Since Amazon announced their new app to turn anyone using one to price compare into a Tool of the Devil, the retail world seems to have awakened to the threat imposed by Amazon to life as we have known it. Here are a few of the developments:
To recap: their new app allows anyone with the app on their smart gizmo to snap a photo of a bar code and to see what Amazon charges for the same item. (Note: for whatever reason, it does not, or is not set up to, work on books. That, my friends, is what they mean when they say ‘we dodged a bullet’.) Amazon can then capture that information, turning the user into a researcher/agent/spy. It also reduces any bricks and mortar business into being, as many have said, a showroom for Amazon. After all, you can’t literally go to an Amazon shop and handle the merchandise but they’re pushing their customers to do that in someone else’s business and then order from Amazon, perhaps even while you stand in the small independent.
On Dec 12, author Richard Russo had an Op-Ed piece in the NYTimes entitled Amazon's Jungle Logic about his daughter’s reaction – she’s a bookseller in Brooklyn. He relates reactions from other authors who responded to his questions of what they thought about it. Dennis Lehane called it ‘scorched-earth capitalism’, Stephen King called it ‘invasive and unfair’ and Scott Turow mused about it’s legality. Ann Patchett, who just opened her own independent bookshop chimes in as well. “If you like seeing the people in your community employed, if you think your city needs a tax base, if you want to buy books from a person who reads, don’t use Amazon.”
We wanted to highlight some comments left by the article:
Nialle Sylvan, owner of The Haunted Bookshop in Iowa City, IA: "We'll still win the market war, largely because we don't rely on algorithms. We do not, for example, throw away all memoirs by gay men to avoid being attacked by fundamentalist "family" groups for carrying "porn." We don't scramble the titles on the books every time we get new stock from a distributor. We don't bully small presses into matching losing price points to gain market share. We're real people. We have real books. We don't make stupid moves and apologize later: we offer service up front. Amazon still doesn't have an app for that."
Further on in the comments, someone posting as Olaf writes: "Wow. The Ayn Randian streak in these comments is depressing. So it's survival of the fittest above all else? Let's see if you still get those low prices once Amazon has run everybody else out of business. Today's discounts are paving the way for tomorrow's monopoly pricing."
Bill H notes: "Ironically, Jeff Bezos (founder of Amazon) gave $15 million to Princeton University today. I don't see Mom & Pop Shops bucking up millions in charity."
To that we reply to Bill - Mon & Pop shops don't HAVE millions to donate, that's why they're Mom & Pops. If we did have millions, we'd be called conglomerates. And Bill raises a good point: while both of the Bezos are Princeton grads, their millions have been made in Seattle. We have a major university here in Seattle, the University of Washington, yet they sent their donations out of the area. It brings to mind the criticisms of Amazon and their vacumming of sales taxes and sales out of localities and giving nothing back.
On Dec 8, Writer Beware featured analysis by Victoria Strauss of Amazon's KDP program for writers. This is a system by which self-published authors can join in Amazon's new lending library program for e-books. They've set aside a pot of money to fund it. The catch? Authors must agree to not allow the book to be available through any other distributor. She quotes from Amazon's contract "1 Exclusivity. When you include a Digital Book in KDP Select, you give us the exclusive right to sell and distribute your Digital Book in digital format while your book is in KDP Select. During this period of exclusivity, you cannot sell or distribute, or give anyone else the right to sell or distribute, your Digital Book (or content that is reasonably likely to compete commercially with your Digital Book, diminish its value, or be confused with it), in digital format in any territory where you have rights."
Mark Coker of Smashwords added his analysis to this program, adding "But there's a catch. Actually, there are multiple catches as outlined in Amazon's Terms and Conditions for the program. Some carry potential anti-competitive and restraint-of-trade implications."
In looking for reactions to this latest Amazonian act, we ran across this story: Best-selling Indie Novel Disappears from Amazon UK from Nov 28, 2011 on Passive Voice's website.
