It seems to me that a lot of folks in the previous discussion don't really understand quite what makes Amazon so interesting—and threatening, for that matter—to the publishing industry.
So I'm going to take a stab at explaining.
Amazon was founded in 1994 by Jeff Bezos. And today it's the world's largest online retailer.
I submit that, as with all other large corporations, you cannot judge Amazon by the public statements of its executives; they are at best uttered with an eye for strategic propaganda effects, and at worst they're deeply self-serving and deceptive. Rather, you need to examine their underlying ideology and then the steps they take—and the actions they consider legitimate—in order to achieve their goals.
Now, first, I'd like to introduce three keywords that need defining before you can understand Amazon:
is the removal of intermediaries in a supply chain: "cutting out the middleman". Instead of going through traditional distribution channels, which had some type of intermediate (such as a distributor, wholesaler, broker, or agent), companies may now deal with every customer directly, for example via the Internet. One important factor is a drop in the cost of servicing customers directly.Disintermediation initiated by consumers is often the result of high market transparency, in that buyers are aware of supply prices direct from the manufacturer. Buyers bypass the middlemen (wholesalers and retailers) in order to buy directly from the manufacturer and thereby pay less. Buyers can alternatively elect to purchase from wholesalers.
It should be fairly obvious by now that the internet is an intrinsically disruptive force in traditional distribution channels because it makes disintermediation very easy.
Jeff Bezos recognized this very early on, and designed Amazon to be a disruptive disintermediary: to buy wholesale and sell retail, using the internet as a tool to reach remote customers directly. Initially Amazon relied on large warehouses, but as its database expanded they moved to just-in-time ordering, whereby obscure items would be listed as available but only ordered from the supplier when a customer requested one.
(So far, so good.)
But there are two other key aspects of Amazon that we need to understand.
Firstly, it's not an accident that Bezos' start-up targeted the book trade. Bookselling in 1994 was a notoriously backward-looking, inefficient, and old-fashioned area of the retail sector. There are structural reasons for this. A bookshop that relies on walk-in customers needs to have a wide range of items in stock because books are not fungible; a copy of the King James Version Bible is not an acceptable substitute for "REAMDE" by Neal Stephenson or "Inside the Puzzle Palace: A History of the NSA" by James Bamford. But books are bulky—a metre wide galley with books stacked spine-out can hold maybe 200 books on its shelves. It takes a lot of floor space to hold one copy of everything a reader might want to buy. Even a big box store may only have room to stock 20-50,000 different titles. In contrast, Amazon's database can hold millions of titles without Amazon having to hold them as physical stock.
Moreover, a big bookstore that stocks 20,000 trade books has to either sell them or return them undamaged for credit within 90 or 120 days. Someone is paying for that credit: either the wholesaler who bought them from the publisher, or the publisher themselves. (Or the bookstore may take a gamble and pay for the books, then keep them on the shelves until they sell—but this doesn't generally happen because bookstore owners aren't suicidal.) And the availability of that credit is limited by the retailer's plausible ability to pay. Amazon doesn't need to run on rolling credit. They can list everything in print as if it's available, and order it only when they have a confirmed sale. Neat, huh?
As noted, Bezos targeted bookselling because it was ripe for disintermediation. By purchasing from the publisher directly when a customer had already bought a copy, his company could keep its overheads down—and in particular, minimize its warehouse space (never mind the cost of running premium retail outlets and paying shop sales staff). This allowed him to buy wholesale and sell retail, at a big discount compared to the regular retail trade (with their higher overheads).
So. What's wrong with this?
Well, there's nothing intrinsically wrong with this way of doing business—if that's all that was going on. But it isn't. So now we come to our two new words:
exists when a specific person or enterprise is the only supplier of a particular commodity ... Monopolies are thus characterized by a lack of economic competition to produce the good or service and a lack of viable substitute goods.
Monopolies suck for their customers because they don't have to give a shit about product quality or price: they have you, the customer, over a barrel with nowhere else to go.
A monopoly is a consumer-side problem. In contrast, there is a less-well-known corresponding supplier-side problem ...
is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers. As the only or majority purchaser of a good or service, the "monopsonist" may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers.
Monopsonies suck for their suppliers because the suppliers are systematically starved of profits by the middle-men running the monopsony. Which can lead to suppliers going bust, and a reduction in the diversity and quality of goods available (via the monopsony) to consumers.
(It's kind of like inflation and deflation in economics. Inflation is bad; deflation, its opposite, is not good, it's simply differently bad. Similarly, both monopolies and monopsonies are bad.)
And the peculiar evil genius of Amazon is that Amazon seems to be trying to simultaneously establish a wholesale monopsony and a retail monopoly in the ebook sector.
You're probably familiar with predatory pricing. A big box retailer moves into a small town with a variety of local grocery and supermarket stores. They stock a huge range of products and hold constant promotions, often dumping goods at or below their wholesale price. This draws customers away from the local incumbents, who can't compete and who go bust. Of course the big box retailer can't keep up the dumping forever, but if losing a few million dollars is the price of driving all the local competitors out of business, then they will have many years of profits drawn from a captive market to recoup the investment. (Meanwhile, helpful laws allow them to write down the losses on this store as a loss against tax, but that's just the icing on the cake.) Once the big box store has killed off every competiting mom'n'pop store within a 50-mile radius, where else are people going to shop?
Amazon has the potential to be like that predatory big box retailer on a global scale. And it's well on the way to doing so in the ebook sector.
Until 2008, the ebook side of publishing was a vestigial, if not irrelevant, irritation from the point of view of the major publishers—at less than 1% of their turnover it was lost in the line noise. However, as subsidiaries of large media conglomerates, the executives who ran the big six had all been given their marching orders about the internet: DRM restrictions would be mandatory on all ebook sales, lest rampant piracy cannibalize their sales of paper books.
(This fear is of course an idiotic shibboleth—we've had studies since 2000 proving that Napster users back in the bad old days spent more money on CDs than their non-pirate peers. The real driver for piracy is the lack of convenient access to desirable content at a competitive price. But if your boss is a 70 year old billionaire who also owns a movie studio and listens to the MPAA, you don't get a vote. Speaking out against DRM was, as more than one editor told me over the past decade, potentially a career-limiting move.)
But publishers aren't software companies. They just want to sell books. And so they outsourced the DRM to the ebook resellers. Including Amazon.
Amazon has a history of investing hundreds of millions of dollars in loss-leading products and ventures solely to build market share. For AMZN, the big six insistence on DRM on ebooks was a windfall: it made the huge investment in the Kindle platform worthwhile, and by 2010 Amazon had come close to an 85% market share in the ebook sector (which was growing at a dizzying compound rate of 100-200% per annum, albeit from a small base). And now we get to 2012, and ebooks are likely to hit 40% of total publishing sales by the end of this year, and are on the way to 60% within five years (per Tim Hely Hutchinson, CEO of Hachette UK). In five years, we've gone from <1% to >40%. That's disruption for you!
Now, most ebook customers are not tech-savvy. It is possible to unlock the DRM on a Kindle ebook and transcode it to epub format for use on other readers; but it's non-trivial. (Not to mention being a breach of the Kindle terms and conditions of use. Because you don't own an ebook; in their short-sighted eagerness to close loopholes the publishers tried to make ebooks more like software, where you merely buy a limited license to use the product, rather than actual ownership of an object.) So, because Amazon had shoved a subsidized Kindle reader or a free Kindle iPhone app into their hands, and they'd bought a handful of books using it, the majority of customers found themselves locked in to the platform they'd started out on. Want to move to another platform? That's hard; you lose all the books you've already bought, because you can't take them with you.
By foolishly insisting on DRM, and then selling to Amazon on a wholesale basis, the publishers handed Amazon a monopoly on their customers—and thereby empowered a predatory monopsony.
I'm not going to comment on the Agency model which has drawn down the current US Department of Justice enquiry into Apple and the big six publishers. Let's just frame it as a desperate attempt by the publishers to get away from the wholesale model, which was allowing the monopsony incumbent (Amazon) to extort ridiculous discounts from their suppliers. If anything, the agency model simply means selling books the same way they were sold 30 years ago, and the way apps are sold in the iTunes app store or the Android Marketplace. It was unwise to give the appearance of collusion to establish a price-fixing cartel, but whether or not such collusion actually happens is a matter to be decided by a judge in the not too distant future.
I'm not going to lecture you about Jeff Bezos either, although I do want to note that he came out of a hedge fund and he's ostensibly a libertarian; these aspects of his background make me uneasy, because in my experience they tend to be found in conjunction with a social-darwinist ideology that has no time for social justice, compassion, or charity. (When you hear a libertarian talking about "disruption" and "innovation" what they usually mean is "opportunities to make a quick buck, however damaging the long-term side effects may be". Watch for the self-serving cant and the shout-outs to abstractions framed in terms of market ideology.)
Anyway, here's the important take-away:
DRM on ebooks is dead. (Or if not dead, it's on death row awaiting a date with the executioner.)
It doesn't matter whether Macmillan wins the price-fixing lawsuit bought by the Department of Justice. The point is, the big six publishers' Plan B for fighting the emerging Amazon monopsony has failed (insofar as it has been painted as a price-fixing ring, whether or not it was one in fact). This means that they need a Plan C. And the only viable Plan C, for breaking Amazon's death-grip on the consumers, is to break DRM.
If the major publishers switch to selling ebooks without DRM, then they can enable customers to buy books from a variety of outlets and move away from the walled garden of the Kindle store. They see DRM as a defense against piracy, but piracy is a much less immediate threat than a gigantic multinational with revenue of $48 Billion in 2011 (more than the entire global publishing industry) that has expressed its intention to "disrupt" them, and whose chief executive said recently "even well-meaning gatekeepers slow innovation" (where "innovation" is code-speak for "opportunities for me to turn a profit").
And so they will deep-six their existing commitment to DRM and use the terms of the DoJ-imposed settlement to wiggle out of the most-favoured-nation terms imposed by Amazon, in order to sell their wares as widely as possible.
If they don't, they're doomed. And all of us who like to read (or write) fiction get to live in the Amazon company town.
Great post. The only thing I'd add is this:
either we get to live in an Amazonian Company Town (obscure reference to the rubber industry of a century ago)....
...or crowdfunding sites start getting really popular with authors.
Crowdfunding books would be yet another level of disintermediation between authors and readers. While I can see a huge number of problems with this system (starting with an author saying, "I needed a business license? Shit!"), it's a potential alternative, especially once Bezos starts playing games with supplies and pricing.
This is total BS. There are a number of authors who live outside of Amazon selling DRM-free books (myself included) on their own website. It's not difficult, and is trivially easy to run as a lifestyle business while you're writing other books. Amazon cannot maintain a monopoly on selling books or a monopsony on buying books even if it tried: Charlie Stross himself has a brand powerful enough that his enthusiastic readers (myself included) would be happy to buy from him instead of Amazon.
John T Reed wrote on his webpage on distribution (http://www.johntreed.com/distribution.html):
"As far as I can tell, the authors who still go with publishers and distributors lack self-esteem—big time. They are so interested in the cachet among ignorant laymen of “being published” and “being in book stores” that they will give up $100,000 or more a year to get that status.
How psychiatrically sick are these authors? How sick would you have to be to walk away from $100,000 or more a year?
In effect, they are willing to pay that much to be a “celebrity,” i.e., “being published” and/or “being in book stores.”
This is spite of the harm done by abandoning that money to their family, themselves, their retirement, their health that would be enhanced by their having more money and therefore more time for exercise and other good habits."
Unfortunately, Charlie Stross belongs in that category.
Rubbish. There's this concept called "division of labour" that I'd like to remind you of; if I had to run my own self-publishing op I'd lose half my writing time to what is essentially a peripheral activity (from my point of view).
I diagnose a bad case of self-publishing disease here. (There's an echo chamber of folks who think that they can all get to be the new Amanda Hocking. Ain't gonna happen, but they get very annoyed if you point out the emperor's sartorial deficiency.)
Well, isn't this an almost privileged moment in modern commercial history? - we get to see how a global commercial entity behaves in what amounts to laboratory conditions (in the sense that we can see, hear and analyse Amazon's actions as they unfold). I think that global corporations have reached a stage of development which is like a hybrid of cancer and morbid parasitism - corporations are driven by their primitive growth programming to expand, push, corrupt, and devour the surrounding socio/economic fabric, yet a certain self-preservation keeps them (or some of them) from overreaching and killing the host.
How will Amazon develop? And, more importantly, what will be the response of those with financial clout (and a stake in the game)? Is it possible that the big publishing houses might club together to create a global bookselling nethub to face down Amazon?
Very clear. Thanks for explaining.
Cliff.
As always, Mr. Stross, you make a lot of sense.
What do you think about the possibility of publishers selling non-DRM ebooks directly to consumers via their website and/or own mobile apps? Non-exclusively, of course. Seems like it would be a reasonably low-cost hedge against Emergent Monopsony X. Hollywood seems to be moving in this direction with content; i.e. I can stream new "Modern Family" episodes via iTunes OR Hulu OR directly from ABC's website/iOS app.
Lack of DRM from the publishers also means that physical retailers have a chance. (Not a big chance, but it's there. Unlike now, where it isn't.)
Think this gives me another reason for sticking to print books...
Hmm. Well I seem to be buying Kindle ebooks almost exclusively now. Case in point, a few days back I had an opportunity to wander round a good 2nd hand bookshop on the Isle of Wight. In the fantasy/horror/sf section all 3 volumes of the Kim Stanley Robinson Mars trilogy were available, albeit foxed, creased, and slightly smelly, for a total of £7.50. Before making a decision to buy, I thought to check Amazon to find I could get the entire series on Kindle for £3.49 , and the author would presumably get a bit too. No contest.
That said, I'd happily buy a Drm free PDF of the next but one Laundry novel via Kickstarter. In many ways, the we pay a bit less but the author gets all the money, and up front to boot, model looks quite attractive from the consumer POV.
The big publishers really aren't geared up for direct sales. Some of the smaller ones, however, are: Baen, for example, with their Webscription set-up have been doing so for over a decade.
The trouble, of course, is being discoverable by customers (and easy to do business with).
The brand of one author is not that powerful. People who own Kindles frequently don't buy from anything but the Kindle store, and in some cases assume that any book not on the kindle store does not exist as an ebook.
And of course, where do you thinh our host *got* that brand, would you ever have heard of him if his publisher had not marketed his books in the first place? There's a massive amount of labor and money involved in building an audience yourself, and you can't crowdsourse until you have that audience.
In economic terms, "monopoly" does not mean "the only seller." It means that you have sufficient market power and presence that you are largely immune to price changes. People selling a few thousand books a year off their website are not going to impact Amazon in any way. (But let's look at one exception here -- Rowling, who has enough power on her own to get Amazon to change how they worked. And she did it by not using DRM. Anyway.)
As for Amazon not being a monopsony... probably. But it's definitely an oligopsony, and is well on its way to monopsony. (Who does, for example, Tor get to sell to? Only a handful of companies that buy significant quantity.)
And your self-publishing means I've never heard of you. Your book's not next to other books I enjoy in the shops. Amazon don't suggest you based on my purchase history. And of course there's the reputation of people who self-publish to be a bunch of kooks who couldn't get a real publisher to touch them.
And while I'm in a different industry, I *do* turn away $100,000 because I don't care for the stress and 120 hour weeks. I'm not Larry Ellison and I don't use my bank balance as a way of keeping score in life.
I agree that an author totally self-publishing may be a waste of time/talent, although given that many authors work effectively at below minimum wage when writing novels it's hard to say they are monetarily worse off.
However ebooks without DRM do have an extremely low barrier to entry. Thus, a bit of word of mouth and some good google (or bing) search engine mojo can get another direct ebook-seller to show up easily when people go searching. And assuming the DoJ suit ends up invalidating the clause that a distributor can insist that no one else resell the same book at a lower price, a lot of the monopsony lock in to Amazon goes. Unless of course Amazon locks the Kindle. I think it is unlikely that Amazon will be able to insist that kindles only read amazon bought ebooks (both from a technical and legal/anti-trust standpoint) and I kind of doubt they would be stupid enough to try. After all with smartphones, iPads etc. you don't need a kindle to read lots of ebooks and if the kindle gets locked down then we'll all go an download some other ebook reading app for our non-kidle hardware devices and let the kindles whither on the vine.
Now having said that I do espect Amazon to try and make it more convenient and cheap to use a Kindle than anything else but I doubt they'll get to total market dominance levels. I supect we'll see something more like the Intel/AMD or Microsoft/Apple kind of market where Amazon has betwene 60% and 80% of the market but can't get to 90%
PS http://madgeniusclub.com/2012/04/14/how-the-mighty-might-fall/ is interesting and on sort of the same topic
So... DRM is dead. That's -- that's good, right? We can be happy about the ruling?
I'm sorry -- it's just, it's been so long since I've seen a news article saying things are generally okay and I don't need to be outraged about anything. I've sort of forgotten what it feels like.
Dan, don't worry: it hasn't happened yet. It is still possible that the unpredictable combination of the DoJ, the publishers and Amazon will contrive to bring about a grim meathook future that is dismal beyond our ability to comprehend. There is no need to re-learn what it is like to feel happy just yet.
Is it possible that the big publishing houses might club together to create a global bookselling nethub to face down Amazon?
This would be great, both for established authors, self-published authors and readers all around, but seeing as how it took a multimillion dollar lawsuit brought by the DoJ to get to the publishing houses to even consider doing this does not bode well. They could have done this 5 years ago and undercut Amazon, defanging the kindle right out of the gate. Instead they clung to their old ways and let Amazon colonize the ebook biome. Now they have to fight an invasive predator (the kindle model) and figure out how to stay alive (solvent) during a global economic crisis, all while shrugging off the public perception that they've already formed a price fixing cartel. A global bookselling nethub would be sweet, but if it happens, it'll have to be managed by an independent organization not directly affiliated with the publishers or with Amazon. The only candidate I see who has the infrastructure already in place for this is Google. make of that what you will.
