Seattle Mystery Bookshop

SPECTRE'S MONOPOLY

Amazon Bites Off Even More Monopoly Power

"The company has established its level of dominance because of the failings of our current antitrust laws. To understand why, you first need to understand the scope of Amazon’s power. It has captured 43 percent of all internet retail sales in the United States, with half of all online shopping searches starting on Amazon. In 2016, it had over $63 billion in revenue from online sales in the United States — or more than the next 10 top online retailers combined. It controls 74 percent of e-book sales, is the largest seller of clothes online and is set to soon become the biggest apparel retailer in the country."

"In building this vast empire, Amazon chased growth over paying dividends, pricing key goods and services below cost to chase out competitors. It invested heavily to buy out innovators like Diapers.com after waging price wars. (Amazon followed its acquisition by raising prices.)"

"Think of Amazon as a 21st-century version of the 19th-century railroads that connected consumers and producers. Because of their gatekeeper role, railroads had power to discriminate, both among users and in favor of their own wares. These middlemen could tax the farmers and oil producers who depended on their rails — or deny them a ride and sink their livelihoods.

 

In several key ways, Amazon uses its power as the railroads did. By integrating across business lines, Amazon now competes with the companies that rely on its platform. This decision to not only host and transport goods but to also directly make and sell them gives rise to a conflict of interest, positioning Amazon to give preferential treatment to itself.

The vast troves of information it collects enable it to self-deal with great finesse. News accounts tell how Amazon exploits data collected on the businesses using its platform to go head-to-head with them.

And like the railroads of yore, Amazon dictates terms and prices to those dependent on its rails. During negotiations with the publisher Hachette over e-book pricing, Amazon showed its might by effectively disabling sales of thousands of Hachette’s books overnight."

SPECTRE CONTINUES TO CONQUER THE WORLD

There were many stories about how much of the holiday's on-line sales were placed through Ama - er um - SPECTRE in 2016.

From US News: Macy's Had a Bad Holiday Season "

"The retailer said Wednesday that sales at its established stores fell 2.1 percent in November and December compared to the same period last year. Macy's Inc. pointed to changing consumer behavior and said its performance reflects the challenges that are facing much of the retail industry."

From Fortune:Amazon Alone Was Responsible for 30% of Cyber Weekend Revenue

From SeekingAlpha.com: "To give an idea of how much Amazon dominated sales from November 1 to December 16, its closest competitor Best Buy (NYSE:BBY) wasn't even able to grab 4 percent of online e-commerce sales. The rest, including Target (NYSE:TGT) and Wal-Mart (NYSE:WMT), weren't able to even produce a market share of 3 percent, with Target having a 2.9 percent share, and Wal-Mart only able to generate a 2.7 percent share of online sales."

From intelligence.slice.com: "Amazon’s share of U.S. e-commerce sales grew significantly as we got closer to Christmas and Hanukkah.  From November 1 through Cyber Monday, Amazon’s share of e-commerce was 33 percent, compared with 44 percent during the final stretch (December 15 through December 25).  However, this was consistent with Amazon’s share during the 2015 Holiday season.  Amazon netted out with a consistent share of 38 percent in both 2015 and 2016." They posted the following graph of where consumer's money went:

From USA Today: Amazon grabbed half of last-minute, online Christmas shoppers

There were also many stories about how sales did not meet expectations at the big department stores during the same period. From Reuters:

"Disappointing holiday-season sales at Macy's Inc (M.N) and Kohl's Corp (KSS.N) underscored the uphill task facing department stores to win back shoppers, who are increasingly turning to online retailers and spending less on apparel.

Macy's shares fell as much as 14 percent on Thursday, their biggest percentage drop in seven months. Kohl's stock dropped as much as 20.5 percent, its biggest decline in more than 14 years.

Both reported lower-than-expected sales for November and December and cut their full-year profit forecasts on Wednesday.

 

Macy's, known the world over for its flagship Herald Square store in Manhattan and its annual Thanksgiving Day parade, is considered a bellwether for department stores."