Then there have been the reviews of the new Kindle Fire themselves. The Seattle Times ran this piece by David Streitfeld who gathered a number of comments. The title of the article sums it up: Many Kindle Fire Buyers not thrilled with Tablet. Usability consultant Jakob Nielsen says it is "disappointingly poor." Among the criticisms: the power switch is too easy to hit accidentally, there is no volume switch on the outside of the device, you need skinny fingers to use the touch screen, there are no privacy locks on the thing and no way to assert parenting blocks on the web browsing, and that web pages are slow to load. "The device does do one thing well, he said. 'Shopping on Amazon is a breeze. 'If I were given to conspiracy theories, I'd say that Amazon deliberately designed a poor Web browsing user experience to keep Fire users from shopping on competing sites,' Nielsen wrote."
On Dec 15, Publisher's Weekly released this article, Is Amazon Pushing Publishers to Brink On Terms, Co-op? by Rachel Deahl and Jim Milliot. In it they report on Amazon's demands on publishers for special, lower discounts. Years ago, Penguin was sued by the American Booksellers Association over their application of different discounts allowed to different accounts. Penguin lost that suit and the rule since has been that all accounts are to be given access to the same discounts, no matter their size or volume of sales. Amazon's demands, then, would seem to violate that edict.
"Although publishers and distributors regularly have discussions with Amazon about these issues--negotiating the terms on these matters is a standard aspect of doing business--the retailer's requests, in recent weeks, have sent shocks through many in the industry, some of whom are worried about what will happen to their books if they cannot meet the demands.
Publishers and distributors have called the latest negotiations with Amazon the most adversarial to date, and many have noted that, for the first time, the retailer is outlining co-op costs for digital, as well as print. Amazon has, as some sources explained, long been pressuring publishers to provide ancillary content on the pages where their books are sold, from videos and q&a's to links to similar books. That content has always been something publishers have had to both pay for and provide. In the latest negotiations with Amazon, sources told PW, the price of providing that content has jumped to what sources say are astronomical percentages (but those sources would not provide specific numbers).
Many publishers and distributors said they have not, and cannot, cave to this newest set of demands from Amazon. The fear, though, is that the retailer could take punitive action. Recalling the most infamous instance of what can happen to a publisher that refuses Amazon's terms, many cite the showdown between Macmillan and Amazon when, in February 2010, the retailer removed the buy buttons to all Macmillan titles after the publisher said it would sell its e-books to the retailer on agency terms, as opposed to wholesale terms.
Although publishers fear seeing their titles disappear from Amazon--for many in the industry the retailer accounts for 20% to 25% of their business--some say the demands the retailer is making are impossible to meet and would nearly wipe out all of their profits there anyway. Furthermore, as some have noted, changing wholesale terms with Amazon, could present a legal issue. Although co-op deals can be varied and private, publishers are prevented by the Robinson-Patman Act from favoring one account over another with notably different wholesale terms. (It was the broad discrepancy in discount terms among accounts that led the ABA to sue Barnes & Noble and Borders in the 1990s.)
The demands regarding co-op have some particularly on edge. Not only are many publishers frustrated about being asked to pay more money for content they are providing, but the whole notion of co-op at the online retailer is unsettling. While the case can be made that co-op in a bricks-and -mortar store is a worthwhile investment--money is spent on getting books to physical areas of the store, such as front tables, where consumers will see those books first--it's much less logical on a Web site. Does having a video or an author Q&A on a book's page on Amazon really encourage a customer who has already clicked on that book to make a purchase?
More problematically, for many in the industry, the latest talks with Amazon are being described as less of a dialogue than a dictation of terms."
Meanwhile, on Dec 13, Slate ran a piece by Farhad Manjoo entitled Dont' Support Your Local Bookseller. "Compared with online retailers, bookstores present a frustrating consumer experience. A physical store—whether it’s your favorite indie or the humongous Barnes & Noble at the mall—offers a relatively paltry selection, no customer reviews, no reliable way to find what you’re looking for, and a dubious recommendations engine. Amazon suggests books based on others you’ve read; your local store recommends what the employees like." [ Shelfaware noted "As might be expected, reactions in defense of indies came fast and furious on Twitter, including @SalmanRushdie ("Bookstore lovers are 'cultists'? Maybe, but this man is a moron.") and @AlgonquinBooks ("Dumbest article of 2011.").] We might note here that any bookseller worth their raw chemicals will ask the customer what they read and like and make recommendations from that. We're not talking clerks at a Big Box warehouse, but a real bookseller. And let's not forget the stories of paying people to write reviews and recommendations for Amazon. This one concerns anti-snoring devices, just to show that this isn't just about books. Here's a story from 2004 about Amazon's promise to 'clamp down' on anonymous reviews. Here's one about someone posting fraudulent reviews that led to a lawsuit in 2010. Here's one from 2009 about a text book publisher offering Amazon gift cards to anyone who'd write a glowing review of their book.