It's worth pointing out that although against the licensing agreement and requiring more than minimal computer skills there are various bits of software that are presented as "e book managers" that can be persuaded to hack your DRMed book (be it from Amazon or most other places) into a non-DRMed form and a different format.
Since I've blogged about doing so, I'm relatively easy about saying I've done it. I read one copy of the book but I prefer the iBooks interface to the Kindle interface on the iPad, so I break DRM and read via iBooks. My conscience is clear - although as yet untested by a judicial system. But I'm not sure how hard it is to do. One of the impetuses behind the recent UK proposed remodelling of copyright law and the like was that middle-England housewives were some of the biggest lawbreakers - doing things like cracking DRM to read on a different platform, lending eBooks to their friends and the like. There are a number of big business cases too but if the law says middle-England is all breaking the law then the law is wrong... or there's a revolution.
The Bezos business model is so incredibly destructive for the publishing industry that I frankly don't see him as a problem in the long run, in any possible scenario.
He's not comparable to Wal-Mart. Wal-Mart is in it for the very long term. They want to be The Shop, forever, for the entire world.
He's doing essentially the same thing as company towns in resource-based industries. They go to a region, exploit its natural resources to the hilt, and then leave the area completely. The company town becomes a ghost town next to a slag heap, and the owners end up with fortunes.
Once he'll have sucked publishing dry, once the big names are totally dead or have left to concentrate on other media, once there is nothing left but reprints and small indie publishers with tiny profit margins he'll close down the book section and concentrate on more profitable things like selling electronics. One day, years after he's shuttered the bookstore, the small indie publishers will grow, some of them will merge, and a better publishing industry will arise. But in the meantime there will be no big English language publishing industry. It will have been gutted.
That's the hedge fund mentality.
Hopefully, someone will stop him.
Sinon, je vais devoir me contenter de nouvelles publications dans d'autres langues que l'Anglais, pour un bon bout de temps.
I hope the publishers wise up and do something like you suggest, but I would never overestimate the wisdom of business executives. I worked at the Borders bookstores headquarters in the late 90's, and at company meetings, the CEO would gleefully - GLEEFULLY - boast how Amazon still hadn't turned a profit and wasn't a real threat at all.
I can't remember his name, but this was the CEO that they brought out of semi-retirement because his replacement was doing a bad job and he was so great for the company.
Business execs can be extremely dense, and unfortunately underlings all too often follow blindly (or are like me back then and just want a paycheck and don't really care who gives it to me).
I think Piaw Na has more of a point than you give him credit Charlie. I mean sure he's suffering from a case of S-PD that's causing him a to be a bit nutty and insulting but in the long run the forces of disintermediation are going to force something like that to happen eventually.
Of course there is still going to be a division of labor but the structure of that division is going to change. Over the next decade or two the field of editing is really going to blossom when their contribution really makes itself evident. Only I think the authors themselves rather than the publishers are going to be hiring them. Or maybe agents will start taking over more of the back-end work and putting together editors, authors, and distribution set-ups.
I suspect though that eventually authors are going to take on most of primacy in the business mesh the eventually develops. The agency of being in charge is just going to be too attractive. And the fact is that the business crap is much simpler than the goons in MBA programs would like us to believe. Thirty years ago you'd be hard pressed to find a programmer or engineer who could cogently explain a stock option was now it's as much a part of the job as knowing what bubble sort is.
*Waves hand*
I won't actually advocate violating license terms and conditions, but I'll cop to doing so myself (insofar as if I buy a DRM'd ebook, I think I'd be mad not to strip the DRM and make an archival copy strictly for my own future use).
I think the interesting comparison to be made here is to Steam; PC games went through this whole drama 5-6 years ago and the market not only survived without either a monopoly or a monopsony but is being dramatically revitalized. But DRM is still alive and kicking.
Of course, Valve is not Amazon and the Gaben is no Bezos.
Is it possible that the big publishing houses might club together to create a global bookselling nethub to face down Amazon?
You mean, form a cartel for the express purpose of raising prices and weakening a particular competitor?
I worked at B&N in the early 00s, when the CEO said that he didn't care what we sold, books or hammers, because it was all widgets to him. I think this is closer to Bezos' business model than anything else. He'll sell book-flavored widgets for as long as there is a market for it. And despite all the articles claiming otherwise, there still is a huge market for book-flavored widgets in the English speaking world. The traditional publishers have an opportunity to wrest control of the selling of these back from Amazon, if they are smart. As you point out though (and as I and others can attest) they aren't smart and so will probably do something mind-numbingly stupid.
The agency of being in charge is just going to be too attractive. And the fact is that the business crap is much simpler than the goons in MBA programs would like us to believe.
The angle you're missing is risk management.
Right now the industry is structured so that the publisher assumes the commercial risk of publishing: the author is along for the ride, and under some circumstances makes less money, but the iron rule of publishing, Yog's Law, states money flows towards the author: you don't have to pay for the expenses of publishing or marketing, you get a nice fat advance against your expected royalties (which you don't have to repay if the publisher doesn't turn a profit, or goes bust), and so on.
I am, as it happens, in a position where I could go from zero to self-publishing on a commercial basis in a handful of months. This is entirely deliberate: I have a "Plan B" to hand in case the publishing industry as a whole crashes and burns. But I'd rather not do that, because if I do, not only do I have to shoulder the workload of being by own publisher, I also have to assume the commercial risk.
(And I'm a child of a long line of self-employed entrepreneurs and business owners; it must be infinitely worse for someone who didn't grow up in a family where everyone was expected to run a business.)
Interesting read. I hope that publishing industry learns a lesson that Hollywood and the music industry have not learned, people will pay for content if it is easy to access and reasonably priced. Sorry MPAA $9-18 for a CD is ridiculous and forcing movie theaters to convert to 3D and charge $15/ticket is just stupid. Get rid of the DRM, find a way to easily search and download content. People will buy.
One of my hobbies is fountain pens. Amazon has been sucking in the small Mom 'n Pop pen sites as 3rd party sellers. Of course these stores disappear and Amazon takes over. I've avoided buying pens and supplies through Amazon, because I do not want Amazon to have the same market share it now has with e-books.
I like DRM free ebooks and being Canadian have been using ePub readers first a Sony and now a Kobo Vox.( Kindle was not available) With the vox I can download reader software to read any format and have actually bought one book from AMAZON. Yes they have basically locked down the US market and are making in roads to the rest of the world but if everyone else can start selling DRM free before they do it may disrupt their business. I dislike locked sandboxes and therefore have avoided Apple and Amazon.
I really don't see DRM as anything but a distraction in this conversation. Having DRM doesn't force users to go to Amazon, and choosing to have DRM books on Amazon doesn't preclude having non-DRM books elsewhere.
Amazon owns the marketplace because a) they doing a pretty good job of running the marketplace, and b) they have scale. If libraries did half as good a job as running a marketplace, I'd get all my books for free from the library. But they don't, and so I discover books on Amazon, read reviews, and 9 times out of 10, purchase there.
As a self-published author who hasn't run afoul of Amazon yet (yes, I know, there are lots of horror stories), I'm pretty happy with the opportunity afforded me. I'm keeping a large portion of my book revenue (far more than I would with a publisher), and my sales are to the point where they can pay the rent. My Amazon sales are 97.7% of my total sales, so I certainly can't afford to live without them.
I assert that if you don't want Amazon to be the only game in town, then the trick is to build a better marketplace. It has nothing to do with DRM.
A better marketplace would likely involve a system of reviews shared among many smaller marketplaces. Imagine all libraries, independent bookstores and publishers sharing one large review database.
It would likely also involve a good recommendation system, like Amazon has. This can itself be crowdsourced, much as Netflix did with the Netflix Prize (a $1 million prize to beat Netflix's movie recommendation algorithm back in 2007). The recommendation system would need to have the ability to recommend items across marketplaces as well as within marketplaces. This can and should be transparent so customers can see when they are about to transfer marketplaces.
To keep friction low and offer an experience similar to Amazon, every part of the experience should be kept smooth and seamless. Checkout and shipping, for example should offer a centralized option, like Paypal that remembers payment and shipping information, although nothing would preclude a participating marketplace in the federation of marketplaces from offering their own payment options in addition to the common ones.
Unfortunately, I don't think we can count on the publishers to lead the charge. I've seen publishers speak at SXSW Interactive year after year, and they appear to be further and further divorced from the reality of the situation. (If you've ever been to SXSW Interactive, you may have noticed there's a lot of very smart people there. When the presenters are too busy being defensive against what the audience is saying to be able to stop and listen, it's a sure sign the presenters are in trouble.)
Personally, I'd like to see libraries lead the charge in building the marketplace. We don't have to doubt their motives: they just want to get books into people's hands.
Except that history doesn't end once Wal-Mart drives the small, expensive retailers out of business. If they jack up the prices, they sow the seeds of their own destruction - and they can't keep selling goods below cost forever. Wal-Mart is an apt example of that, because now they're scrambling to deal with the threat posed by Amazon to their DVD/BD and "High-End" product sales.
I pointed this out in the earlier thread, but let me re-iterate it: without government regulation, private sector monopolies are not long for this world - especially in anything related to the Digital Economy and Retail. They are ripe targets for disruptive innovations and changes in how we produce, sell, and market goods and services.
Yet this kind of fear-mongering turns up, over and over - that this time, it's different. This time, we're at dire risk of ending up in the "Amazon company town", in the grasp of Microsoft, trapped in AOL-Time Warner's "walled garden". I think it's as wrong now as it was with all the prior times when it came up.
thank you. well explained. many moan about the big companies and what they do, the Evil Empire and so on. to me, these are capitalists behaving like capitalists. why do people get so outraged? do we really expect them to be different? do we expect these structures to suddenly grow bigger moral wings and fly above their modus operandi? we can look the other way; what happens when a country tries to control the economy? we have the absurdities of the old USSR. yes, maybe we will have an Amazon style Company Town; but I bet its own internal contradictions will bring its demise and some newer form will emerge with good and bad. . . . and there is where my hope rests, new forms emerge. every time I see a Company Town, I look behind it to see what is coming next. sometimes it is hard to see but it will be there and when it is not, we are all dead.
Interesting piece, as always.
Steam is an interesting analogy, and indeed the biggest contrast with Amazon is that it seems to be run by people who to some extent care about the products they sell (and the same is true for some of the other digital pc game stores).
But the scary thing at the moment is not Valve, but it's customers. The customers that seem to be really prone to voluntary vendor lock in. Partly a trust issue, partly a convenience issue, partly a social issue, but in the end there is a big group that won't buy directly from a developer or competitor, only from Steam.
Which is something that I assume also happens with people that feel fine within the Amazon ecosystem (or Apple for that matter). And all those people are highly unlikely to take a chance and buy direct, making the dream of independent authors successfully selling directly or at least independent from the big sellers less likely.
I'm not sure Bezos will ever abandon publishing, because he's set up a nice long-tail company that can make a tremendous amount of money, though having lots of small sales.
No. We don't know what will kill Amazon yet. It may well happen after Bezos is gone, but something will happen. And it's going to be an astoundingly stupid move, whatever it is that happens.
My favorite example of this phenomenon is nearby, where a local Korean grocery store is moving to take over an empty Sears big box nearby, and turning half the floor space into a mini-mall to sublet out to the restaurants, small shops, and hair salon that they already sublet to in their existing building. A century ago, Sears was a huge player in the catalog retail game all through the US. Now they're drying up and blowing away.
It's interesting to watch a Korean copy of a Japanese model (I'm not sure who the original was for this store design: Mitsuwa?) take over as a former giant falls apart. That Korean store is successful enough that it's already turning into a local chain.
If you flip through old Baen books, you will see Jim Baen had a keen interest in exploring options other than the usual distribution chains right from the start.
It's not about DRM or a company store or locking people into a platform
Amazon is a technical company and knows that DRM is not sustainable and the things like kindles are going to drop to about $25 very fast and they are in the end not going to come from Amazon.
It's about being the biggest and the cheapest, driving the price down, pressure the suppliers to the point where the margins are razor thin and the biggest and most efficient retailer wins due to technological and economy of scale advantages.
There is a real possibilities this will turn into a nightmare scenario for authors. They need to work with Apple, publishers and surviving retailers to develop their own distribution channels, that are COMPETITIVE on price and efficiency. It's not as hard as it sounds delivering a few million text files for pennies is child's play these days
..If libraries did half as good a job as running a marketplace, I'd get all my books for free from the library...
As a librarian, I'd like to give this statement an award for the most poorly thought out analogy of the week, but I'm a librarian, and we don't have the funding for awards. Or keeping the lights on more than four days a week.
Right. Does anyone believe that Bezos' ambitions for World Domination (Bwah Hah Hah Hah) are unique to him? That Walmart and Toyota and BP et. al. don't desire exactly the same monopsony/monopoly combination?
Maybe there's something to the notion that A-Z is uniquely situated to actually realize this state of affairs. But I haven't seen that argument made yet.
Good points.
My guess is that somebody will come along with a new, successful business that directly attacks the heart of Amazon's business model. Amazon, like earlier giants, will struggle to respond, spend a ton of money trying to adjust without luck.
If they're lucky, they'll end up like Microsoft or IBM - successful companies that produce a steady supply of products that people want, even if they're not the Big Man of the Tech Sector anymore. Retail is pretty unforgiving, though, so they might just go out of business.
There's also the example of A & P, a supermarket chain that had a 75% market share as recently as the 1950s. I'm guessing that your first reaction (and most people's reaction) to this is "Who?".
I think it apropos at this point to remember that for many people, ebooks aren't "owned" per se; what they own is the right to view a given title. Not the same thing.
Of course this state of affairs creates incentives for jailbreaking and creating a version of your acquisition that makes it actually, you know, yours.
You can buy a Kindle and use Calibre to convert .epub to .mobi. This was you get a nice e-reader and damage AMZN (assuming they sell Kindles at a loss).
Once he'll have sucked publishing dry, once the big names are totally dead or have left to concentrate on other media, once there is nothing left but reprints and small indie publishers with tiny profit margins he'll close down the book section and concentrate on more profitable things like selling electronics
Bullshit. You are missing two strategic points: 1) don't leave a flank, 2) code is law.
The first is obvious, the second means that intellectual property, such as it is, is not the same thing as a mountain full of coal.
That said, I think we live in disruptive times. If it wasn't Amazon, it would have been someone else. I like the current publishing model, but I don't think it matters what I like. I'm simmering some half-baked ideas (I couldn't pack another misplaced cooking analogy in there, which is why I'll never be published) on how one keeps authors whose names are not Rawlings or King both writing and not living under a bridge. Scale is a problem. I'm wondering it talking to authors, who likely know their local booksellers, pubs, coffee shops, etc. might be an angle. (That's part of the publicity angle; editing, art and finance are the other 240% of the problem. Honestly, finance, I think, is the easy part, assuming the rest comes together.)
Crap, I fumbled the HTML. Sorry.
Hat is tipped. This is a brilliant post.
Suppose we find ourselves in the amazon.com grim meathook future. Shouldn't authors be able to come up with a few ways to collectively organize themselves to better survive?
I'm thinking something like a foundation or cooperative or guild that could run an author-friendly alternative to amazon.com's ebook storefront? Something run with an explicit mission to forward the mission of authors rather than enrich middlemen? Is such a thing possible?
IIRC you have an agent already. What's to prevent your agent, and other agents, from turning into mini-publishers? A 5-man shop could handle that division of labor for you and a stable of other authors as well.
Didn't look far enough. Bezos wants to disintermediate between authors and Amazon. What are these pesky publisher things between us and the content creators? *swat*
And another level of monosomy forms. With many more, much weaker sellers...
SFWA and the other writer groups need to have some serious Come to Jesus talks about which set of corporate overlords they want to work for and under what conditions ten years from now...
The publishers need to compete with Amazon on distribution. Seriously, it's that simple. Stop crying into their beer about the good old days, stop the shady backroom deals, stop waiting for the government to save them, and just compete. The people that are doing that (B&N, Apple) are doing fine. Amazon is in now way unbeatable.
I know its been like a 100 years since they have had to do that, but most of the rest of the world does it every day.
If the big six publishers cannot get their shit together then the authors are going to have to find someone else to represent them or do it themselves.
My guess is that somebody will come along with a new, successful business that directly attacks the heart of Amazon's business model.
I'm not sure what the heart of AMZN's business model is, but I suspect their cloud services have a lot to do with it.
No comment.
And another level of monosomy forms. With many more, much weaker sellers...
This is why I [heart] the big publishers. Well no, not really, but having a handful of competing, cumbersome, slightly inept, and not terribly voracious sauropods for a market beats having to sell to a market consisting of a single psychopathic tyrannosaur.
There's that, since that's where they make their biggest profit margins.
Supermarkets don't squeeze out the smaller shops by predatory pricing, while they sell at prices that the smaller shops would lose money at they don't lose money themselves in doing so. They are actually better at retail than their competitors. They have intrinsically lower costs due to having better lower cost logistics and better quality stock. When I was at university the TESCO Metro was much nicer (better lit, nicer decor &c.) with far more fresh food than the similarly sized independent supermarkets. Even when the small shops have gone out of business the other supermarkets provide ongoing competition or potential competition as the barriers to entry aren't that high. If TESCO are making exceptional profits in a local market ASDA or Wm Morrison or J Sainsbury or one of the various smaller retailers are going to see an opportunity.
"I really don't see DRM as anything but a distraction in this conversation. Having DRM doesn't force users to go to Amazon"
Actually it does, you cannot read a DRMed book on a Kindle unless that book was bought from Amazon, and you cannot read a DRMed book bought from Amazon on anything but a Kindle.
