone else to do it–any responsible teenager will do.

    But within the next year I predict an application coming (if it’s not already here) that will hook into Word and other programs that will make the labor obsolete. Creating a Kindle document will be like creating a PDF document in Word today—you just click Save.

    Uploading could be automated as well across various sites with some application. But it’s fairly easy now.

    So for which tasks are these ebook distributors wanting to charge 15% forever? Obtaining an ISBN?

    I don’t even think they even do that.

    Amazon and the other ebook retailers have a lock on 9 & 10. It would be incredibly hard to dislodge those gorillas. So I think the place where literary agencies and others who want to play in the indie ebook/POD supply chain are going to flourish is in the other tasks that require the most skills–editing, cover art, and marketing, which I’ve marked in blue.

    Authors interested in the indie ebook/POD channel are going to want service providers who can deliver great editing, cover art, and marketing. They’re going to want folks who can help them sell into traditional domestic and foreign paper distribution channels. They’re going to want folks who can help them sell rights to other buyers–audio, film, etc.  And they’re going to want help with their contracts.

    If I were an agency, graphic artist, editor, intellectual rights lawyer, or some other entrepreneur trying to serve indie ebook/POD authors, that’s where I’d spend my time.

    Dystel & Goodrich literary agency recently announced they would do something like this . . . almost.

    Over the past months and years we’ve come to the realization that e-publishing is yet another area in which we can be of service to our clients as literary agents. From authors who want to have their work available once the physical edition has gone out of print and the rights have reverted, to those whose books we believe in and feel passionately about but couldn’t sell—oftentimes, after approaching 20 or more houses—we realized that part of our job as agents in this new publishing milieu is to facilitate these works being made available as e-books and through POD and other editions.

    Right now, you’re thinking, oh, DGLM is going to be another of those agencies that has decided to become an e-publisher and charge clients whose books they can’t sell 50% of their income for the privilege of uploading their work. Some of you may be mumbling, “Uh…that’s a conflict of interest.” We get it and we understand how that can be the perception. However, we have no intention of becoming e-publishers. As we said above, we have too much respect for the work that publishers do and too much respect for the work we ourselves do to muddy the waters in such a way.

    Again, what we are going to do is to facilitate e-publishing for those of our clients who decide that they want to go this route, after consultation and strategizing about whether they should try traditional publishing first or perhaps simply set aside the current book and move on to the next. We will charge a 15% commission for our services in helping them project manage everything from choosing a cover artist to working with a copyeditor to uploading their work. We will continue to negotiate all agreements that may ensue as a result of e-publishing, try to place subsidiary rights where applicable, collect monies and review statements to make sure the author is being paid. In short, we will continue to be agents and do the myriad things that agents do.

    Our intention is to keep on trying to find books we think we can sell to traditional publishing houses, to negotiate the best deal (always), and to give our authors as many options as we can. Because we will continue to be commission-based, we will not be automatically pushing authors into e-publishing. Again, we want to give our authors options and empower them to do what they set out to do all along: have their work read by the largest possible audience

    However, from what I understand they’re not offering to perform the necessary tasks for 15% forever, only the project management of the tasks. Which means the author will still be paying for the editing and cover art and marketing.

    15% forever for project management (a list of to-do’s in this case) and a service provider contact list? Where the author still pays for the editing, cover design and art, and marketing?

    Ummmmm, no.

    Others like D&G will pop up. But the ones that indie authors will eventually go to will be those that deliver on the high-skill tasks for reasonable rates.  Those will be the ones playing in the ebook supply chain of the future.

    Many authors will contract the tasks separately themselves.  But a lot of authors won’t want to do that. They’ll want a one-stop-shop. Or one that does most of it. Some of those one-stop-shops will charge an upfront fee and will probably accept anyone who can pay. Others will make most of their money on a % of the sales to readers and libraries, footing the initial costs of the tasks, and will only work with clients they think will pay out, which if you think about it isn’t really an idie (self-pub) model at all. That’s the space traditional publishers play in right now.

    But in the ebook/POD world distribution is no longer a key barrier to entry for new competitors. And so I expect to see a whole bunch of new publishers coming to play in that space. Those that select, edit, and market well will flourish.

    Meanwhile, I don’t think most of us authors care which road we take and who we play with. Well, as long as they play nice and don’t poop in the sandbox. We just want to get our stories in to the hands of massive numbers of delighted readers.

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  • What Robinson Wells Learned Last Year

    Look, this is just an excellent post by Robinson Wells: Five Things I’ve Learned In The Last Year About Writing.

    I kept finding myself saying yes, yes, yes!

    Yes! I hate “networking” too. Icky, icky, icky. Like squishy underwear. Like buddying up to someone to get them into your network marketing downline. Like flies in soup. I love how Robinson replaces that with the real deal. I think I’m going to summarize him every time anyone asks me about networking. 

    One point. I do think he might be overstating the you-need-to-know someone deal. It’s easier, sure. But Larry Correia didn’t know anybody. He just wrote a book a lot of people in a certain demographic loved. I didn’t know my agent from Adam. Didn’t know my editor, but did have an endorsement from one of his authors. But that didn’t get me any deal. It probably got me, at most, a fair consideration. I can name others who didn’t know a soul. In fact, go to the facts and figures page in the On Writing section. Look at the author polls there. A lot of authors didn’t know a soul. Of course, knowing someone can help.

    Yes! Be cheerfully flexible. Oh, my gosh. This is such a good approach. And I’m living it right now, although there have been a few moments when I’ve had to regroup for a moment to capture the cheerful.

    Yes! Sometimes the thing you love doesn’t work for the project. Sometimes it does. I would advocate making sure you get to the root of the issue. But we’re artists. If the thing we don’t love doesn’t work, we can create a new thing to love. That’s what it means to be creative.

    Work! Yes! It’s amazing what happens when you work.

    Good stuff.  

    I’m so bullish on this, I say Robinson for President.

    Of what, I don’t know. But he should be President, of something.

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4 Comments

  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. 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.

  3. 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.

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