Then there were the stories of working conditions inside one of Amazon's warehouses.
Mr. Manjoo then shows that he has no grasp of retail. "It’s not just that bookstores are difficult to use. They’re economically inefficient, too. Rent, utilities, and a brigade of book-reading workers aren’t cheap, so the only way for bookstores to stay afloat is to sell items at a huge markup. A few times a year, my wife—an unreformed local-bookstore cultist—drags me into one of our supposedly sacrosanct neighborhood booksellers, and I’m always astonished by how much they want me to pay for books. At many local stores, most titles—even new releases—usually go for list price, which means $35 for hardcovers and $9 to $15 for paperbacks. That’s not slightly more than Amazon charges—at Amazon, you can usually save a staggering 30 to 50 percent. In other words, for the price you’d pay for one book at your indie, you could buy two." First of all, very few novels are priced at $35, but art books, coffee table books, histories do go for that much. So condemning all 'new hardcovers' as being $35 is misleading at least. But the uglier assertion is that we independents are somehow cheating book buyers by selling a book at the retail price established by the publisher. What stupid, rapacious and mean people we unreformed cultists are! I'm so sorry that he's married to such a flawed woman!
That 'mark-up' that he thinks we should eliminate is called 'profit' and that is what we use to pay the bills, the payroll, the rent, the utilities and so forth. He appears to think that we don't need to make a living and that we should give books away for free. Tell me, Mr. Manjoo, are you willing to work for free? Do you not pay for food and shelter and, occassionally, entertainment? Booksellers like to be able to pay for those things, too. Uggggg - read his article for yourself.
Then read this by Dustin Kurtz, a response that is at once thoughtful, scornful and funny. I don't know who this guy is or what or where his bookshop is but if you live nearby, please go in and buy at least one book from him.
And here is Richard Russo's reply to Mr. Manjoo.
Let's wind-up with something Mr.Manjoo wrote himself in 2009 as the Kindle premiered: "In exchange for this convenience, though, the Kindle locks you down with more rules than the Army Field Manual. The Kindle won't let you resell or share your books. Anything you buy through the reader is fixed to your Amazon account, readable only on the Kindle or other devices that Amazon may one day deem appropriate. (The company has hinted that it'll build an iPhone app that can read Kindle books.) Even worse, you can buy books for your Kindle only from Amazon's store...But we've come to a different cultural consensus on books. First, we've decided that books should be sharable—when you buy a book, you can pass it along to others freely. In fact, governments and large institutions actively encourage the practice; we build huge, beautiful buildings devoted to lending books to perfect strangers. We've also decided that there should be an aftermarket for books: When you buy a book, you're also buying the right to sell that book when you're done with it. This not only helps people who can't afford new books, it also encourages those who can afford them to buy more—it's much less risky to buy a $30 hardcover if you know you can sell it for $15 in six months." That's from his article Fear the Kindle: Amazon's amazing e-book reader is bad news for the publishing industry. So, which is it, Mr. Manjoo - Amazon is a threat to books and publishing in 2009 or it's the only thing that's going to save it in 2011?
Finally, let's do some math with Mr. Manjoo's own book: True Enough: Learning to Live in a Post-Fact Society was published in March 2008. If you order it from Amazon, the $25.95 hardcover price is sliced to $16.34 (a 37% savings). However, there is no reason to pay even that much; the e-book is only $9.34!They also offer it used for $4.10. However, if you sign up for a free, 30-day trial with Audible (which is owned by Amazon) you can get the book for free! Isn't that great! You can download and read Mr. Manjoo's book for free on Amazon! What are you waiting for! Isn't it wonderful that there are so many ways to not only get Mr. Manjoo's book without paying that awful markup that would allow him to get royalties! What a marvelous and modern thing!
To be continued...inevitably.