Yes there are non DRMed books, but as Charlie points out, books are not fungible, and books that come with DRM are (usually, I've seen a few DRMed public domain books) not avialable any other way.
I immediately thought of O'Reilly.
They produce one of the largest lines of technical books on the market and being smart people have been selling their books DRM free for years. (They are watermarked though, to discourage reposting).
Their market, of course, is tech knowledgable people who are quite capable of cracking DRM so they can use the books on multiple devices. So O'Reilly accept and embrace that.
Bad news though. A quick check shows that Amazon sell kindle versions of the O'Reilly ebooks at half the price of the ebooks on the publisher's website.
I'm not so sure. The reason is that the Kindle *physical platform* is a bit of a technological blip. It basically exists because reflective screens are nicer for reading books - the competitor is smartphones and tablets. And on my Android phone, I have *both* a Kindle app and a Google books app. I've bought titles on either. I strongly expect smartphones to displace physical Kindles for the same reason they displaced Palm Pilots, they are near enough and good enough and you already have one. And once they displace kindles, the market for intermediaries opens back up.
What that means is the book industry becomes a collection of Amazon-alike data silos, whether run by Amazon or the publishers directly, that contain books which refuse to transfer between silos but are otherwise able to exist along side one another.
As for Amazon getting in trouble, I can see roughly four serious problems for them.
1. Amazon has a serious cloud crash, and spends the next few years afterwards in legal hell trying to get out of paying for it. Unfortunately for them (and us), they're big enough to be a target in cyber-war, but it doesn't take a day-infinity exploit when a disgruntled employee, cascading power outage, or major earthquake can probably do much the same thing.
2. Amazon gets sued by the DoJ for being scary, and broken up Ma Bell style (yes, that's sarcastic).
3. Amazon gets sued by the DoJ, but the real reason is that they refused to make nice with the American National Intelligence Apparatus (this for the tinfoil hat crowd. Distinguishing this one from the last one will be difficult until after the fact).
4. Something seriously disrupts international commerce, be it a human pathogen, war, a Snow Crash level computer virus, or whatever. Yes, this sucks horribly for all of us, but I think it sucks even more horribly for firms whose profits depend on cheap and fast supply chains, like WalMart and Amazon.
I wish I was as optimistic about the publishers giving up on DRM. But business people have an imperfect record of following their own long term self interest.
It does seem like a slam-dunk argument to abandon DRM: if they do, they can disintermediate and sell directly.
Interesting possible confounds: (1) they let Bezos lock up a huge number of their potential customers --- "just throw away your Kindle and buy from us on..." what? I suppose iPads work, but letting AMZN and B&N lock up so many customers wasn't clever. (2) it could lead to a game of chicken over the physical book sales.
One elephant in the room that rarely gets talked about when the big monopsonists, AMZN and Apple are discussed is customer service.
I wouldn't argue that these companies are perfect, but the experience purchasing from them is wildly better than most of the alternatives. Barnes and Noble (and the late Borders) killed almost all US independent book stores, and I can tell you from unfortunate experience that their notions of customer service are some combination of infuriating and pitiable. It's hard to imagine them surviving much longer. Consider cell phone companies (at least in the US), big box retailers (again, in the US), and airlines. The experience is simply better with these two than most of the competition, unless you can afford boutique-y alternatives.
Somehow these companies have managed to get very large without acquiring a financial framework that confuses consumer happiness with "unacceptable drag on profits."
I'm nervous about the concentrating trends, too, but there's a reason why retail consumers buy from these vendors, and it's not just network effects. The alternatives are almost uniformly bad. Maybe it's time for CEOs to dump their Jack Welch Six Sigma porn and think again about their customers.
@William
I agree with the host that DRM is key: just look at the music industry. There's no major seller of DRM encumbered music left.
Mainly though, it's not that easy. Netflix never used that algorithm they crowd-sourced http://arstechnica.com/gadgets/news/2012/04/netflix-never-used-its-1-million-algorithm-due-to-engineering-costs.ars?clicked=related_right
O'Reilly is a great point of comparison. They have done one thing that the publishers seem to have flubbed completely: I buy a copy of the physical thing, and they offer to sell me a very deeply discounted copy of the e-book.
I have often wondered why, if I am willing to buy a first edition hardcover, the publisher wouldn't offer to throw in a PDF or other ebook.
I note by comparison that this is something that many periodicals will do: buy the expensive physical subscription and you get access to the web site free.
I'd be happy to participate in an offer like this, since it gives me the nice feeling of supporting the author more (by buying the hardcover) and the convenience without feeling exploited ("what? $20 for a book I don't even own?")
Enjoyed this article a lot. I have two comments, neither exactly germane.
(1) I don't think Amazon is in the book business at all. I think they're in the customer data business. Anyone who has seen those "recommended for you" lists at amazon.com, or noticed that Amazon remembers the address of everyone you've ever sent a gift to, knows what I mean.
(2) I don't think Amazon is a villain. On the contrary. I'm an O'Reilly author. Amazon sells the printed version and Kindle versions of my books at a discount, but I just take Amazon's price to be the actual street price. What matters to me is that Amazon gives me huge publicity benefits and makes my book readily purchasable.
1) "don't leave a flank" You're so extremely, perfectly obvious to yourself that I have no idea what you mean there. I'm an imperfect person and I can't understand secret ciphers.
2) Intellectual property like a novel comes from a source that has to be nurtured, processed, treated in a continuous fashion. Sure, it's more like farming than coal mining but in the end all that remains is also a dry wasteland, if you take a profit-only attitude and suck the land dry.
Charlie Stross can survive because he's got the computer smarts and comes from a family with a long tradition of entrepreneurship. But you don't have a breathing, living literary culture with a single author, or even two or three.
Bezos isn't into monopoly or monopsonies for the same reasons as Walmart or Toyota or BP, or IBM. They have all concentrated on one specialty each and they want to dominate the world in that specialty, forever, really forever, after their founders are long dead. This means that they want their suppliers to actually survive and also have to try for quality at times.
I used to think that Bezos also was willing to ensure some kind of quality, sometimes but over the last years he's flooded the bookstore with worthless self-published titles in both non-fiction and fiction. Watching for quality means some kind of gatekeeping and Bezos has revealed recently that he isn't at all into any kind of gatekeeping. He won't abandon book sales next year but he'll drop them presto when the sales flatten. I'm hoping that his sales will flatten before he's reduced English language publishing to a wasteland of reprints and translations.
Wow. This is one of the best rundowns of the situation that I've seen, and that comes from someone working in ebooks for a relatively sizable publishing company. Thank you for this, and for the suggestions on how to manage our position. I think in one sense it may be too late to change our dependency on Amazon, but I am hopeful that the agency model won't go away (if wishes were horses, beggars would ride, I know, I know).
The difference between the wholesale and agency models is vast for us, and it really has damaged us to be stuck with wholesale with Amazon (and it doesn't even make sense! Amazon isn't buying ebooks in bulk! It's one master file that's copied!).
I'll try to advocate for this around the office.
> mobi
Yeah, but Amazon bought mobipocket reader and gutted support for the software on anything _but_ their hardware. As I'm still cheerfully reading all sorts of books on one of the last general purpose computers sold, a Sony Clie TH55, I'm at a dead end because the formerly inept but occasionaly responsive support for mobipocket is now just a huge swamp of blogspam. Amazon ate it and turned it to shit.
Charlie, I think this is generally pretty insightful about the nature of the problem, but I'm not sure you've actually got your finger on the solution.
Yes, ebook DRM is probably doomed in the long run, but it is very likely too late for that change to have any particular effect on the dynamics of this market. Ironically, the best example of this is the other big Amazon-vs-Apple showdown, over digital music. The Amazon music store launched selling unprotected high-bitrate MP3 files with the labels' blessing at the same time that Apple's contract with the labels still required them to sell DRM music. Then a few months later, Apple was able to drop their DRM as well. The upshot of this dramatic leveling of the playing field was...
...well, fuck-all, really. Amazon spent an enormous amount of money to claw themselves a 13% share of the online music market, while Apple still sits happily on a 66% share. (Google, Sony and a handful of bottom-feeders round out the remaining 21%.) And despite the presumptive portability of the files themselves, the vast majority of those files are still played on iPods and iPhones.
Sometimes getting there first with a product that is "good enough" is all it takes. In theory I should be annoyed about the various bits of DRM and licensing lock-in, but at the end of the day I can click a button, pay $10ish and have a book pop into existence simultaneously on my phone, tablet and laptop. The best that Apple and B&N have been able to offer against that so far is "kinda the same thing, only a little worse in one or two aspects." As anyone who went up against iTunes in the music business over the last decade can attest, that's not a story that gets you much traction.
As public libraries and even the world class research libraries are getting dumped and abandoned by the communities who fund them in the first place -- even when the citizens of the communities fight to keep them -- and the institutions with which the research libraries are associated in the second case --
And, further --
as back catalog print books themselves within these facilities have disappeared in collaboration of themselves with google's digitization project and amazon's distribution and control of digitized new books --
We will left very soon finding our info only on --
two very large monopolies that control it all, google and amazon, and you will have to pay for it even on google --
Unless what you need for research is on Gutenberg, perhaps --
And if --
you can afford an internet service fast enough to download, when the corps make the different tier system a reality -- fast enough if you can pay for it.
Information no longer wants to be free, it wants to be paid, and paid for through the nose of the researcher and reader, because both the publishers and the consumers were too helpless to figure out something else viable.
The future in not equally distributed and neither is the fun of it.
Love, C.
Anyone who ever thought amazon was a benign entity, has never read the accounts of what it's like and always has been like to work for them. They are worse than wal-mart, if you can believe that. Sweat shops, literally, among other horrible treatments -- and they Do Not Pay A Living Wage -- not even the minimum wage, because they know how not to.
Love, C.
Very nice rundown of the issues.
I think there's an important distinction between having a monopoly and being able to exercise monopoly power. The first is legal, the second is not. Amazon has used predatory pricing as part of a range of strategies (lock-in) to garner a large market, but there's nothing inherently wrong with that. Where it becomes a problem is if in the future they can earn monopoly rents, i.e. can set higher than normal prices in the ebook market. I'm not an expert in the area, but ebooks, particularly DRM-free ebooks seem like a highly contestable market, which would make exercising monopoly power difficult.
Absolutely agree -- not to mention it displays utter ignorance as to conditions of libraries' funding -- thanks to many factors, but none of them as far as I can see have been created by librarians at all -- they are far and away the most responsive to changing conditions their communities of any entities, whether public, government or private, as in university libraries. But they've always been starved for funding and what funding they receive is always ear-marked by the funders for physical things that have nothing to do with books, much less salaries for professionally trained people.
It sounds like my brother who rotely repeats, "if such and such private business behave like such and such government something other blahblah," when in the breath just before that he was complaining how his corp's project is completed FUed because the private business vendors they're dealing with are so FUed up.
If e-book DRM is dead, where's the DRM stripper for Apple e-books?
Yes, this is my purely selfish angle into the subject under discussion, but I'd kind of like one. As you note, Kindle customers have back doors for unlocking their purchases, and I suspect that Amazon doesn't care as long as the back doors are more of a hassle than one-click purchase. Apple should care even less (they *have* my money for the hardware), but the forces that cracked FairPlay for music and movies seem uninterested in doing anything about books.
Hi Keith,
I'd love to understand why my analogy is so bad. My local library offers me the ability to reserve books online, at no cost, and to pick them up at my local library when they are available. They have a reasonably good selection of books. The system works when you know the book you want ahead of time.
However, what they don't offer is a good discovery experience. (And this is what Amazon excels at.) I can go to the Amazon site, and within a few minutes discover new books that I'm sure I'll be interested in. The combination of effective search, good description, abundant reviews, and a powerful recommendation engine guarantees that with five to ten minutes research, I can discover new books to read that I'll really enjoy. And the process is frictionless: I can pay for and ship my book with less effort than it takes for me to log into my library account.
This combination of discovery plus low friction is what makes Amazon powerful.
None of that has anything to do with DRM.
(Yes, DRM may be doomed, but it's still mostly irrelevant to the relationship between Amazon, publishers, authors, and readers.)
The reason I bought up the library is simply to show how powerful those features are: I'm willing to pay for a book at Amazon when I could get the same book from the library for free. I think that's a relevant discussion point. If you want to break Amazon's lock on the industry, it's going to take something pretty powerful to do it when even offering the content for free isn't enough.
Hi Arthur: If you go on to read the article, Netflix does use the algorithms from the competition. It started doing so even before the competition ended. It doesn't use the winning algorithm in its completeness because of the computational cost relative to the incremental benefit. - Will
FairPlay for ebooks was cracked earlier this year. The tools are out there. HTH.
Charlie, I don't think you've read it right.
Imagine, in a fit of not-being-dicks, that the big publishers got rid of DRM tomorrow. What changes?
Well Amazon still owns the shopfront to the customer, and the books the customer 'owns' on their kindle are still locked in (for the great unwashed).
Imagine the big 6 publishers pushed their own bookstore, with books minus the DRM so they could be put onto the kindles, etc. They are still doing nothing that really hurts Amazon, since they are more steps away from the customer.
In short it's not till they STOP selling to Amazon (or charge them more, or delay shipping to them) that anything changes - and doing that doesn't really require getting rid of DRM. You can bet that Bezos would scream blue murder about being cut out, as would authors who would see less sales.
Amazon is out to remove the big publishers from the game entirely. Amazon will setup a workflow where authors can publish directly with them (already doing it to an extent) and they will woo big authors to their services. The big publishers will implode, and since they tend to be held by conglomerates, losses will be cut.
Can the big publishers save themselves?
Well, I'd suggest there is one, small, possibility. People are tending to move towards tablets for book reading, and away from eInk. Whatever some may think, the lure of a general purpose consuming device outweighs the value of reflective display. That dislocation switch gives the publishers one small chink of opportunity. If they create a reading/shopfront app for the tablets (sideload for Kindle) that offers a storefront/reader AND a 'get the eBook version of your paperbacks for free', they can wipe out Kindle. Short of that, they'd have to take the no-sale-to-Amazon route, and I think they would get court cased to death.
The best opportunity to not end up with a company store, however, is for authors to accept the big publishers are doomed and take ownership of the publishing arena. What I'm thinking of is an author-owned entity that creates (owns) a turnkey solution for an author, any author, publishing their wares. This would manage the workflow, integrated with the selling AND the author>reader CRM. In essence it would automate the tiresome tasks for a small fee - manuscript goes in/money comes out. It could also manage the up-front funding via a kickstarter type affair - although I think future potential authors are probably going to have to shoulder more of the up front risk, no matter what. Such an approach would require some big names to join to provide credibility.
The reason I think that's the best possible practical solution is that the only people who really value books are the authors and readers. Agents do to a degree, but the further you get along that workflow, the more it's just shifting watermelons. Thus it's the authors and readers that are going to shape the best solution, and they probably have to realise this and take action. Otherwise it's going to be no good in 5 years time whining that Amazon will only pay you 10% of the sale price - sheep get slaughtered.
Oh, and Apple would be as bad - they love lockin. If you had to have a big boy involved Google would be the closest to trustworthy, and even then...
#71: What prevents you from browsing for books on Amazon (or B&N, or wherever) and then ordering them from your library? I know a fair number of people who do that.
Surely not because it's two clicks instead of one?
Re publishers and direct sales: I had an interesting conversation with a textbook person from BigCo X yesterday, implying that they _are_ working on it. BigCo Y has already noted that it, and its peers, are working on a common online interface. Not all good news: My warnings about amazon were met with a response which implies the publishers aren't about to drop DRM. On the other hand, they saw Apple as enemy number one: I get the impression that apple's scorched earth approach to rights is making amazon's labour camp model look superficially attractive.
Amazon are of course capable of selling non DRM open format stuff: the money I give them gladly buys me MP3s, which is nice.
my sales are to the point where they can pay the rent. My Amazon sales are 97.7% of my total sales, so I certainly can't afford to live without them.
Bing bing bing! And that's the problem. Since your comment didn't follow this up, allow me to. You are utterly dependent on Amazon. They pay your rent... because right now they give you 70% of the sales price. Now, if they achieve a monopoly position, they can invert the percentages and keep 70% for themselves and give you 30%. Boom, your income is less than half what it was.
Before you say 'but they wouldn't do that..." I'll ask... why not? By definition in this scenario they have no viable competitors. What are you and other authors going to do? There's nowhere for you to go if Amazon is in a monopoly position. Stross can tell Amazon to, er, perform carnal acts upon themselves and sell from his site. You and most authors probably won't be in that position.
A few things: First, the existence of scatter-shot individuals hawking their own wares does not constitute a counter to an erstwhile monopoly.
Second, using yourself as an example when some of your own books are sold via amazon somewhat dilutes your point.
Last, John T Reed is not an unbiased expert in these matters, as he has a financial interest (selling his own self-published books on how to self-publish books) in providing this particular view, along with numeric estimates that seem rather inflated. I would no more trust his thoughts on self-publishing than I would trust the the real estate advise of 3am t.v. commercial real-estate "tycoons" hawking their opinions on the advantages of "no money down" real estate purchasing for the low low price of whatever they can squeeze out of you.
Predatory pricing only makes sense if you can subsequently exact monopoly rents, this requires that there be fairly high barriers to entry as otherwise the extraordinary profits of monopoly attract competitors, some of whom have deep enough pockets to outlast you. Predatory pricing is expensive so you need to be making very large abnormal profits in order to make up for the substantial losses you suffer while doing it.
One reason the competition authorities are fairly blasé about price wars is they are inherently self limiting and in the short term benefit the consumer by lowering prices. They take a much more negative view of cartels and monopolies as they directly and immediately harm consumers by raising prices and can be sustained indefinitely.
