Saturday, 30 January 2010

The Book Report: Amazon Declares War

Welcome to the show folks...

This is a dilly of a pickle, so I'm going to try to explain it as best as I can.

If you log onto Amazon and try to order a book published by one of the many imprints of the publishing mega-giant Macmillan Books, you are pretty much shit out of luck. Reports are bopping around cyberspace saying that almost every title has either had their "buy" buttons neutralized, or have completely disappeared all together.

All I can say is: "WHY CAN'T WE ALL JUST GET ALONG?"

Okay, maybe I'm jumping the gun, and should explain a little for the folks who are too lazy to click the link.

Amazon is the world's biggest online retailer of books. If you don't already know that, it's time to get out of the cave.

Amazon has an e-book reader called The Kindle. You buy an e-book for $9.99, put it on your Kindle, and read it at your leisure, until the day Amazon decides to take it back like they recently did with some George Orwell books.

Computer and gadget giant Apple just released a new gadget called the iPad. One of the iPad's features is an e-book reader, and they want you to buy books for the iPad for $15. Macmillan is one of the biggest publishers signed onto this deal, and they want Amazon to bump up their e-book prices. to match them Amazon is now punishing them for it with their boycott.

This is a sad result of having too much an industry concentrated into too few hands. When the players become too big, they can't fight the urge to dictate prices instead of letting prices happen naturally.

Amazon tries to dictate prices by using their bulk to demand deep discounts from publishers. They then use those discounts to crush competition, like in my town, which doesn't have a dedicated bookstore anymore, and the only books carried at our local Wal-Mart either involve losing weight, formulaic thrillers with titles taken from nursery rhymes and plots taken from previous thrillers, Harry Potter rip-offs, or tales of whiny teenage girls finding chaste love with sparkly emo-vampire types.

The publishers want to end those deep discounts because they spend a hellacious amount of money on a select few big-name authors, and Amazon demands the biggest discounts on books by those very same big names. This is eating into the publisher's profitability, and they think that they, like Amazon, can dictate their prices and get out of this mess.

Well, that's not good economics.

You see there is a certain inalienable fact that dictates that it's really really wrong to.... well...
dictate prices.

There is a thing called The Price System. The Price System is where prices find their organic balance based on a combination of the costs of producing and selling a product, and the price that a free market is willing to pay for that product. When left to its own natural devices, prices have a way of making everyone happy, producers, retailers, and customers. It is one of the inalienable truths of human interaction, and possibly the most efficient form of communication developed on this planet.

Any attempt to control those prices, be it by a government or a corporation, creates logjams in the Price System. Things go out of balance. Profits shrink, shortages occur, customers are either unable, or unwilling to get what they want, and no one is happy.

So here's my suggestion to both sides, and it's come from hours of deep drinking thinking about the issue, and contradicting myself on several occasions.


It's too big for any one corporation or oligarchy to control, and even if you did succeed in getting control of said market, you'd only screw it up, and not just for customers, but for yourself as well. Thinking you can make a quick buck by controlling things is overly simplified short-term stage one thinking, and ultimately destructive.

E-books have a lower cost of production and distribution than hard-copy books. That's a fact. Once you get past the costs of paying the writer an advance then their royalties, editing the book, formatting, layout and all the other incidentals needed to produce an e-book, you're done. There's no paper or ink to buy, and no shipping that burns fuel. There's just some cheap hard-drive storage, and some bandwidth, that could handle thousands of e-book transactions a second without breaking a sweat or spending a penny.

But here lies the rub as Shakespeare said.

E-books are a new market, and when compared to hard copy books they are a tiny market. In my opinion, they are like the flying car of literature. Their convenience will never completely replace the simple comfort of a real paper book. In fact feuds over digital rights management, file formats, and other pettiness, could sink the e-book market before it even swims.

This means that e-books are currently selling a mere fraction of the numbers of their hard-copy cousins.

The price has to reflect that simple reality. It has to find that organic balance that enables the business to profit, while not alienating customers from a new and potentially lucrative medium.

So I suggest that both sides step back and take a good long look at themselves and their business practices. Then figure out what is the best price the market will bear, and let it all happen naturally.

Letting things happen according to the no-rules rule of Free Markets opens up the field to competition, increased production, and decreased costs for everyone in the long term.

That's what I think, what do you think?


  1. I won't go so far as to say I "hate" e-books but I certainly don't like them. When I buy a book I want a book. Something to sit on my bookshelves and take down from time to time to read.

    It would be nice if every book I bought came with an "e-copy" so I could enjoy the convenience of carrying a couple dozen books at once when I go to the beach or whatever. But I'll give up that convenience before I'll give up the physical book that requires no power, no fail-able storage media (beyond the printed pages themselves), no internet access, and no hassles if I want to loan it to a friend. (Well, other than the hassle of making sure I get it back.)

    Not to mention no worries about a vendor deciding I don't need that book anymore and deleting it from my account. (I'm looking at you, Amazon, as noted in the original post.)

  2. As much sense as you're making, there's this part of me that figures that Apple's charging more for their e-books simply because they're Apple, and they feel everything they do should be more expensive because you're paying for the privilege of having an Apple Logo on your random piece of technology.

    Granted, looking at the business model that's being used for e-book readers - I've heard rumblings that authors are kind of getting screwed on the digital royalties somehow - I remain, in general, opposed to the Kindle and all of its ilk.

  3. Blast Hardcheese31/1/10 8:27 am

    I haven't tried the e-books thing, mainly because I'm still suspicious of the DRM that might be put on it. If I buy something, I want to be able to use it, no questions asked. That's the main reason I buy music through Amazon instead of iTunes. (Also, I can play Amazon's MP3s on music players other than the bloody iPod).

    But yes, you are correct. Finding the natural price point (less convenient than print vs. lower cost) is how the market should work. But even $10 is too much for an e-book, IMHO. That's close to the cost of a paperback. For me to want to buy one, it would have to be significantly less than the average cost of a paperback, otherwise it's not worth the hassle of lugging around a reader and batteries.

  4. I don't do ebooks for the simple reason that they cost to much. Start charging around the price of an iphone app and I'll buy a ton of books..