From N+1
I’ve worked in book publishing for most of my adult life; currently I run an online bookstore called Emily Books specializing in the kind of women’s writing that’s typically labeled “difficult.” My business partner is my best friend. Most of my other friends and coworkers are also involved, directly or otherwise, in the writing, publication, and sale of books. When we talk about Amazon an uneasy pall falls over the room, as if we’ve invoked a monstrous, evil entity—Pol Pot or Exxon Mobil or King Joffrey Baratheon, the Ill-Born Usurper of Westeros (lifetime Amazon rank of A Game of Thrones author George R. R. Martin: 14). Amazon’s cutthroat pricing schemes, commanding control of the book marketplace, and experiments with bundling and the publication of original material directly threaten our livelihoods, such as they are.
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As an independent bookseller, and as a reader, and as a person, this worries me. On the other hand, I realize that a consumer without a dog—and by “dog” I mean “an unnaturally strong and cherished connection to the written word”—in this particular fight might have no stronger response than a shrug at the prospect of Amazon.com: Total Domination. Most of us, understandably, are more concerned with economics on the personal scale of budgets and paychecks and debt and less interested in economics on the corporate scale of interstate commerce or monopolies or taxable presences. Amazon’s violation of the spirit (if not the letter) of American tax and anti-monopoly laws is abstract; one’s rent, phone bill, spending money, student loan payments, a lot less so. And Amazon is very good at addressing economics on a personal scale: their stuff is cheap and there’s a lot of it. One-click purchasing (which Amazon pioneered), low prices, endless inventory, and incredibly fast shipping have made it a company that reported $61 billion in sales last year and a 60 percent increase in stock value over the first half of 2013. The frequently cited fact that Amazon rarely turns a profit in a given quarter is mostly beside the point: if they didn’t spend so much money on building infrastructure for their future new world order, the company would be plenty profitable. And, as The Everything Store makes clear, Amazon doesn’t have to be profitable to become the only significant retailer doing business in many major product categories. Once it’s done that, prices will go up. Why would they not? Where one falls on this question, I think, depends on whether or not you think the check for the actual cost of merchandise we’ve grown accustomed to purchasing at artificially low prices is ever going to be dropped on the metaphorical table, and who’s going to have to pony up their Visa.
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There’s a fundamental problem with bookselling as a business: put bluntly, it’s that people aren’t really into buying books. Bezos discovered this via a 1998 survey that found most shoppers didn’t use Amazon.com and probably never would, because—well—Americans buy very few books. This is the part of the story where some booksellers, like me and my partner, might begin wishing we had done something else with our lives, but Bezos was unfazed. Instead he turned his attention to other products easily sold via mail, and shortly thereafter Amazon expanded into music and DVDs.
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Then, in 2007, Amazon released the Kindle. The new device was made possible by the relatively recent advent of widespread wireless technology; the development of magnetic e-ink, which made the screen readable without a backlight, and the fact that in the years before, Amazon had leveraged its market power to convince publishers to digitize their back catalogs. When the Kindle launched, publishers didn’t see why an ebook should cost any less than a physical book, and set the price at the same as the hardcover—typically, around $26. With the standard 50 percent discount, this meant the publishers would charge sellers $13. Bezos set the sticker price of most ebooks at $9.99, meaning that every time Amazon sold an ebook, he lost $3. For a while, publishers chuckled, but then they grew frightened. What did Bezos have up his sleeve? Amazon could afford to sell ebooks at a loss, but the availability of a cheaper ebook edition meant publishers lost money on their most profitable format (the hardcover) and small booksellers could not compete at all. Amazon no longer adheres to the $9.99 ebook price point as a rule, but the standard had been set, and the company only grew more powerful as the popularity of the ebook format increased. Holiday 2013 sales of the Nook, Barnes & Noble’s answer to the Kindle, fell 60.5 percent compared to 2012 holiday sales. Borders—initially one of the Big Bad, along with Waterstones and Barnes & Noble—went out of business in 2011, and Barnes & Noble is expected to follow any day now.
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Emily Books, the online feminist bookstore I run with my best friend, was started as an attempt to create a tiny, but serious, competitor to Amazon. To our surprise, the publishers who will talk in private about how much they hate Amazon did not want to do business with us. When I approached the VP of what I’ll generously call the “Digital Development” department of one of these publishers about selling one of her books via Emily Books, she was dismissive. She won’t do business with retailers who can’t offer digital rights protection (DRM), she explained. OK, I said, that software is far too expensive for most independent booksellers, and for Kindle devices, it’s proprietary to Amazon. What sort of non-Amazon branded digital protection would they require? Was there a viable workaround, an alternative? What if we were able to come up with something? As soon as the words left my mouth, I realized how stupid they were. Surely such a thing—an Amazon workaround!—would be incredibly, obviously valuable. Surely many people far smarter and wealthier than me were working day and night on it. Well, the Digital Developer reiterated, acknowledging my gaffe by speaking as if to a very slow child, they would need the software required for a Kindle. Never mind that these arbitrary criteria exclude basically all retailers who are not Amazon, never mind that DRM does little to prevent a determined book pirate, never mind that a real-life retailer was literally asking for her business, money on the table. It’s rare to witness someone line up such a perfect shot to their own foot, unless you work in publishing, I guess.
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But it turns out the way to build the world’s most successful bookstore has nothing to do with knowing your customers or recommending the “best” books or even making money, and everything to do with developing software, recruiting investors, and hiring a bunch of people who used to work at Walmart. This is not news I can use, but it explains the odd mixture of relief and nihilism I felt. Jeff Bezos both created and dominated the industry of his choice, online retail. His success has all but ensured the failure of anyone else who wants to sell not just books but consumer goods of any kind, and I wonder how many corporate biographies will be possible after this one.
Link to the rest at N+1 and thanks to Jan for the tip.
Grumble, grumble, whine, whine. Making excuses and predicting doom for all that is good and right about Big Publishing and book selling makes losing to Amazon a foregone conclusion.
It is interesting that Big Pub’s ignorant worship of DRM squeezes out potential competitors to Amazon.
But back to the bigger picture – How many times did Jeff Bezos hear that Wal-Mart would squash Amazon like a bug whenever Bentonville turned its sights on ecommerce? A bazillion at least.
But now, with Amazon growing by leaps and bounds, the tradpub world sees nothing but the end of corporate biographies in the future.
At heart, Amazon is a tech company. If anybody in Big Publishing had the slightest knowledge of the technology world other than the headlines they read in The New York Times, they would understand that Compaq was once where Amazon is in the public imagination. So was IBM in personal computers and Lotus and Microsoft and Hewlett Packard. PG thinks Apple has passed its point of maximum influence and value and will be much less impressive in three years than it is now.
Staying on top of the slippery pole that is the consumer-oriented tech biz is a hard, hard thing to do. So hard, nobody has managed to do it for very long since the invention of the personal computer and the internet.
PG says Amazon will slide down that pole some day. Not today or tomorrow or next year, but some day.
Of course, in PG’s opinion, traditional publishers will disappear before Amazon does and that’s pretty much what all these articles are about. Not that Amazon will destroy the world, but that Amazon will destroy their world.
by Carlos Ruiz Zafon
visible, including beginning to experiment with the new promotional tool, theKindle Countdown, that has been introduced as part of KDP Select.
by J.R.R. Tolkien,