A lot of that technology already exists in the form of version control software, forum software, wikis and online, collaborative word processing software. Sourceforge is a very good example of how this might work.
What still needs to be done is for someone to code the business logic so that a wanna-be author can upload his/her manuscript and say, "Here's my first manuscript, I'll give 40% of the profits to one editor, one copy editor, one artist/layout person, and one publicist, as follows: ..." while being able to trust that the software can track these details appropriately. That way everyone associated with producing the book gets royalties and hopefully upfront payments are not required.
Ideally the software would also price the book appropriately given the author's/book's popularity and make it possible for fans to get discounts/rewards for paying into a project before it goes on sale. In other words, my first novel starts selling for 0.99, while Charlie's next opus starts at 12.99 (or whatever) with both books rising or falling in price as their popularity demands. Once the initial surge of interest in the book is done the book would move into "oldie" status with some kind of cheaper price.
I wish you will proved to be correct re: DRM being on death row.
But doesn't that outcome depend on the 70 year old billionaires who own the publishing houses being not idiotic enough to avoid committing suicide? Given that they bought into DRM the first time around, it's not clear they will be smart enough to say yes to breaking DRM this time around....
Heck, the MPAA and the RIAA are still up to their same old tricks of antagonizing their customers... they tried to push SOPA, and you can bet that they will be trying to push son-of-SOPA as soon as this year's election season is over.
So while I wish you are correct, I remain somewhat more pessimistic about the publishing houses not being able to avoid committing suicide. And if so, authors will either have to get used to living in the Amazon company town, or finding other ways to get their products out to consumers.
Hmm, sounds a bit like Economy 2.0!
(Actually maybe a bit 1.5-ish... 2.0 always gave me the impression of peer-to-peer predator micro economies coalescing into an emergent macro econo-fuck)
I'm with Theodore Ts'o on DRM. There's really no reason to believe that the publishers are going to be able to see their way to giving up on DRM. They are so used to managing a business model based on scarcity that they are simply unable to envision a business model that accepts frictionless digital copying.
For my own small part in this, I've pledged to correct anybody who says "buy an ebook" because as all of us here know, we're buying nothing.
Nice assessment of the situation. As to Amazon's business strategy, I think a big part of it comes from being born in the early years of the Bubble. The company wants to sustain a high level of growth to keep its stock value high. This means sales and growth are more important than profits, and that they have to be very concerned about Wall Street perceptions. Once you stop being a growth company, your stock value -- which depends on market perceptions of future growth prospects -- will drop. How much depends on how much real sustainable the company has.
It'd be great if DRM on ebooks actually died, but I'm not holding my breath.
Many content distributors in many industries can't get it through their thick skulls that we'd be happy to buy their stuff if priced and presented reasonably. If people buy things now, even if they could just download it, why would they stop if DRM were removed?
I have a hard time hating Amazon: they provide a pretty good service, in some cases unique. Who else will sell me ebooks all over the globe? Almost no one at the moment.
More than that Alex, there are lots of ways in which the way things are published can be revolutionised, neither publishers nor Amazon are particularly customer focused in their approaches there, I'm thinking. I'm not going to go into detail here, since the IP has value elsewhere as well, but the general model has much to offer in terms of true disintermediation terms.
Finally, a point to consider. You suggest that the book start off at a high price, and then drop. Consider the options for the reverse to happen, and what it would mean in the sales model ...
Nice to hear you talking about the Amazon epub situation Charlie. Publishing right now seems weirder and more turbulent than any time in the 30 or 40 years I've been involved.
In February I decided to go for it and figure out how to make my own ebooks, porting some titles to the EPUB and MOBI formats.
This is, as you say, something of a second job and an immense time sink. Being a lapsed computer programmer, I've enjoyed it, up to a point.
A publisher or, for that matter, my current literary agency would be willing to do the port and distribution, taking of course a certain cut of the putative royalties. An ebook being an easier sell to a publisher than a print book these days.
So what I did so far was to make two books that would in fact be hard to sell and hard to put into print, due to their excessive lenght---these are my "Complete Stories" and "Collected Essays," live on my Transreal Books page, www.rudyrucker.com/transrealbooks
I'm selling them direct as well as through Amazon and B&N. When I get my now-depleted energies together, I'll put up a blog post explaining some of the methods and gotchas I've learned about.
As for novels, sure, I'm still hoping to continue placing my novels with "real" publishers, at least for now.
An upside with ebpub is that your book isn't so likely to become unavailable. Also, as mentioned, the book can be as long or as short as you like. And you can include color illos.
Side remark: One new gotcha I just noticed today is that Amazon charges $00.15 per megabyte of your book's length per sale, this comes off your royalty. So for a ten megabyte book (which might include, say, a hundred illos), that's $1.50. So you need to charge a bit more for the heavily illustrated volumes.
Of course the big box retailer can't keep up the dumping forever, but if losing a few million dollars is the price of driving all the local competitors out of business, then they will have many years of profits drawn from a captive market to recoup the investment. (Meanwhile, helpful laws allow them to write down the losses on this store as a loss against tax, but that's just the icing on the cake.) Once the big box store has killed off every competiting mom'n'pop store within a 50-mile radius, where else are people going to shop?
I have read many descriptions of this phenomenon, but are there actual, documented cases of this happening on a wide-scale? Or even an individual scale?
(A side note: minor typo in bold, possibly: did you mean "competing?")
I know people have brought up Steam several times. The interesting thing about Steam is that they don't always have the best price for "Steamworks" games. Case in point this RPS weekly feature [url]http://www.shacknews.com/article/73324/weekend-pc-digital-deals-the-darkness-ii-for-1249[/url]
So maybe there's a way for publishers to sell on the amazon platform (or any platform) by rotating deals. They could do something wild as well, like send in your physical copy of a book and for a reasonable price get a non-DRM E-book (probably a pipe dream) but it would help the post office too :)
Sorry, guess I don't know the code for posting a url.
Mr. Rucker, I've enjoyed "Complete Stories" quite a bit. Thank you for doing that.
Chris: different industry sectors. Textbook publishing and trade fiction publishing bear about the same relationship as building turboprop short-haul airliners and freight locomotives.
Having said that, this in no way invalidates what you say about textbook publishing.
Your analogy fails because libraries don't have the money to compete with brick and mortar bookstores, let along Amazon's just-in-time delivery model. There are a number of reasons for this but chief among them is taxes. All those free services you love aren't free. They are paid for by local and/or state taxes, depending on the library. As you may have noticed, we've been cutting taxes here in the US for the last 30 years and now it's reached the point where some cities can't even keep the street lights on or staff fire departments, let alone fund services like the library.
Libraries are caught int he middle of a perfect storm of bad policies and trying to do the best they can but they need funding (in the form of taxes). The ALA has zero clout when it comes to publishers and we're just observers in this particular fight. Once there's a ruling we'll adapt the best way we can, so long the cost is minimal.
Getting rid of DRM would allow libraries to invest more in ebooks as it would make cross platform lending possible. But the publishers don't want that and neither does Apple or Amazon. The only ones who do are the customers/readers and some authors. And they are the last to be considered.
Consider the options for the reverse to happen, and what it would mean in the sales model ...
Hi Ian,
Perhaps I didn't communicate very well, so let me make my idea clear: John Smith puts his first book, an S.F opus titled Surfing the Higgs Boson up for sale. The software knows he's a new author and therefore prices his book at 99 cents. Fortunately, John's a very good author who hooked up with the right publicist, editor, and artist, so he sees decent sales. The site software determines that the sales figures justify a higher price and increases the cost to $2.99.
Surfing the Higgs Boson gets good reviews from John Scalzi and Wil Wheaton, so sales increase dramatically and the e-book site increases the price to $5.99. The author gets a movie deal and the resulting publicity drives the price to $10.99. Once Meryl Streep announces that she'd like to play the female lead, the book becomes a best-seller and the site software prices it at $15.99.
Once the hullabaloo dies down, the book goes on the backlist at $3.99. Now that he's a best-seller, John Smith's next book goes on sale for $9.99...
I'm guessing you live outside the UK.
Visit virtually any High Street in the UK and you will see nothing but chain stores. Heck, I could show you the empty shops round the corner from me that once housed family businesses.
And as a for the supermarkets - their tricks with land banks alone are frequently enough to shut down the competition.
(For an example - well lets name one, the Swan Centre development in Yardley Birmngham nuked the local business, and last I looked the damn Tescos hadn't even been built - they'd just bought the land and demolished the old shops).
It's not just the booktrade. The whole economic system seems to be designed to encourage monopolys, unethical practices and gouging. Certainly it penalises those businesses that don't.
Rick - I agree completely. Did you think I was somehow arguing for Amazon's postion? No way. I'm completely in agreement that having Amazon in charge of the entire marketplace is bad.
They just happen to do a really good job of creating that marketplace, so it's going to be a challenge to beat. It's not just the pricing, not just the monopoly position, and not just the amazing user experience, but all of those things together.
It's always astounding to see what grave misconceptions about Libertarianism are still in circulation.
Say, Mr. Stross, how could we, who strive after universally improved social cooperation, possibly exhibit social Darwinism? Considering your earlier, fairly specious comparison between the England of Dickens' time and our proposed ideal state I can't help but think that you let ideological bias cloud your view.
I would be delighted to see another one of your essays on this topic, though, as I figure this would be the perfect opportunity to disabuse any misconceptions.
~Bieser
Dave, #71: I'd like to say "no, of course I'd just go get it from the library", but unfortunately it's just not true. If it was two clicks instead of one, I'd do it. But it's a login to another web app that won't keep me logged in, plus some tricky searching because the ISBN numbers are never the same, because the title search doesn't work well. It's ten minutes of friction.
My background is in web design, so I know pretty well the cost of any friction. The reason Amazon defended their one-click system so long is that it's worth billions of dollars in incremental revenue.
As an author, I do like to buy books too. I am supporting the author after all.
And please, I'm not trying to slam libraries here. I understand the funding problems, and I know that the vast majority of libraries get their software from one of a handful (two?) companies that provide it. My point is not that libraries are doing something wrong, but that Amazon is providing a very good customer experience, and that's the biggest challenge we would face in trying to replace their monopoly/monosoly.
Alex,
Yep, there's also "bid to be one of the those to get the first edition a week early, 5000 places only", or individual prices depending on customer specifics (buy lots - you are an opinion former - get it cheaper), or "buy now, goes up to $10 tomorrow", or 'money off for spotting a typo', or indeed having the 'backlist' price actually being higher again, since those buying will be those who specifically want it.
The whole thing gets much more interesting and adaptive in the ebook world - different authors could employ personalised, customised and targeted models specific to their wants - but first they have to grab back control.
The whole idea could also be applied to music. I've got a day job and a side project already or I'd be coding this stuff right now...
"grave misconceptions"
My mind boggles.
Perhaps you could point to a working libertarian utopia so I could understand how such a wonderful system works?
Otherwise, it's no more meaningful than those who complain that they problem with communism is it hasn't been tried properly...
Thanks Charlie for this excellent explanation of what Amazon is up to and what publishers could do about it. You may even find yourself being quoted in court by the Apple/publisher representatives.
To which the judge will reply with the legal equivalent of "Well that's nice but it's got bugger-all to do with this case so shut up and sit down." Amazon haven't been colluding to raise prices, so they're not under investigation no matter what else they've been doing. At best, some minds within the DOJ may start thinking about what else they should be looking into when this is over.
The DOJ investigation is also going to make Plan C no DRM tougher. When Apple first dropped DRM on iTunes music, prices went up. (And yes there was no technical reason to do so - music execs compensating for "piracy" ?) Not an encouraging precedent if the book publishers try to remove DRM all at once.
And suppose Amazon don't remove the DRM even if the publishers want it?
Great analysis.
I only bought a single Kindle book before I found a way to remove DRM. Now my standard practice is buy a (Kindle) book, remove the DRM, export it to epub, and then upload it to my Dropbox account. Then I can read it on any computer or device I own - Mac, iPad, Android smartphone, Nook tablet, etc. And I can reasonably expect access to it for my lifetime, since ePub is an open format.
Consumers will be in for an unpleasant surprise when they try to switch away from the Kindle platform, and realize that DRM is locking them in.
I learned my lesson with DRM music from Apple. I love Apple, but hate DRM, and realize they had to use DRM to get the music labels to cooperate. But until they dropped DRM, every album I bought, I burned to CD and then ripped back as MP3 so I actually owned it free and clear.
And by the way, although I like the iBooks app for iPad, I have only bought a single book from iTunes - as soon as I realized there is no known way to remove the DRM, I was done buying ebooks from them. So now I often read my "Kindle" ebooks on iBooks on iPad as ePub, and that works very well. But I'm not locked in anywhere, which is what I demand.
I just see ebooks as a little behind that same curve. It can't change soon enough, to dropping DRM.
And by the way - notice no mention of piracy. I don't do that, i.e. "sharing" it with others. But I have the right to remove DRM from any ebook or other media I own, for my own use.
Charlier @50 & Patrick @46. Eloquent non comment.
(maybe this is trading one evil for another...)
Just idle curiosity - how much effort would it take for Bing/Yahoo/Google to scan their page index, figure out "this page has a DRM-free book for sale", put a standard wrapper page around it, then a soup-to-nuts site with a storefront, reviews, buy with your Google Wallet, samples, a "customers who liked this liked"....
Okay, so that's "Google Play", but with several missing parts - the biggest of which is only having partial catalogs from some of the major publishers. Include the self-pubs. The books that the publisher didn't buy and are sitting on the author's web site. The "hey my rights reverted back to me and I've redone them and am selling them for $5" gals. And, like you said earlier, Charlie: no-DRM. Your book has DRM?
Google "Requiem 3.3 drm Brahms"
(continued since I hit enter too early)
Your book has DRM? Oh, sorry, we can't sell it. We will watermark, but no DRM. Then include an easy way to load them onto your ereader (including the kindle), or your tablet, and (hopefully) voila.
I think it's only fair to mention that when internet shopping was just starting out, a LOT of companies tried there hand at it. And they were bad. Really, really bad. Amazon was one of the only (possibly THE only) company that created a online shopping experience that didn't absolutely suck. And IMHO, Amazon is still the nicest place to shop online. I will actually start to try to buy something online, and then give up in frustration because I can't find it on amazon, and everyone else's shopping site is so bad by comparison. So give them some credit for innovation please. They made a darn good shopping site, while competing with a ton of other companies trying to do the same.
Good points about ebooks and DRM though.
Interesting as hell, but the only time I got into ebooks was when I figured out that ******** allowed me to get several gigs worth of ebooks.
Most of which are madly out of print, or ridiculously overpriced (there's a few authors who only publish out in TPB, and, well, ahem, I won't share my opinion).
DRM is already pretty much dead. I have more books than I could read in a lifetime, right now. 10 gigs?
I do still stick to buying the books I enjoyed. Nice to be able to lend out, and supports the author.
"business crap is much simpler than the goons in MBA programs would like us to believe." -- Yes and no, IMHO.
I know that an MBA is trivial to earn compared to a M.S. or PhD in Mathematics or Physics or Biology or Computer Science. I know because I ghost-wrote two MBA dissertations for Fortune 100 executives, from a major Business School. Grey area ethically, but they could NOT use the degree to get a job for which they were not qualified; they had the big bucks job already. I was a writer; money flowed to me; I learned what a MBA was, without paying tuition.
In The Closing of the American Mind, a 1987 book by Allan Bloom, he says (I paraphrase from memory) that an MBA is not a genuine academic degree, but pretends to be one, with the sweetener that it allegedly increases your income. By analogy, he says, imagine a degree in Sexology, that allegedly gives you better orgasms.
However, real business complexity emerges in earning a DBA -- Doctorate in Business Administration.
I think that Charlie's right about Amazon to first approximation. It is the second-order effects that we don't yet know, and that's DBA-level analysis, or professional Mathematical Economics.
There's another possibility, instead of jettisoning DRM the publishers use the threat of doing do to force Amazon into giving them better terms. Amazon still makes lots of money but the publishers get to keep a slice. Less apocalyptic but it doesnt really impact customers (us) very much.
I think Dean Wesley Smith and C.E. Petit (Scrivener's Error) have taken swings at answering that question. It's good exercise to go back through their archives and
One correction I may make, having been there not long after the company came out of the garage. The decision to sell books was arbitrary and based on their regular shape and predictable weight, in addition to your "virtual" catalog theory. As company lore went, Jeff was driving from NY to Seattle in the same Civic he used for years into Amazon's existence, trying to think of what he could sell on the web.
At some point, the scales fell from his eyes and he realized the advantages of books. I'm sure there's a monument in South Dakota somewhere.
Keep in mind where the web was in 1994. This was a long shot and required a bigger investment than today but not as big as five years later.
The other thing to keep in mind is that you're thinking too small. This isn't a conspiracy about reading material. I submit that Jeff, who is smarter than all of us (I went to AMZN after working at MSFT, where I had the scary experience of meeting Bill), is working at a level one or two levels above where even the most paranoid are looking.
I wouldn't be surprised if Jeff's secret goal is to achieve Singularity in space by 2030. That isn't my guess, but that's the scope you should be considering.
"Amazon has the potential to be like that predatory big box retailer on a global scale. And it's well on the way to doing so in the ebook sector."
Potential is not actuality. If Amazon engages in predatory pricing, it should be prosecuted for such. That is against the law.
"It was unwise to give the appearance of collusion to establish a price-fixing cartel"
Clever of you to downgrade the accusations, but in point of fact DOJ appears to have a strong case that publishers were in fact engaged in collusion, which is illegal. And, in point of fact, carries potential criminal penalties. They should count themselves lucky that DOJ has chosen to pursue purely civil remedies.
