When Ink Runs Red

The unfolding debacle with regard to eBook pricing is both fascinating and, in some ways, bewildering. So for those who’ve not been following the issue, here’s a quick recap:

Ebooks have been around  for well over a decade. Although there were several—and some would say better—eBook readers on the market years before Amazon introduced the Kindle in 2007, the lure of instant eBook downloads via the Kindle’s unique, built-in wifi, added to Amazon’s vast inventory and ultra-prominent brand, quickly made Amazon the main player in the eBook business; even today, with competition from the Barnes and Noble Nook, the Sony Reader, Apple’s iPad, and numerous apps that enable one to read on a smartphone, Amazon still claims some 60% of the eBook market.

The action kicked off last summer with a class action suit filed against Apple and five big publishers, accusing them of eBook price fixing. Back in 2010, Amazon had been selling eBooks at $9.99 in a drive to grab as much market share for the Kindle as possible. With the introduction of the iPad, Apple and the publishers reacted with a covert deal to set their own eBook prices so that no bookseller could undercut Apple (déjà vu of Apple’s policy over individual song pricing, anyone?). As a result, eBook prices jumped overnight. Amazon wasn’t about to give up: in February of this year, Amazon dumped some 5,000 titles from IPG (Independent Publishers Group) because they refused to go along with Amazon’s pricing structure. And yesterday the US Department of Justice opened its own suit, simultaneously announcing that 3 of the 5 big publishing houses had agreed to settle, leaving Penguin and Macmillan to fight alone.

Although one can certainly have some sympathy for the Publishers’ and the bookselling industry’s assertion that once Amazon cements its monopoly this will quickly turn into a Pyrrhic victory for consumers, it’s very, very hard for me to have any sympathy for the book publishing industry as a whole. Not only has it clung for decades to a truly awful business model, but the industry is well-known for its historic lack of transparency over authors’ royalties and for its often onerous contract clauses; like the music industry before it, book publishers have only themselves to blame for their utter failure to adapt to a rapidly-evolving marketplace and new technologies. It’s not as if someone changed the rules overnight: the writing has been on the wall for at least a decade, and the book publishing industry simply sat on its hands and showed the same fatal complacency that the music industry did several years ago.

Like it or not, we live in a Darwinian, capitalist world, and Amazon has achieved dominance by serving the book-reading public with truly phenomenal efficiency; if they’ve sometimes done so by taking a loss on individual book sales to cement their market share, so what? It’s their money, not the taxpayer’s.

From a writer’s point of view, Amazon has also—so far—proved benign: indie authors publishing their own titles electronically get to remain in print indefinitely, have near-complete control over their work, and keep a far, far greater share of the net. Yes, they’re forgoing marketing, cover design, copyediting, and the rest… but given that traditional publishers offer most new authors just about zero marketing help and often appallingly poor covers on which they have no input, this is a debatable loss. Nor do I buy the ‘ocean of dreck’ argument which argues that  publishers have been the industry’s shining Guardians of Quality: although they may have screened out the worst—manuscripts of  third-grade level literacy—the truth is that a large percentage of published works have always been and will continue to be crap, per Sturgeon’s Law.

The nightmare scenario that the book publishing industry and many indie authors warn of is that once Amazon has run the competition out of town and achieved a monopoly, it’ll start jacking up prices and chipping away at author royalties. While the second is a distinct possibility, the first is unlikely. Why? Because (i) the market won’t wear it; and (ii) capitalism abhors a vacuum. Even if all the big five publishers were to fall—and they won’t, because some of them show signs of ‘getting it’ and adapting—other players will appear to compete with Amazon. Who would that be? Why, Apple, Google, and maybe even Mr. Zuckerberg (Facebook Publishing, anyone? Ugh.). All these have the muscle to go head-to-head with Amazon, though it certainly won’t be easy.

The bottom line? No monopoly endures for long, and modern capitalism tends to duopolies at worst; the free market is a Darwinian arena where the blood never dries. And whenever a Goliath appears, there’s always going to be a David to challenge them.

See also WIRED magazine, DOJ Announces Terms of Stettlement

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2 Comments

Filed under Material World

2 responses to “When Ink Runs Red

  1. Aidan Fritz

    I agree with you regarding the monopoly. I think to some degree it’s already happening. Although, it probably only does for a small fraction of folks who are computer savvy.

    If I know an author sells ebooks directly off their website, I’ll prefer purchasing it there (although I don’t necessarily look there first). I’ve also found a couple of publishers (Baen being one) that have e-books on their website that aren’t on Amazon. Lastly, I purchase my foreign language books from non-Amazon companies.

    • Hi Fritz. Baen is an interesting and unusual case. First, they sell their titles–the cheaper of which I think are all backlist– direct from their own webstore; second, their books are DRM-free; and third, they operate their own lending library. They’re a big outfit and have clearly thought things through. I don’t think their ebooks are on Amazon, so they can keep the price structure they want. Also, kudos to you for buying direct from the author’s website where possible–that’s a great way to support authors 🙂

      Here’s an interesting piece on Baen’s policy. It also references an NYT article that shows Jim Baen had a strategy cooking as early as 2001: http://www.teleread.com/ebooks/another-source-for-kindle-books-baen/

      The more I read about this dust-up on blogs and op-eds, the more amazed I am at the vast spread of opinion. It’s a very, very complicated issue whose outcomes are both unclear and yet critical.

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