So let's see. Publishers have engaged in an actual conspiracy in violation of antitrust law. Amazon might do so at some indefinite point in the future. Goddamn, Amazon sucks massive time!
I'm no fan of Amazon and its penchant for DRM, but someone broke the law here and someone else didn't. Trying to prove how someone who didn't break the law did break the law is bullshit. You should shut up about that.
I think you might be missing the middle. That is, we have the USA at one extreme, and the USSR at another, and yet there are a great many successful industrial economies which take a middle path. Germany, for instance, has laws on worker representation on company boards. They're not collapsing into chaos from that. There are different systems of paying for healthcare, different levels of regulation on banking, and all these systems, when looked at with a stranger's eyes, can look rather frightening.
I am pretty sure that, under the American system, I would be bankrupt and dead. I could be wrong, I am looking from the outside.
Is the typical American any more likely to be right about other countries? It's easy to point fingers at the Soviet Union, because their system lost. We don't have that indicator for other industrial alternatives.
Does the long tail really exist?
It gets argued about, thats for sure. I've seen claims both ways. It's a selling point for Amazon that you can find the obscure that might never appear in any physical bookshop. Some of it is good though specialised, and other stuff is just rubbish: we're seeing that pattern with ebooks. At what point does Amazon decide they can cut some of that tail off?
The ideas of ownership and of control overlap. It's worth remembering that there are a lot of variants short of complete ownership, but most of us never encounter them in our lives. Many of us rent homes, rather than buy them, but we make a single payment for an ebook, and that biases us to ownership as the status.
A library where we paid a fee for each book, that might be a model that we could handle. But I think the publishers might struggle with that. They come close with their attempts to limit how a library uses an ebook, but for it to work the "library" has to charge the reader. It needs new thinking all through the chain.]
There are at least two sides to how Amazon appears. For the customer, they're pretty good. You can find what you want. order it, and it gets delivered.
I've looked at Amazon as a prospective ebook seller. They distribute from Luxembourg and exploit EU rules to minimise the tax they pay. But they pay me from the USA and embroil me in US tax law. They're acting as a US publisher, and the overheads in dealing with both the IRS and Britain's HMRC are intimidating, for the likely income. Charlie gets a payment from his US publisher, and has to go through similar procedures, but he is dealing with sums counted in kilobucks.
If I felt my ebook would earn kilobucks, I could give you the link for it now, but from my point of view as a potential supplier, Amazon are pretty ugly.
Two different viewpoints on the same company, two different answers. Charlie isn't somebody buying books, so what a customer sees—easy searches, and reliable payment and delivery—is secondary. Anyone who retails books has to provide that. Any author wants to sell his books to a distribution and marketing system which doesn't rip him off.
I could say the same about Anarchism. It was, in 1920s USA, something of a political bogey man. And there were certainly individuals who called themselves Anarchists who fit modern definitions of terrorist.
But it is a rather broad label encompassing some rather different philosophies with some common roots.
The impression I get is that Libertarianism and Anarchism both depend on a respect for others. They both need a means short of violence to resolve disputes. And neither can work in the environment that has arisen in the USA, where the judicial and legislative systems have been corrupted by the greedy. Then you see a few who call themselves Libertarians, who worship at the altar of Ayn Rand and exhibit an inability to see others as people which is typical of a young child.
My liberty should not imply your slavery, but that seems the unavoidable outcome of Libertarianism in the current USA.
My first ebook reader was a Sony PRS 505. Lving in austria I bought my ebooks from Waterstone. I was forced to Amazon when waterstone (and the UK publishers) decided not to sell any ebooks outside the UK. As there arn't many other alternatives for english ebooks to AmazonI didn't have much choice.
I invest about 30 € per month in ebooks and I always remove the DRM from the ebooks I buy. This is the reason why I also don't buy any ebooks from Apple. Besides I enjoy reading my books on epaper.To be honest since I own a kindle the probablity for me to buy a book instead of getting it from alternate sources has gone to nearly 100%. What Amazon gets right, as Apple got it right for music, is the ease in getting new books and the unobstructivness of the DRM scheme. I can read the ebooks on my kindle, Ipad and iphone without haveing to worry about the DRM.
Whenever I can I'm buying my ebooks DRM-free (Baen, Angry Robot). But when the book in question is from a big publisher mos likely Amazon is the only option for me. It used to be Fictionwise, or Diesel but not anymore. Why? Because of the OTHER crippling factor called "geographical restictions". I can live with DRM (let's not get into details why or how ;-)). But when every non-Amazon ebook seller says that I cannot purchase book X because I have not the privilege to live in the USA I have no choice. Even at Amazon not every book is available for me (but more and more are), and those which are have their prices inflated by the cost of "free wireless delivery", but at least they are aware that world does not end on USA border.
So Amazon may be The Source of All Evil and Jeff Bezos - The Devil Incarnate, but as long as they will be the only ones selling me ebooks I will be buying from them. Plain and simple.
I've never heard of you or your books.
But I'm glad you are making a living.
This DRM nonsense is exactly why I only buy e-books from Baen Publishing directly. No DRM on any of their e-books and they take into account when pricing that selling an e-book does not require the purchase of paper and ink, a major expense when publishing physical books. They are formatted for most e-book readers and are even available as RTF and HTML files that can be read on any computer in a word prosessing program or web browser. I absolutely refuse to purchase any e-book priced the same as its hardback counterpart. And since their e-books have reasonable pricing, I can preview them before deciding if I want them in my library of physical books. And I do own many of the books in both formats. More publishers should follow thier example of using e-books to drive their physical book sales.
Stopping doing something stupid is really difficult for companies or organisations or governments, and only slightly less diffciult for individuals.
One day we may learn to be better at it.
DRM, MPAA, war on drugs, Tory economics, whatnot.
The scientific journals are a different market, I think, but the current row of scientists (and medical doctors etc) versus Elsevier et al and the evolution of PLOS One and other journals where the payment comes from part of the research grant rather than from the (library in which is sitting the) reader could be presented as contravening Yog's Law. And probably will since everything anyone can think of against it seems to be being passed around in an unedifying Cnut-like effort.
But actually the money flowed from the funding organisation, the grant-givers, _toward_ the authors, before being disbursed.
Self-publishing by sicientists is another collection of problems.
That's what Microsoft tried to sell - a word-posessing program.
(sorry - not picking up typos, it seems germane to this argument, perhaps it was subconscious)
It IS about DRM. Amazon's proprietary .azw file format is not an open standard and can only be read on the Kindle. What is less well understood is that although Kindles can read the standard .ePub and .PDF formats, they can only read ePub and PDF files without DRM.
What this means is that anyone who reads ebooks on a Kindle is locked in to the Amazon system - not only can they not (legally) read their Amazon books on another device, they can't read DRM'd ebooks from other suppliers on their Kindle. So it's all very well for publishers and others to bleat about how terrible it all is that Amazon have a monopsony, but as the article states, this is a problem of the publishers' own making.
Getting rid of DRM would allow libraries to invest more in ebooks as it would make cross platform lending possible. But the publishers don't want that and neither does Apple or Amazon.
The real roadblock wrt. ebooks in libraries is that the USA does not have a Public Lending Right framework. Nor, given the way libraries are [locally] funded is it likely to get one, which means publishers will continue to see libraries as cannibalizing direct sales for the forseeable future.
(Note that editorial folks know about and value libraries because you don't end up in that job unless you were a voracious reader as a young 'un, and you don't end up in that job if your goal in life is to get rich. But big publishers are subsidiaries of large corporations run by bean counters who don't necessarily share these values and, even if they do, are required to prioritize the bottom line.)
Oh, and even if the US enacted some kind of PLR scheme, it would need to be funded, which brings us round to the library funding problem again.
Which is frustrating, because the advantage of a PLR scheme for ebooks is that it would allow libraries to reduce the amount of physical space needed for some physical books -- most likely the mass market fiction collections -- and focus their physical floor space on reference collections, community computing services, and other valuable activities. But I digress.
Shorter version of my thoughts on libertarianism (which are not new and have taken some years to gel):
Libertarianism, like Leninism, is an attractive, internally consistent ideology which provides a prescription for achieving a utopian society populated entirely by frictionless perfectly spherical human beings.
Lenin and his followers tried to achieve their goal by, well, the political equivalent of chopping off all the spiky extrusions and compressing people into vaguely spherical shapes. We've seen how well that worked, and most of us said "no thanks". The trouble with Libertarianism is that because we don't have a clear, recent historical example of a Libertarian nation built on the same pile-of-skulls methodology, Libertarians can apply the "no true Scotsman" argument when defending their fundamentally broken model of human behaviour. Which is why they're so tiresome and persistent.
TL:DR; don't trust ideologues who come bearing attractive theories that over-simplify human behaviour.
I know @42 has already been well beaten up upthread, but I just have to ask: Has anyone else heard of the world-famous multi-best selling author "Rawlings"?
(Here endeth the sarcasm)
Two points.
1. I do business with some of the big six; it therefore behooves me not to pre-judge the outcome of an on-going lawsuit against them. Hence the circumlocution. If you carefully read my words you'll note that I am not offering any opinion as to their guilt or innocence.
2. You do not, ever, tell me to shut up on my own blog. Automatic yellow card. Do it again, and your ass is banned.
Charlie,
How does the UK PLR system benefit the publisher? I know payments go to the authors. Do they also go to the publisher? If not, this could be one reason for the publishers attitude towards libraries and eBooks.
Frank.
The UK PLR system doesn't benefit the publishers, true. In an ideal world, this would be addressed.
Alas, that's not going to happen under the Tories. They've axed the PLR agency, reduced the budget for payments to authors, and going by my 2011 PLR payments, UK library loans are down 30% from 2010-2011 -- probably due to library closures due to central government cuts.
Please actually talk, and listen for a change, to actual libertarians. You have made some hateful remarks that show your ignorance.
Whenever accusing whole groups of people of venal intent, based solely on holding political or economic positions you disagree with, consider it may be a sign of your ignorance and not their evil.
Scott, I regularly chew over politics with a local libertarian[*], in the pub, every week. I know plenty of libertarians, have been shooting with some of them, and I'm not accusing them all of venal intent: I'm accusing them of having an ideology based on a fundamentally broken model of how human societies work.
And don't get me started on Objectivism, which is to Libertarianism as Pol Pot's happy fun followers were to bog-standard vanguard party Leninism.
[*] This is Scotland; he's the only native-born libertarian I know here. If he'd been born in backwoods Texas he'd be a doctrinaire Little-Red-Book Maoist.
Yes, and I would add to that that the current crop of international publishers are led by bean counters who haven't bothered to look at statistics correlating book sales and the presence of well funded public libraries with tons of books in them.
Decade after decade the statistics showed that towns / cities with large library systems and a regular input of "fresh" books were towns / cities where book sales were the greatest and prosperous bookstores were numerous. Towns / cities with small or nonexistent library systems (regardless of the level of income of their populations, since there were rich suburbs who opted to keep libraries out in order to keep their property taxes low) were also the places where book sales were the lowest. Readers would discover a book through a library and then want to own it, or they would discover it through a friend who borrowed it from the library (even if they would never set foot in a "stupid" place like a library)and then want to own it. Libraries created a reading environment in any community they served.
Before the rounds of publisher fusions and buyouts by huge media companies the North American publishers were run by people who knew all about readers and reading. They knew that libraries weren't competitors to bookstores, but an integral part of the book buying environment. They actually _courted_ libraries. Most of the large North American publishers had a special department for dealing with libraries in general and library systems in particular, offering them discounts, advance review copies, etc.
The current attitude of big publishers towards public libraries is insane.
You are correct. I should also note that second hand bookshops also correlate with readers. (Mostly with readers who are too poor to buy books new, but who are enthusiastic enough to want to buy books. Like, oh, my 14-year-old self ... and s/h bookshop customers who get jobs that give them a discretionary income usually move on to buying new books by the authors they like.)
The point you omit is that the big "publishers" aren't publishers in the traditional sense ("companies that live or die by publishing and selling books") but are long-established cross-media conglomerates where the top levels are so divorced from the street-level view that ... well, try to imagine Mitt Romney hanging out at your local library or haunting a second-hand bookstore, then imagine a boardroom full of his ilk.
That's quite fascinating, and matches everything I've heard about him from other sources.
(It also creeps me out a little, because I find his moral framework -- to the extent to which it is expressed through the company he has so successfully built -- abhorrent.)
Not entirely sure what incorrect positions Charlie holds on libertarians...
When one of you can either show, or explain how such a society can work with real human beings I, for one, will stop being snarky about it.
"... well, try to imagine Mitt Romney hanging out at your local library or haunting a second-hand bookstore, then imagine a boardroom full of his ilk."
I can't even imagine Mitt Romney sitting down and reading a book, not a single one. The possibility that he would read two in a year or go to a bookstore (or have a flunky go to one for him) boggles my mind.
http://slog.thestranger.com/slog/archives/2011/11/30/mitt-romney-reads-two-books-a-year-apparently
I would also think the same of the members of cross media conglo boardrooms.
The only billionaires I can think of who actually set time aside in their schedules to sit down and read books are Bill Gates and Steve Jobs.
Charlie, in your FAQ you recommend that people who want to buy your books search Amazon for them. Is there another online retailer you could point me to that sends a bigger cut of the money your way? I'd like to pre-order the new Laundry book, but would like to avoid Amazon if I can. (I live in a town with no bookstore, I don't drive, and I don't work near anywhere near a bookstore either. So my options are kind of limited.)
It would help if you could tell me which country you live in.
Perhaps the functions of publishers need to be disaggregated, at least in discussion if not in reality.
There's the administration side of things, which you've estimated would take 0.5 of an administrative type person for 0.5 of an author, and which others on this thread have suggested could be done by fairly small teams of people for small groups of authors. That's probably a reasonably solvable one, in any case.
There's the risk management side. Assuming that the major risk is that the book doesn't sell (rather than cost overruns), that can be solved with something like Kickstarter. The traditional publishing way could also be separated out, or at least spelled out: an investor buys out a fraction of the future income stream of the book. Cash for equity. No need to entangle that with all the other things publishers traditionally do, at least in principle.
There's the discoverability and gatekeeping function, which is hard, but probably solvable given the Internet. Reputation systems are the Next Big Thing, after all, and have been for years if not decades. The biggest danger may be a tendency toward monopoly / oligopoly effects, as with the scientific publishing system (where their gatekeeping role now seems to overshadow their role in disseminating the results of scientific research), but that's by no means an inevitable outcome.
These are all rather off-the-cuff suggestions, but I suspect in any discussion of the future of publishing, it's probably better to disaggregate these aspects (and possibly others) rather than treating publishing as a single, amorphous blob. In the long run they will probably re-aggregate, but quite possibly in a different configuration.
This is the approach taken by Barry Eisler, a spy novelist who famously walked away from a $500k contract from a legacy publishing house to self-publish. In the end, he didn't self publish, Amazon's new publishing arm picked him up. But he's decided that, in his case, the various functions publishers provide - editing, copy editing, cover design, publicity - are things that he can do better if he hires contractors. Eisler himself is probably an edge case, but his view of disaggregating publishing is a very smart one.
D'oh. Should have said, I live in Scotland. Thanks!
Again, that's only one aspect. What about the other two I mentioned? What about the commercial risk, did he just carry that himself? How about the discoverability and gatekeeping function?
Well, if you're in Scotland, why not ping Mike at Transreal Books? It's the only real SF specialist bookstore in Edinburgh (or Glasgow -- unless you count Forbidden Planet), and Mike can arrange to get me to drop in to sign books before shipping. Or, if you're visiting Edinburgh, you can find it next door to Greyfriars Bobby!
> Imagine, in a fit of not-being-dicks,
> that the big publishers got rid of
> DRM tomorrow. What changes?
Pretty much nothing, I expect.
*Most* of the casual readers I personally know buy a new book, read it, and then give it away or toss it in the trash. Reading the same book twice isn't on their radar. (and a majority of those people only read new books; they wouldn't touch a used book with a stick)
If their locked-in reader device stops working, all they've lost is the book they are reading at the time.
If you both read books more than once *and* keep more than a handful of books, you're out there on the edge of the demographic curve with people who talk to giant invisible rabbits.
If he's getting $0.5M advances, he's very much in the 0.1% (or even 0.01%) at the top of the greasy pole -- that level of advance yells "New York Times top 10 bestseller". In which case, the risk calculation is very unusual.
My thoughts exactly Spriggana. I use a Samsung tablet for ebooks with quite a few different readers including kindle loaded. I have a large ebook collection, however the only company I 'buy' from are Amazon, because they are the only ones that will sell to me.
I'm quite happy to support the big 6, but they have to start selling to me first.
I think Charles Stross is right on the money when he says that a lot of people don't realise the potential threat Amazon represents.
It is clear that the intent of Amazon is to establish a monopoly and to also be the only market for the suppliers of books -- being authors and publishers. What other goals could they have? Without the publishers in the equation, where is there any competition in terms of royalties and advances? As an author, Amazon makes you an offer, and all you can do is accept. Yes, arguments can be mounted for self-promotion and self-publishing electronically, but does the average book buyer trawl the internet for these publications at present? No, because time is a precious commodity and Amazon provides the largest and easiest to navigate interface. And don't underestimate the desire people have to store all their books on one interface. It's the equivalent of having one bookshelf in your living room, rather than three piles of books in different rooms. This in itself creates a 'switching cost' for consumers to move to another platform. Amazon already have a huge first-mover advantage, in that they've already conquered the ebook marketplace by being the first to get in.
And if authors aren't being paid, then the quality of writing across the board will fall. It's naive to believe otherwise. You only have to look at the proliferation of self-published and barely edited titles on Amazon at the moment. At the very least publishers provide a 'signal' to me as a customer that someone has read through the manuscript to ensure the basics of grammar and characterisation are in play.
I firmly believe that a big factor in the explosion in ebook sales is due to the artificial price reduction by Amazon. It's not a simple case of books suddenly becoming digital because of the ease of using a digital book. The digital books are often cheaper, and this is part of the reason for the explosion in ebook sales. If you look at the quality of the kindle editions, the quality of the editing is almost always lower than the print editions, in some cases dishearteningly so. Cheaper ebooks have come at a cost, and one of those costs is the average fall in the copyediting of the electronic product. Many of the ebook editions appear to be direct scans of the print edition, with no further editing to remove glitches from the transferral process.
It's not as simple as predatory pricing and a supermarket comparison, because Amazon is also establishing a platform and a format -- the Kindle. What they are doing are creating barriers to entry at the same time as squeezing out the competition. A proprietary format creates a switching cost for a consumer. They can no longer use their cosy App bookshelf when they switch to a competitor. The Kindle becoming the standard handheld reader creates another barrier to entry, because it is designed for use with the Amazon interface. Hence the one-click purchasing and instant wireless downloading. Once the barriers to entry become insurmountable, it becomes unfeasible for new players to enter the market. A new player has switching costs to contend with (they have to entice people away from an established product), they have to overcome Amazon's first mover advantage (for example their massive brand name heft in online ebook marketing), they have to overcome the fact that the established format and hardware are Amazon's.
What all this means is that authors and publishers will only have one market for their product. Any price offered, they will have to accept. Who wants to be a full-time writer in that world?
And the more time passes, the more Amazon becomes the dominant player. Why? Because people like to collect books. The larger a person's bookshelf with Amazon, the greater the switching cost. At present, you don't really own the ebooks you think you own. They're only licensed to you.
For a long time I've believed removing copy protection to be opening the devil's floodgates (even back as a kid when all my friends were pirating Amiga games while I was buying them), but I think Stross has a point. I don't think it is a complete solution, though. I think Amazon have created a perception that ebooks are cheap through their aggressive pricing. Their prices undercut their competitors for the most part, copy protection or not. I suspect that the ebook price will creep up once Amazon have the barriers to entry they want, but I believe that it is on the supply side, dealing with publishers and authors, where they will be most dangerous.
Durand
Maybe its time to abstract to a new layer of ideology - an ideology that creates ideologies suitable for the messy moment.
In what way is our model broken? And why should it mutate everyone who adopts it into avaricious, social Darwinist "robber barons," as our detractors so often claim?
~Bieser
It's easy to discard some principles if the means to the end requires it and The End is big enough. I can quite imagine him thinking: "FFS, its only *books*"
Same can be asked of Marxists. That is, "true" Marxists.
I agree that the big publishers will either drop DRM or die. I disagree on which one they're going to do.
Well, yes, although the stakes are presumably also higher.
I guess I'm most interested in the last aspect I mentioned — the discoverability and gatekeeping function — because there are a number of ways reputation systems can go wrong and no obvious simple ways to do them right. Even the wrong but profitable ways seem to be rare, and what examples there are seem to be more historical accident than deliberate design. Maybe we're all asking the wrong question...
Obviously, this too would be very unusual in the case of someone who's getting $0.5M advances; indeed, that would seem to be the easy case.
As far as I can tell, Libertarians idealize the idea of rights excessively, but have no corresponding ideal of responsibilities. While I have run into Libertarian idealists, none of them have confronted the question of how a society which puts rights up on an altar could be gamed by those who do not have an ideal of responsibility. We're watching this happen in the US right now, (Bill of Rights without a Bill of Responsibilities) and it's quite ugly.
Maybe he's the poster boy for Amazon's company town.
On the other hand, the publishing industry is ripe for disintermediation - consider the chain of author -> agent -> publisher -> distributor -> retailer. Someone who can cut a couple pieces out of the chain, lower prices, relate intelligently to libraries, fans, and the used book market, and also put more money in an author's pocket will do very, very well indeed.
Unfortunately, I don't think Amazon has a good idea of the community of readers/writers, except as viewed through the abstract lens of statistics and used to sell more books right now rather than develop a long term plan which will encourage writing, reading and purchasing of books over the long run.
Thanks for the primer..Now I understand the process of checking out an ebook from my local public library. I find it strange that when ever the book due date is near, instead of getting email reminders from the library, I get them from Amazon. When the book is due, I get a soliciting email from Amazon asking me to purchase the book I checked out of the library and just finished reading! The process for renewing is kinda hokey. I have to wait until the book is due instead of renewing it a couple of days before it's due; but it still saves all my notes and bookmarks.
In the end it may be simply the author and retailer that survive.
Unfortunately some of those chunks of chain are actual sub-assemblies; a manuscript (what an author produces) is not a book (manuscript with editorial input and layout). An agent is optional ... if the author is able to do the agent's job, i.e. handle contract negotiations with publishers. (I would really advise would-be authors against doing this, however, unless they have a background in contract law and publishing. They'll come off worse.) The publisher -> distributor -> retailer chain can be collapsed only if the publisher is geared up for direct retail sales. And so on.
> You suggest that the book start off
> at a high price, and then drop.
> Consider the options for the reverse
> to happen, and what it would mean in
> the sales model
"If you want it, you pay the price?"
The only hardbacks I buy are engineering or other reference works, and since I've found quotes in later works often seriously misrepresent information in earlier works, I buy a lot of out of print or antique books. Once anyone slaps the word "collectible" on something, the price jumps substantially.
Paper and ink is such a minor expense. You would think otherwise, but no. For a 2-color hardback, a college chemistry textbook (so closer to 8x11), the PP&B ( _just_ the price to physically print a book) was $3.65 (granted, this was a decade ago). So for a one-color Mass Market, I'd be astonished if it were more than 50 cents. the big costs are the cost of a company to pay its people, including the author, editor, IT guys, accountants, HR, etc.
The true price savings are from getting rid of the middleman(the bookstores), from a thinner distribution network (including sales people convincing bookstores to carry it), from the lack of resales, and from economies of scale because of higher sales. Which is why the iTextbooks were going to sell for $15, and that's WITH apple's 30% cut.
@88:
> I have read many descriptions of this phenomenon, but are there actual, documented cases of this happening on a wide-scale? Or even an individual scale?
--
[waves hand] Over heeere!
I do get all that. Obviously the agent is necessary as long as the publisher sets out to write a contract full of snares for the unwary. However, a publisher who wrote a truly fair contract could successfully disintermediate the agent. In the real world it probably won't happen (Sigh. Greed is Good. Sigh.) but the potential does exist.
Whether anyone can successfully play the "full disintermediation" card is another matter entirely. I suspect that anyone who tried it would immediately become The New Enemy.
Thanks, BTW, for hosting a truly informative and interesting discussion.
In this day and age content is king and publishers that do not adapt will soon be done. I think Amazon is a juggernaut but it is not the all powerful entity that you make it out to be. The internet and digital distribution means that content creators no longer need "middlemen" including Amazon. Authors that produce work that people want to consume will always have several options to distribute that work. Louis CK did it with video and producing the written word is a lot easier and less expensive. An author producing great work that people want to read can do just as well without Amazon and without DRM for that matter.
Fascinating stuff: a lot of these thoughts have a genesis in Charlie's writings about the book market from a couple of years ago, but I personally wasn't smart enough to pull the threads together until reading them all in one place here. It leaves me with a couple of questions:
1. What stops Amazon getting into print-on-demand? I am assuming that paper books will not entirely go away, and even if they do they will still take a few years to get that far; why wouldn't Amazon become their own printer? Possibly this ties back to the point that the physical cost of printing a book is not the large chunk of the cost of a book that everyone naively thinks it is, but it strikes me that printing one book costing X and printing 5000 books costing much less than 5000X is partially because of the economics of big runs but also partially because no-one's invested a shedload of money in trying to fix that. If Amazon can throw money at the problem to fix that and build a "book printer" which can print one book at roughly the same cost as a large print run at a printer, then they could open up physical shops which are the size of a cash register and allow you to walk in and buy any book imaginable and walk out with it, just like Waterstones but with no shelves needed. (Again, I assume that the concept of "walking into a shop" either isn't entirely going away or isn't going away for a few years at least.)
2. Watching how the DRM story has played out here and in music suggests the following unpalatable fact: the way to get a DRM-free market in some digital good is to (a) allow DRM to one specific vendor so they have an incentive to invest tons of money in *creating* the market for that good (Apple with iPod music, Amazon with Kindle books), (b) wait for that vendor to invest money in the hope of getting a monopoly, (c) wait for that now-monopoly vendor to inevitably use that monopoly power to screw everyone else, (d) wait for the everyone-else to feel very sad and angry about it, (e) point out that the only way to break that monopoly is by shifting to a no-DRM world. It worked with music, it's working with books; this suggests that the current state of video being dominated by Netflix is not necessarily a bad thing, assuming that it's midway through step (b) above.
Amazon does do print on demand - Amazon Create
Only author and retailer might work in a monolingual unified worldwide market. But in the varied world that exists intermediates that understand local rules and markets will still be important.
> And if authors aren't being paid,
> then the quality of writing across
> the board will fall.
...and your point is? It's all "product" to the publishers, and the content between the covers is almost irrelevant. The important part is the cover art and blurbs that persuade you to buy the book; once the cash register rings, game over. If you liked it, you *might* buy another book by the same author, but that's nothing compared to the initial sale.
As for stuff to put between the covers, there are plenty of people out there who would be delighted to be a "real published author" for $100 and a box of author copies.
[cynicism mode only slightly turned up from default]
Interesting article by an eBook publisher on CNN
The part I found interesting is the comment that authors are hiring their own people to do the functions that publishers offer. Clearly there are coordination issues, but it would be interesting to work out the economics and determine exactly what value publishers offer as an integrated business. I'm guessing the hard part is sales and marketing, but maybe not.
Doublegood quackspeak, comrade.
(If you'd managed to cram any more cliches into that comment, it would have crystallized out as a perfect platonic solid of dotcommie propaganda.)
why wouldn't Amazon become their own printer?
They already have.
(Which means they're in competition with their suppliers, which is never good.)
But Amazon are going to go into bricks'n'mortar high street retail around the time hell freezes over.
Heh, hell isn't likely to freeze over soon. Point taken. :)
Thanks, Dirk (and Charlie later); I didn't know about Amazon Create.
It's all "product" to the publishers ... once the cash register rings, game over. If you liked it, you *might* buy another book by the same author, but that's nothing compared to the initial sale.
Wrong. Utterly wrong. Wrong with bells on it!
Publishers are -- or were until very recently -- in the business of buying authors, not books. That's why if you're a first-timer and you offer them a novel they like, they will counter-offer with a two or three book contract (even if the latter books are as-yet untitled and unwritten). New authors seldom earn out in their first couple of books; the real profits begin to show up some time down the line.
You want an example? Try Terry Pratchett. PTerry was midlist for about the first three books, which came out at 3 year intervals and sold very modestly. Even after "The Colour of Magic" his sales only built slowly but steadily; he was 6-10 books in before his career went A-list and then bestseller.
That's what they all dream about, of course. Get the next PTerry or JKR on the ground floor with a modest advance and a multi-book contract and the profit is enough to float a publishing house for a decade.
There's one aspect you haven't covered. I never bought many hardcover books, most of the books I read came from the local library. My Kindle currently has over 150 bucks so the authors get a benefit that they wouldn't have had if it hadn't been for the Kindle.
Amazon will never have a monopoly. If they do not provide customers with the goods and services they want, the customers will go elsewhere.
DRM is a non issue. Those that care can break it and most don't care. Most people are not obsessed with "ownership." they read a book once and move on. The price of technology will only get cheaper over time. Kindle owners can buy a different ereader. The purchase of a kindle does not beholden a customer for life to Amazon.
It isn't that Amazon is doing such a great jab as it is the other publishers are doing so poorly.
When they lose the idea authors are chattels and readers are petty thieves to be controlled and taken for granted they can compete.
I expect them to commit mass suicide because the ideas are too big a leap for them to abide.
"Those that care can break it and most don't care"
Not quite true. Those who care *most* are likely to be using GNU/Linux or a similar OS. Breaking the two most common DRM schemes (Amazon's one, and the Adobe one used by most smaller ebook retailers) requires extracting a key from the Kindle or Adobe software, which requires having a running copy of that software, which isn't available for GNU/Linux (or BSD, OpenSolaris, BeOS or whatever). (And no, they don't work well enough in WINE to do the DRM-removal).
"The price of technology will only get cheaper over time"
Between the increasing scarcity of the rare earth metals needed for a lot of current technology, the increasing cost of oil to produce plastics, and the increasing cost of transporting that technology from the plants where it's manufactured to other countries, I *very* much doubt that that's the case in the medium term.
"... How much education people have helps determine how much — and how — they read, the poll shows. More than 7 in 10 college-educated respondents said they read 'a lot,' while only half of those with no college said they did. Those who went to college are also more likely to use an e-reader."
"Owners of e-readers are more likely to read books, read more books and spend more hours each week reading. About 4 in 10 said they devoured four or more books a month...."
["Even e-reader owners still like printed books, survey finds
The pleasure of reading endures in the digital age, a USC Dornsife/L.A. Times poll shows. Six in 10 people say they like to read 'a lot,' and young adults read about as much as many of their elders.", By Mike Anton, Los Angeles Times, April 14, 2012, 8:30 p.m.]
"... Until some new magic is added to MRI machines, full archives, with their many revised drafts, are as close as we get to seeing the mind in action, the actual creation of a work of writing that readers hold dear...."
["T.C. Boyle archives go to Ransom Center at UT Austin
The university is also home to material from Norman Mailer, Don DeLillo and more.", By Carolyn Kellogg, Los Angeles Times, April 15, 2012].
First, you can do a lot of that with library online catalogs. But a library's cataloging mission isn't the same as a retailer's.
Second, for e-books etc. in libraries, and why the searching of them is such an impossibility, go here, which runs it down -- it's because of another monoply.
And then there is the pulling of e-book titles from library purchase by the Biggies, as part of their febrile attempt to push-back against Kindle and Apple.
These things are all inter-connected.
Libraries do miracles with less and less, but they are up against the final walls.
In poor communities the libraries are rapidly disappearing. In other communities, they are being sold to private contractors who don't even hire librarians, or else hire them part time by hourly wage.
Bingo! I saw that in action a couple of years ago in the POD t-shirts market. A company, CafePress, built-up a huge stable of design providers and an even larger online marketplace. The model was this: The designer created artwork and put it on select merchandise (clocks, mugs, stickers, t-shirts, hoodies, underwear, tiles, boxes, cups, thermos-ware, etc). CafePress offered these items to the "shopkeepers" at a set cost and the shopkeeper selected their OWN retail price which CafePress then listed and sold on their CafePress MarketPlace. The shopkeeper kept the difference between the "retail" and the CafePress "cost" of the items sold. (as an example there were t-shirts that said "This is a $100 t-shirt" and were listed at that price in the CafePress Marketplace--and the t-shirt cost to the shopkeeper was $12.00).
And then the owner of CafePress decided HE wanted to hike his profits: CafePress changed the system to a flat 10% of retail, where CafePress set the retail price. I saw my income drop from hundreds of dollars a month to tens, others saw their income drop from $10,000 a month to $1,000, and many people even lost their homes.
The problem for the shopkeepers was two-fold: they lost control of the price and they lost control of the profit. Can you imagine going up to Disney and telling them "Hey, I think your Donald T-shirt is worth only $19.99 so that's what I'm going to market it at, and I'll give you just 10%." And artists should decide what his/her art is worth and let the market decide if that price is fair, not some hack how wants every t-shirt to be the same price.
What's to prevent Amazon from doing the same thing to ebook author/publishers after they wipe out the big companies, the only ones who can fight Amazon?
There's one more perspective: authors. I just wrote a Kindle Single (Gutenberg the Geek) and decided to play by Amazon's rules to understand them better. I signed a six-month exclusive (but after that I can and will just put it up); in return, I got impressive promotion (I heard from many people who were on the other end of that promotion). Amazon gave me the option to turn off DRM, which I did (though I don't know in practical terms what that means to a reader). Amazon lets me give away the Single for free for a half-dozen days, which I'll experiment with next.
But most important: Amazon gives me 70% of the price and lets me set that price. *That* is what cuts out the publisher. Yes, I give up value from the publisher -- mostly my good editor. But I have not found my publishers' marketing and distribution to be impressive -- less so with the death of Borders.
So Amazon is sucking up to the next constituency: us. Alternatives?
"Before the rounds of publisher fusions and buyouts by huge media companies the North American publishers were run by people who knew all about readers and reading."
I dunno. That was the lament when I got out of bookselling nineteen years ago. Seems to me that horse well and truly left the barn a long time ago.
I wonder if Google will kill Amazon? (Like Daleks and Cybermen duking it out.)
If Google were to add a shopping cart and payment processing front-end to Google Shopping or Google Books (with opt-in and technical requirements for vendors) then there would be no need for middle men.
The real roadblock wrt. ebooks in libraries is that the USA does not have a Public Lending Right framework. Nor, given the way libraries are [locally] funded is it likely to get one, which means publishers will continue to see libraries as cannibalizing direct sales for the forseeable future.
Right you are Charlie. Which is why, on top of the whole DRM issue for ebooks, libraries in the US are forced to deal with cartels offering shitty deals for ebook packages (this has been the sticking pint between Elsevier and university libraries for years-- forced to buy 1000 ebooks noone wants to get the 2 they do). There are a handfull of research providers who are selling (not leasing) unrestricted ebook packages, but they are tiny and only in a few research fields. Something similar would work for fiction but would require publishers to play along. Which yeah, not too likely.
...forced to buy 1000 ebooks noone wants to get the 2 they do)...
That is forced "bundling", which I though was illegal in retail. If so, why doesn't that apply to libraries?
I always understood that university libraries "could" unbundle, it was just that the package offered for the bundle was just too attractive.
It just struck me that if you presented publishers as "venture capitalists investing in writer startups" you might get through to a larger percentage of the dotcommie crowd... ;)
Let me add to Charlie's "Rubbish." I self-published a short story in December. Since then, I sold fewer than 30 copies at $0.99 each. I've got seven more stories and novels in the pipeline, and I'm having fun and not complaining -- but I don't see $100,000 per year in my future, let alone a $100,000 differential between the vast sums I could make through traditional publishing and the EVEN VASTER amounts I could make by self-publishing.
My goals are far more modest: If I can make $10,000 through creative writing in 2015 I shall consider the enterprise successful.
Not that I don't dream of Rowlingbucks.
Stunning revelations for me:
"Many of the ebook editions appear to be direct scans of the print edition, with no further editing to remove glitches from the transferal process."
Yet that does not stop sales:
"Because people like to collect books. "
People like to collect eBooks? Any genres?
I would have thought of eBooks as the kinds of flimsy things that attract people for whom books are disposables, not collectible.
Even more surprising,people still like to collect eBooks despite the glitches from the transferal process?
???
"- not only can they not (legally) read their Amazon books on another device, they can't read DRM'd ebooks from other suppliers on their Kindle."
People keep saying this. It isn't true. i read my kindle stuff of on my Ipad and Iphone all the time.
It is true that specilaized eReaders block competing content, but they will be dead soon
Jeff, other than the promotion, those are the standard terms for self-publishing on Amazon. You need a three-month exclusive contract to have the free days (which don't help with promotion very much, incidentally, because everyone who has written a three-page 'book' called Mi Grate Buk (For Fans Of J.K. Rawling) has taken advantage of that, so mow readers associate 'free' with 'unutterably bad'), but the 70% royalties (for books priced between $2.99 and $9.99) and option to remove DRM are standard and don't require any exclusivity at all.
Thank you for writing the first article about this that I've seen that isn't about how Amazon is bad because it's ruining our literary culture, or some other grand, melodramatic statement. It's not a situation where one is the hero and the other is evil; both parties have created issues.
What's to prevent Amazon from doing the same thing to ebook author/publishers after they wipe out the big companies, the only ones who can fight Amazon?
Nothing. Which is why the big six went for the agency model like passengers on a sinking liner fighting over the life belts. The agency model basically gives them back control over the retail price, and hence the profitability of the product. Which in turn stops Big Disintermediating Retailers from low-balling them into oblivion.
One emerging trend that has the potential to stave off the need for a non-DRM solution is the emergence of app-based consumption of ebooks. If people read most (if not all) of their books on an iPad, they can easily switch between the major ebook providers. This means that they don't have to leave their library behind if they adopt a new provider, lowering or eliminating the switching costs completely. Most reading still happens on closed readers, but the emergence of tablets as a primary reading device is a notable development.
There is a Plan C that you haven't contemplated. Rather than allow Amazon to control the DRM, the publishers could get together and embrace a common DRM standard that would be supported across e-reader platforms. That technically makes it easier for consumers to move content between machines without tying them specifically to Amazon, or the Kindle device, specifically. But I would agree that eliminating DRM entirely would be a far more disruptive factor to Amazon's business.
Speaking only for myself and from limited experience, I can say that a basic eBook cover can be ginned up in about four hours. Dean Wesley Smith uses Powerpoint, I use an antiquated Photoshop, and we both come up with the same "covers are fast" for eBooks answer. If you can do this yourself, I'd say go for it.
Typesetting is irrelevant in an eBook (sadly, Kindle loves to screw up formatting no matter what you do), and for POD it's pretty easy in Word. Places like Lulu send you a format file that you can bend your work to. It takes a few hours to properly format your manuscript. Actually, printing it out in manuscript format for an old-line publisher takes much longer than formatting it for POD, due to printer speeds for manuscripts that are hundreds of pages long.
Marketing is hard, but the big imponderable is editing. Not copy editing (which is mechanical--I've got one error per book using only myself and friends, which isn't bad, considering that none of us are English majors), but real editing to improve the quality of the text.
The problem with editing isn't that editors don't add value, it's trying to figure out how much value they add. For someone who is self-publishing, figuring out whether a manuscript would benefit from several thousand dollars of editing is hard to do. Primarily, it comes down to figuring out whether editing will improve sales enough to offset the cost of the edit, and that's a bit of a crap-shoot. This isn't to insult editors, it's just that every book is a bit of a black swan, and that makes such decisions hard.
I'm sure that Mitt Romney has had some of his 'People' read these 'Books ' things of which you speak. These people would then have supplied The Grate Leader with a report on these 'Books ' that would be delivered by the Man Himself on Fox Moos to an electorate who don't actually 'read ' these 'books 'or 'Books' of any kind other than the Bible, but who do understand that 'Reading Books ' might be a GOOD thing for said Leaders to have done ...provided that they were the RIGHT sort of Books of course and that they didn't divert attention from the Truths exposed in The GOOD Book..... oh, and also in " No Apology: The Case for American Greatness " by Mitt Romney.
Romney might only read one or two books a year, but he reads them several times and I don't doubt he can quote from them Chapter and Verse as the Occasion demands... and his partisans would consider that to be a Good Thing.
As for Gates and Jobs ? They have " People " too and of Course they read the Right kind of Books at the Right kind of time and will mention them at the appropriate time and place, with copies left in just the right places that they might be discovered so as to establish verisimilitude in the Role that they are playing at any given time .. these people are actors on a World stage and everything they do is Scripted and Performed as Theatre.The performance even continues after their deaths. Death as Theatre ..as in famous last words?
http://www.guardian.co.uk/technology/2011/oct/31/steve-jobs-last-words
Jobs was an artist with a natural flair for beauty of design and it wouldn't surprise me if he'd rehearsed those famous last words...very enigmatic .. "what did he mean by that?"
I think many posters on this thread are underestimating how much less tech-savvy (or more time poor or whatever, just think normal people) people will put up with Amazon and the way they do business. Thus they imagine that competitors will appear and ensure that Amazon will maintain certain standards or not make too big a profit.
Which may be correct in the long run, but {quote Keynes}.
The barriers to entry are larger than people think, not only do you have to build a decent website and supply contacts, you also have to make sure that enough people know of it and get to see how wonderful it is. QUite a lot of people are pissed off at Ebay for various reasons, but it seems to be taking an age to die and has still been profitable for years, or so I read.
The only way to stop Amazon from gutting the publishing industry is to boycott Amazon. I don't own a Kindle and have stopped buying from the Amazon store. (If I can't find elsewhere, so be it.) If four or five million people did the same thing, maybe Bezos would look into his soul and reconsider his slash-and-burn approach to books and the book industry. Oh, I forgot: he sold that a long time ago.
If four or five million people did the same thing, maybe Bezos would look into his soul and reconsider his slash-and-burn approach
You guys crack me up!
(Hint: Amazon's annual revenue in 2011 was 48 billion dollars. So unless the "four or five million people" you're talking about are each currently spending >$1000 per year with Amazon, the net effect on their bottom line will be lost in the line noise.)
Oh, a strawman - and one that actually answers the question you claim to be interested in.
No-one claims that in a libertarian society "everyone" would automatically act as a robber baron. The problem is that libertarians claim that under your system, there would magically be no robber barons - the ones who currently exist, and are held in marginal check by government regulations you scorn, would suddenly disappear.
As Charlie said, it's a system that would work well for perfectly spherical frictionless human beings. But it stops working the moment that the aggressive guy with a shotgun decides he wants his unarmed neighbour's cow. In the real world, it doesn't happen because the government would investigate the killing and arrest him, so he doesn't gain anything. In libertarian-world, it apparently doesn't happen because, um, magic.
If you can explain why it is that no-one in libertarian world would ever want to infringe on someone else's rights, then you might get taken more seriously. But since I've never seen any attempt to answer that question with anything other than magical thinking (the funniest version of which is the "insurance" answer), there's no current reason to do so.
The problem specialized ereaders have is that Amazon did not allow other manufactures to simultaneously decode DRM protected Amazon and DRM protected epub files. Since most of these manufactures had their own content stores (or contracts with non-amazon stores) they all chose to remove compatibility with Amazon.
This all happened a couple of years ago and was probably an early move to keep their consumers as close as possible, and trying to stop them from getting used to access to multiple stores.
Actually, if you read what comes up on a search for references to publishing on Hacker News (a prominent dotcommie hangout, as focused on business as technical issues despite the name), you'll see that a lot of them already do view publishers as VCs for books --- who offer terrible financial terms and bring little else to the table. (It's an article of faith that they outsource pretty much everything they can, including editorial and design work, and do very little marketing.)
So, if for some reason, you want to argue against them, this is what you're arguing against.
See this thread, for example: http://news.ycombinator.com/item?id=2049028
breaking DRM isn't all that hard to do. I'm totally non-technical, and I do it all the time. You don't have to be a techy, you just have to know where to look for the tools.
You can find me on HN as cstross. I am familiar with their doctrinaire mindset. Let's put it this way: there's some merit to it, but a lot of drawbacks most of the natives appear blind to. Goes with the territory, I guess.
That is forced "bundling", which I though was illegal in retail. If so, why doesn't that apply to libraries?
Libraries aren't considered retail, for a lot of arcane reasons having mostly to do with taxes. And the bundling is being done by research cartels with near or actual monopolies on the content, like Elsevier. This is where it gets into a grey area, legally and morally, because Elsevier and other academic publishers aren't retail and so don't have to abide by retail rules. This is why they won't bat an eye charging libraries $10,000 a year for access to a database. Because they can. And since they paid for the peer-review process, and have leveraged sole distribution rites from the researchers and authors of the content, they have created a virtual monopoly on all the latest research being in done in several fields (most notably in the Healthcare industry).
Elsevier has attracted the most ire of late, because they've been doing overtly nasty and dickish things, like packaging advertisements for new drugs as journals and selling these fake journals to research libraries and universities, or rewriting access agreements to their proprietary database every year as an excuse to jack up prices and swap content. Licenscing ejournals and databases has become such a Byzantine process that sometimes it's impossible to tell if your library "owns" a specific journal title, because the rites may be orphaned or in limbo. I once described ejournals as Schrodinger's resources, because you never know if they exist or not and checking to see if they do may trigger their demise.
I always understood that university libraries "could" unbundle, it was just that the package offered for the bundle was just too attractive.
Nope. Most EULAs forbid breaking bundles on pain of massive lawsuit. There are very few Academic publishers who sell a la carte subscriptions to databases/eBooks/eJournals. The few who do are tiny and have next to no content to offer.
If a fiction model were devised for libraries, it would most likely follow the cartel bundling model: pay X amount of $ a year, get all the ebook versions of the bestsellers from Publishing House Y. Add a few extra 000s to that subscription price and they'll throw in their back catalog of midlist authors. It wouldn't be optimal but it would be attractive form the budget management perspective of a strap cashed library director and the CEO of Publishing House Y, who has just found a market willing to pay them thousands of dollars a year for a product that requires no additional overhead (they were already going to convert those ebooks anyway and sell them one at a time).
Well, maybe.
But maybe it's the other way around. Maybe the best way to re-direct Amazon from its current path in publishing is to actually buy more stuff from it, but other stuff than books.
And maybe the current market forces are already doing this.
Out of the 48 billion in Amazon revenue last year 28 billion was from electronics and other non-book, non-media purchases. This was a 56% growth from the previous year.
So, out of that 48 billion there was 17 billion coming from books, movies, music and other media.(and thus even less for books) and the growth rate was smaller than for "electronics and non-book".
kill amazon? easy.
sell coffee at libraries.
Okay, so several people in this thread are anticipating that amazon will rewrite the terms they currently offer to authors publishing via amazon to be much worse once the publishers are dead. Doing this would require amazon managment to get a lobotomy first - 30% for hosting a glorifed text file server is already monopolist pricing, and going further runs too high a risk of killing the goose that lays golden eggs. That is not amazons long term plan.
Their long term plan is to get all authors to take this deal, where you hand them a finished manuscript and they uncritically put it on their server, and the public uses amazons recommendation algoritms for slushpile sorting.
This plan allows amazon to collect 28% of all expediture on literature as pure rent for all eternity. You expect them to risk that ocean of cash for short term greed? Well, buisnesses have done dumber things, so I will not claim that it is *impossible*, but I think it a very low probability outcome.
What about advances and editing? These are valid concerns for authors. but Amazon has absolutely no need to care - It does not matter - to amazon - if author X writes slower because he or she has to work as a nightwatchman, when authors z, y and q, who are respectively on the dole, independantly wealthy, and insomniac are also handing them manuscripts.
Vernor Vinge was a professor while he wrote most of his work. Rowling was famously on welfare until Potter exploded. Many, many people just flat out like to write fiction, and will do so entirely on spec.
Editing? Well, I anticipate that some skilled editors will eventually work out a contract where they are paid a percentage of a books earnings, but again, amazon has absolutely no incentive to get into this part of the buisness - as doing so would require them to spend money in a way running servers do not.
zornhau: Google has been trying to horn in on Amazon's various digital content sales markets for years now. What they have to show for it is the single worst effort/reward ratio fo any of the major players: they've burned an astonishing amount of money, all in order to stake out single-digit marketshare (or worse) in sales of digital books, music and movies. (And for that matter social networking.) As a former employee, I see no sign that this is ever going to change: the kind of smart that google makes a point of hiring is not the kind of smart that is going to buy them success in these fields.
Much like Microsoft, they'll never be a non-player, because they have infinite amounts of money to shovel at the project and can run their content sales operations at a loss without having the slightest impact on their bottom line. But they're never going to be a serious factor in these markets.
Doing this would require amazon managment to get a lobotomy first - 30% for hosting a glorifed text file server is already monopolist pricing, and going further runs too high a risk of killing the goose that lays golden eggs.
Ahem: current terms they impose on publishers are between 50% and 70%. Yes, for hosting a glorified text file server! The deal they give authors who cut out the publishers and go direct-and-exclusively through Amazon is way sweeter than anything they give anyone else.
So I ask you: if they kill the major publishers, why would Amazon offer indie authors better terms than they offer the surviving [small] publishers? After all, collecting 70% rent on all literature for eternity has got to be better than collecting 30%, right?
Nevertheless, individual acts of resistance matter, because if everyone waits for society as a whole to act nothing will get done. I can't think of any movement for social change that skipped over "small-scale actions that the target could ignore" to "complete victory." They are necessary, just not sufficient.
Because the suppliers they are dealing with in the latter case are individual authors, not professional negotiators for a corporation - This is important, because that means they are regular people, rather than homo economicus. Squeeze to hard, and the following very predictable chain of events will take place
1: Someone else will start a glorified file server. Note that the barrier to entry in the buisness model they have is nigh-zero.
2: Lots of authors will use it instead, even if it intially pays less in absolute terms, because it does not violate their sense of fairness.
3: Oops, amazon just lost its position as default merchant. CEO that instituted the hike in the cut is murdered by angry shareholders.
Your theory would hold more water if such alternative ebook publishing platforms didn't already exist. Ahem.
It is not so much a theory as it is about strategy, repeat buisness and stable equilibriums.
Amazon squeezes publishers hard because they can. Publishers are profit maximisers, and will take 30% of 40000 sales over 70 % of 10000.
Individuals are much more likely to respond to such an offer with "Go take a long walk off a short pier". Which is why they dont, currently, offer those terms to individuals. And would be foolish indeed to do so in the future.
Ah but they only have to get it right once...
Or perhaps it won't be them. Suppose PayPal created an aggregating site enabling you to search people's PayPal sites.
Given the number of resellers, Amazon is already on its way to becoming a glorified search engine and payment processor. Other people can also do that.
It has little to do with the content providers, you have to convince the customers to come with you.
And those want a smooth experience, a store they feel they can trust, a recommendation algorithm that definitely does take more than nigh-zero to start. Oh, and competitive prices for the large part of the customer base that only cares about getting a good deal themselves.
And all of this at a level that is similar to that of your big competitor.
Which is a problem after you let one company rule the consumer connection for as long as the remaining publishers or authors will have at the point that company can start increasing their part of the pie.
zornhau: See my earlier comment. "Getting it right" does not mean achieving rough feature parity with amazon: they've already done that. Getting it right means leapfrogging Amazon in terms of both features and user experience (users in this case being both authors and readers and to some unknown extent the publishers too) to the point where it's worth everyone's trouble to switch. I'm not saying that it's impossible that Google will do this, but if you're betting that they actually will? I'll take the other side of that wager at any odds you want to offer.
Apple hasn't been able to do this in the ebook sphere, and this is territory that is far less alien to them than it is to Google.
(And Paypal? Not in a million, billion years.)
This sounds like a bunch of buggy whip makers. If it was about cars you would be cheering. I'm a Ned Lud on book readers. But things change. Like or not.
Amazon may be becoming a trust. Nobody has used anti-trust laws for a long time.
Interestingly, Richard Sears (Sears, Roebuck & Co.) used a similar model when they started their catalog business in the late 19th century. The simply printed the catalog with items that they did not order from manufacturers until the got firm orders.
Publishers are profit maximisers, and will take 30% of 40000 sales over 70 % of 10000.
You mean "should." They should take smaller slice of the bigger pie.
When there's a large number of companies and so multiple tactics, they will tend to converge on an optimal solution - most of the time, and into the neighborhood of an optimum. Real economics are complex.
When there's only one actor involved, how can they know? If everyone is buying from the monopolists already, there's no information about how profitable alternative business models might be and good reason not to go exploring.
al_zorra wrote:
I do a lot of consulting. I also watch Undercover Boss, which has featured several places I patronize as a customer.
There are intrinsic disconnects between management clue, how employees are treated, how the company behaves to customers (abusive or constructive), how the company behaves to vendors or suppliers. If you make a 4-D map of that, you have companies with no clue and excellent coverage in the other areas, companies which are abusive to employees but excel in other areas, places which treat employees great but which I would never patronize as a customer, etc.
Waving a flag and pointing out that Amazon's workplace conditions are only legal minimum OK in the US (and not the arguably better performing and ethically "living wage" and constructive employee relations) is very different from any of the other arguments about Amazon's customers or vendor relationships.
It's arguable that Amazon would not exist today if from the beginning they had upped their cost equation 10% to be nicer to employees. The stock market and capital sources watched Amazon expand and catch market share and discover new market, losing money nearly the whole time, but Bezos could make a credible case that they were always right around the corner from profit if they chose to slow expansion. And they were right.
This thread's done a lot to show the negatives that came with that. But that's due to Amazon's inherent disruptiveness of the prior market model, and lack of settled future model (who intermediates for whom, who aggregates for whom, how many layers are there). Nobody knows the answers. We know that they're not the same ones. But I enjoy living in a world where Amazon exists and I can just order a lot of its stuff online. Previously, despite living for years in or near cities with some of the best bookstores in the world, there were things I just couldn't get. I could go to the UC Berkeley library, sure, but to own a copy at home? Go fish. Get a book for my computer? Sure, if it was out of copyright, and if Project Gutenberg had scanned it.
The old publisher system met the Internet and the new distribution models and went splat. Amazon was a large part of the splat, and is picking up pieces in a manner that is good for them. Apple's doing the same thing. It's not clear if the Publishers are yet. The Authors are largely on the sidelines alternating between concerned, befuddled, and excited.
Do I wish Amazon was nicer to its warehouse guys? Sure. Do I expect to see Bezos on Undercover Boss doing that stuff in person? No. Will I stop buying from them (at least for some stuff)? No. What's the future look like? You tell us. Not like the present, nor the past.
I've never actually read Amazon's terms and conditions for eBooks. I had an Amazon account before eBooks existed at Amazon. I've also never had to agree to any terms and conditions before buying free eBooks from Amazon. Personally, I won't give Amazon any of my money for eBooks. I find Amazon's Kindle business repulsive. Bezos is a megalomaniac.
Anyway, since I've never read or agreed to Amazon's eBook terms and conditions, I don't think if I convert the free eBooks I've gotten from Amazon to be wrong.
I find Amazon's Kindle business repulsive.
Why is Amazon any more repulsive than B&N, who tie their book DRM to your credit card number?
"Paid for the peer review process." Well, not quite -- at least not in physics and astronomy. In my experience, the effort of the peers doing the reviewing is effectively donated by the institutions that employ them -- the same institutions that are paying for the subscriptions and (to some extent with grants) the page charges. The (smaller, specialist) journals each employ a handful of academic editors (working part time out of their institutional offices -- I think they get paid, but I couldn't swear to it) and a few actual office staff to wrangle the process, and maintain a website.
haha! They sell coffee at Barnes and Noble, but they are still dying.
I meant that libraries could buy an unbundled product. I've read elsewhere that Elsevier claim that this is always an option, whenever the bundling issue is raised, so they are not "forcing" libraries to buy a bundle, just that bundles are much more attractive to libraries.
Of course Elsevier are fighting open science initiatives which would undermine their business model. About time their model was challenged.
Amusingly enough, Amazon has ALREADY sown the seeds of destroying its' monopoly. How, you say ? Via their "Cloud Reader". It's cumbersome now, but I'm quite sure someone will automate it fully soon.
How ?
Requirements: Amazon Account, Kindle App for your platform, Calibre E-book manager ( http://calibre-ebook.com/ )
1. Get the book from Amazon, have it delivered to your "cloud reader".
2. Then download it to your Kindle App.
3. From there, import it to Calibre.
4. Once imported, convert to Epub.
5. Voila! DRM Free! Ready to read on your non-proprietary reader of choice. (I have a Nook Color and a Kobo. . .)
6. And since this IS the Internet. . . . PROFIT !! (grin)
This is not as black and white as you make it out to be. No one needs a publisher any longer, and pretty soon they won't need a retailer. HTML 5 makes it possible for any creative person to go direct to consumers without any intermediary. A lot of people are going to do that. In categories like movies, the economics of direct selling of catalog product is so obvious it is hard to imagine any film company missing it.
While the original poster may need some advice on his tone, the idea that traditionally published authors don't do any marketing and sales work is just wrong. They spend HUGE amounts of time on promotions, tours, signings, social media, etc., etc. Your "division of labor"doesn't exist in any writing job that I know of in this day and age, and any cautious, moderate professional involved in writing and publishing at this point will be careful not to draw conclusions regarding self-publishing yet. The jury is still out, and the change is still underway. The industry of writing and publishing books won't remain the same regardless of how many lawsuits are filed or corporations are reviled (rhyme unintended).
@srpaulsen - I'm sure the original poster and Charlie Stross are grateful to your insight into how the real-world writing and publishing business work.
I can go direct to the public right now, sort of...
I assume you have seen my extract from TechnoMage and the purchase button on my site?
All I need now, for the 1 in 1000 who might be interested in buying it, is a few million people a month dropping in to view.
Forced bundling doesn't apply to cable networks either.
I take it that everyone is fine with paying high prices for their ebooks if they believe that Amazon is the devil and the publishers are poor victims? Prior to the agency model some level of price competition existed that had nothing to do with Amazon. The agency model destroyed it by "setting prices". Yes the industry is in transition and yes there will be winners and losers. At the moment authors might actually have an opportunity of winning if they will only chose to invest in some copy editing.
Amazon and ebook format gives any aspiring author a way to sell their material at a much higher rate than they will ever receive from a publisher. Right now most of it's drivel but there's always hope. As with everything nothing is ever black and white.
And so -- I, as a reader, creator, and all around citizen am expected to sit back and go, O myes, here they are doing what is to be expected of monopoly congloms, devasting both labor and consumers at the expense of labor and consumer, and not complain or make any moves to change these conditions?
I have always refused to buy from amazon from the very beginning -- and have been called a luddite.
I call myself a boycotter of amazon, apple and all those others, who is looking into every way to avoid them all, while still getting royalties as creator.
Nothing's yet in place, all is up for grabs, so I read more and more into the history in the U.S. of the plutocratic monopolist wars of the late 19th century and the 3.5 decades of the 20th century -- and then how in the 7th and 8th decades of the 20th century, all those standards and regulations started to be dismantled.
Nothing happens in a vacuum and without context -- to protect oneself one needs information -- which I'm seeing every day becoming less accessible by these conglomerates.
I'm afraid I haven't had time to even read the latest.
Question: Given the impending demise of DRM, what would you buy NOW? Despite my wife's experience with Microsoft abruptly going out of the DRM'd music business (and losing her entire classic music library), she has bought a kindle and now proposes to buy me one for my birthday so we can at least read together what she has purchased (ie rented from Amazon).
When I check Amazon US, they offer me besides a Kindle, a used Galaxy Tab and a used HP tablet with android installed. What would you suggest?
This may be true for physics and astronomy but Elsevier dominates the health and medical journals with an iron fist.
Can't understand how DRM is a boon for Amazon, as most books have very little repeat value, once I have read hunger games, having instant access on my nook is never an issue. Also, considering that I can access same book on my PC, mac, iphone, android, windows phone, blackberry makes moving to ibooks or like very easy.
Only reason kindle ebooks are very successful, is no one else created so seamless and compelling environment.
Question: Given the impending demise of DRM, what would you buy NOW?
As an ereader?
Currently I have:
a Nook Simple Touch (6" eink, 800x600)
a Nook Color (7" LCD, 1024x600)
2 Motorola Droids, no longer in use as phones (4" LCD 852x480)
1 Motorola Triumph (4.5" LCD, 800x480)
1 Samsung Galaxy Nexus (4.7" LCD, 1280x720)
If you have good eyes and a limited budget, a used Droid or equivalent screen is over 300dpi and basically perfect. It is small, however. That's a plus for portability and one-handed usability.
If your eyes aren't 20/20 and your budget is limited, look for a refurbished Nook Color or similar Android tablet. The screen is large and clear and bright, and though the letters are slightly chunky, it's an esthetic call.
If you have money and need a new smartphone anyway, the Galaxy Nexus is beautiful in all respects except battery life.
I hear Google's going to sell a 7" tablet for $200 - $300 in July. Maybe. If so, it's probably a good bet.
The page turn speed of eink annoys me.
speaking as a reader not a second hand book store owner for once
my biggest complaint about ebooks is the no share issue
I bought my son the Hunger Games trilogy box set on-line -he couldn't wait a week and bought the ebook
so great HE can read it on his ipad
but the other 4 members of the household nope bad luck
the ebook was half the price of the pb but value wise it is a single user/single use item
not to mention it would have lasted 5 seconds on the shelf at the shop once we had all read it
You have an excellent point. This is a great long-term strategy.
You are totally naive. Once Amazon is the only publisher they will unilaterally change the contract terms.
Lather. Rinse. Repeat.
I have a Kindle and a Galaxy Tab 7"
Tab Pros:
Great for PDFs.
Kindle and Kobo and other aps.
great web browser(s).
Expandable (microSD + Dropbox etc.)
Tab cons:
Hard on the eyes for long term reading.
Lots of reading? Charge every night.
Heavier than the Kindle.
Kindle Pros:
E-ink great on the eyes forlong term reading.
Kindle DRM easy to break.
Only have to recharge every 1 or 2 months.
Great for outdoor use.
Lightweight, not a pain to hold single-handed for long periods.
Inexpensive.
Kindle Cons:
No night reading without external light.
Can't read EPub.
Not great for PDFs.
Crappy web browser.
Limited expansion capability. (Kindle cloud only)
The Amazon model basically is only compelling if either (a) there are bunchteen thousand physical titles to get to customers or (b) there's one master DRM key to rule them all.
Back in the day, the number of miles from your publisher to my house would have been a problem, but the number of milliseconds isn't, and an open-format ebook model would let multiple suppliers sell globally to people with whatever device. We may actually get there THANKS to Amazon's single-gateway DRM model!
We just need a credit card model that works across borders, an Internet, and not too much government insistence that I get my daily dose of Canadian Content.
Then too, my wife got a parcel from Zazzle on Friday; all we need to do is extend that model to books...
The one thing that bugs me (Living in New Zealand) is region locking.
There are _ebooks_ on amazon that they won't sell me because im in asia pacific and the publisher is too dumb/lazy to let amazon sell them in APAC.
The key point, I think, is that Elsevier does not pay the peer reviewers.
Or the authors.
This is what happens when you accidentally hand the keys to the reputation system to a private company.
Amazon is evil. Doesn't the DOJ see the irony in their case in helping Bezos. His attack on free markets, his arm twisting against taxes, his obsession with global domination is the worst possible outcome for the world. Anti-trust!
"breaking DRM isn't all that hard to do. I'm totally non-technical, and I do it all the time. You don't have to be a techy, you just have to know where to look for the tools."
No. First you have to know that DRM exists at all, and then you have to know that it can be removed. Two very large conceptual hurdles for most people, and ones that corporations work very, very hard indeed to put in place.
It is hard to break free if you are unaware of being a prisoner to begin with.
I buy books on Kindle I would never bother to buy, let alone read in either hardback or paper. If there is a book I plan on keeping or an author I like, I buy their hardback.
I do find fascinating the abject prejudice against those of us who must resort to self-publishing in order to have our books see the light of day. I write in the genera of the history of the wild west. A good 80% of the books that are produced in this field are self-published. No publisher would touch them. The bitter irony is one of my books about Wyatt Earp has already produced more of a cash flow for me than a colleague who had a major contract. Because he refuses to even consider lowering himself to considering alternative routes for publishing, he has books that will never see the light of day.
No, my things are never going to be a best-seller. I know that. Why on earth would anyone in their right mind want a 528 page non-fiction about Wyatt Earp with nearly 2000 footnotes? Only a "buff" or a researcher would want it. I know just who my market is, how many books will sell, and what I must do to present them, properly.
I write in a field where we are probably some of the worst sticklers for accuracy, and provable fact. The irony is that someone comes along, gets a big contract, uses our work without citing us, and gets all the glory. It's not right, but that's the way of the world.
The world has changed. If we don't evolve, as authors, we are going to be left standing in the dust. Let's be honest about the publishing industry. If you aren't famous, have a scandal, or a "hook" you are never going to be considered. It's ugly, but true. You can make fun of authors such as moi, but at least we are actively working and do have a specific audience for our books. We'll never get rich, but how many writers ever do?
I was once ashamed of how I was working, but I'm not any more. I am bright enough to know that only a specific person is going to read what I write and there isn't a publisher in the world who would touch it this day and age. When you put 15 years of research into a subject, you really don't want to have some nit-wit assistant editor taking out terribly important historical information because they cannot even consider the fact that the OK Corral is not the name of a movie.
You either evolve or become extinct. I find the brave new publishing world to be quite exciting. The beauty of it is there is room to be very little. Remember, the dinosaurs went extinct but those tiny mouse size mammals survived.
As for the corner bookstore, where I live, in the middle of nowhere New Mexico, we don't have one. As a researcher, I still buy hard copies of books. For my current endeavor, I've bought at least 75 books, all from Amazon, most from used sellers. I remember having to wait 6 to 8 weeks for a local bookseller to finally get in a title I need. Those days are gone forever, and I, for one, am thankful for it.
If you really want to see dirty, check out the fine print with Apple's new app for publishing via their system. I was quite excited when I first heard about it. Forget it. At least Amazon doesn't require you to sign your life over to them, and then maybe they might now want your title to see the light of day - for political reasons.
Evolve or become extinct.
SJR
Amazon's business model is embodied in its mission statement: to be the most customer-centric company on earth. That's business, not altruism, but you will find every aspect of its operation to be traceable to that idea.
Having one company with 90% of the eggs is never a good idea - I don't think Amazon is evil any more than I think Apple is evil, but both companies, and all the various publishers, have long or short-term goals of gaining market share and maximising profits.
I'd like to see other strong e-tailers rise and I'm all for publishers dropping DRM, which will help, but Amazon isn't just deep pockets and a nice device. A competitor to Amazon needs to compete on:
- Serious devotion to customer service. Amazon is streets ahead of most competitors.
- Incredible search engine and recommendations engine.
- Vast inventory.
- Total ease of purchase and delivery to device.
- Self-publishers.
You are utterly dependent on Amazon. They pay your rent... because right now they give you 70% of the sales price. Now, if they achieve a monopoly position, they can invert the percentages and keep 70% for themselves and give you 30%. Boom, your income is less than half what it was.
Amazon has gone above and beyond to attract and work with self-publishers - and are making serious profits from them as a result. As Bezos noted in his last shareholders letter, "more than a thousand KDP authors now each sell more than a thousand copies a month".
No other major etailer gives self-publishers anywhere near the same opportunity. Oh, they list the books, but they don't promote them (through bestseller lists, etc) in anything like the same way. Amazon is doing a lot to lock in self-publishers and create a dependency - especially with the barbed offering of KDP Select (an exclusivity deal which is the worst thing they've come up with recently).
I don't want Amazon to gain absolute primacy because I think that would be bad for everyone. But the focus of discussion seems to be on trying to cripple Amazon rather than set up a powerful competitor. Perhaps Google Play will step up in the ebook arena?
[If publishers really want to cripple Amazon, the impact of withdrawing all their books for a couple of years would be immense - but I'm not sure the publishers would survive it either.]
Hey Charlie,
253 comments later, I think I fully understand how this breaks down. So here's my question:
If a future-oriented publishing company can disintermediate the agent (thus making you 10% more profit) and distributor, (making you whatever $$ that brings) handle the editing, copyediting, layout and cover artist in a fashion which doesn't interrupt your work flow, bring out your next novel as an e-book anywhere in the world, use high-quality POD for people who want physical books, manage the publisher's part of the relationship with fans, libraries, bookstores, etc., in a rational way, and give you a 50% royalty on the e-books, all this wrapped up in a decent contract that covers the appropriate rights, do you take the deal?
Why or why not?
If they're customer - centric, then why is it that they never test their Web interfaces on customers before putting them online?
Al Zorra writes:
I encourage you to do whatever you feel like here, it's your life, money, and content.
I am just saying, the Internet broke a bunch of preexisting business models and it's not going back. That's not "today's net is the only future". That's "the future is not the past."
Travel agencies imploded. Newspaper classifieds will never come back.
Amazon is not "good". But it is - and the world changed. As a consumer I like a lot of the change, but am acutely aware of monopoly and monosomy risks. You seem to me to be stuck in the past.
"...by 2010 Amazon had come close to an 85% market share in the ebook sector"
Yes, indeed it did. What Charlie has conveniently forgotten to mention, though, is that that figure is nowhere near true anymore. Since the Nook's and iBooks' rise in popularity, Kindle share has decreased quite a bit. Probably around the 50-55% mark now.
Still significant? Undoubtedly. But not as "monopoly-friendly" as Mr. Stross seems to imply. But hey, 85% does sound much more frightening, so there's that.
More importantly - so what if Amazon dominates the market? Who ever said that this would remain true till the End of Time? Go back 20 years and most people probably found it hard to see anyone other than B&N and Borders as dominant players, and now B&N is struggling to keep up and Borders is no more. Someone always comes along who figures out a better way to do what you're doing. Amazon will be no different.
All this brouhaha over Amazon's "monopoly" is severely exaggerated. The world is not coming to an end. Not even the world of publishing. Amazon dominates the market because they offer competitive prices and solid service. When NewOnlineRetailer comes along and offers better service and better pricing, consumers will jump ship; walled gardens aren't going to keep them in.