There was news that Macy's will be closing 100 stores due to poor sales and what that would mean to their soon-so-be-unemployed workers. Washington State will lose stores in Everett and Kelso, Oregon is losing stores in Salem and downtown Portland.

From CNN on Jan. 4, 2014: Macy's is closing 68 stores, cutting 10,000 jobs

If you read the stories you see that this isn't all about Macy's. Sear's and KMart and Kohl's are going through this, too.

Then there was news about SPECTRE's plans to hire 100,000 over the coming months.

Finally, there was news that SPECTRE's leader, Jeff Bezos, from the Seattle Times:

"Jeff Bezos, one of the Seattle area’s wealthiest and best-known residents, has reportedly purchased a mega-mansion in Washington, D.C. But don’t expect him to abandon us.

The Washington Post on Thursday cited unnamed sources in reporting that the Amazon.com CEO had dropped $23 million on the former Textile Museum, a 27,000-square-foot property in D.C.’s Kalorama neighborhood. The 10-bed, 14-bath home, which spans two historic mansions, was bought under a trust in October but the paper outed Bezos as the man behind the purchase."

When you own the world, why not spend millions on a mansion you'll not occupy?

Sorry to sound like a broken record but we've been writing and warning about this for years.

From our post of July 11, 2014, we included a link to a story in The Guardian: Amazon's Jeff Bezos: the man who wants you to buy everything from his company Seems as if consumers are eager to help him.

Back on February 3, 2012 we wrote  Welcome to the Company Town and the Company's Rules

"You’re going to be living in a company town, where the company owns the store, sets the prices and rakes it in.

Don’t want to live like that? Fight it now. Talk about it with the people you know.

Friends don’t let friends support the Borg.

Resistance is not futile."

Maybe it is.

Last year, we had our GoFundMe campaign to help us stay afloat, and you came through like champions! However, that - in and of itself - will not be enough to continue to sustain us through this next year. We still need you to help out as a customer. Come into the shop, buy online, but choose us over Amazon, please. Choose all your mom-and-pop shops first.

Otherwise we're afraid that we'll go the way of those bigger stores, squashed under SPECTRE's big boots.

 

Running Silent, Running Deep: Resurfacing to Fire on SPECTRE

It's been awhile since we said anything about Ama - - er, um - SPECTRE. We had come to feel that we'd said what needed to be said and to no good. After a while, you have to stop screaming at the TV. We went silent, watching SPECTRE do its thing.

Its thing included opening stores (the antithesis of it's original business plan), fiddle with plans to launch its own air force for deliveries, vastly increase its advertising budget to where you can't turn around without seeing their logo (really, is it supposed to be a smile, a mushroom, a swoosh of speed, or something sexual? We know, A-Z, but really!).

We've read about them releasing new gizmos, new programs, new revolutionary ways to work their way into the lives of their data producers, making it more difficult to find some books, even ceasing to post original prices vs. discounted prices. All the while, more and more independent bookshops have closed.

Now we read that, in their physical stores, they've instituted different prices to buyers depending on whether they've ponied up to subscribe to the tribe that gets the best deals. Yes, you have to pay extra to save more.

Yes, if you haven't paid them to be part of the in-crowd, you get zero discount.

We've been writing about, and warning about, SPECTRE for years. Our first post was back in June of 2011. It is with no satisfaction that we now take you back to a post from March 2, 2012 in which we wrote:

"There is one issue that no one seems to be addressing.

Amazon proponents say that Amazon is bringing the world a river (yes, that's why it is named Amazon) of affordable material and that has to be good for everyone. Well, yes, they do make things affordable. Now. But, after they've run other publishers and other booksellers out of business and have a virtual - if not actual - monopoly on publishing and bookselling, do you really expect them to continue to discount so deeply? If there is no competition, do you really believe that they won't raise the prices on everything, eliminating discounts, slashing the percentages given to authors? If they're the only game in town, what is to stop them? At some point, if Wall Street is to continue supporting them, they'll have to start showing profits to shareholders. To do that, they'll have to take it out of the hide of those who buy from them and sell to them.

That's when you will find yourself living in the company's town, having nowhere to shop but at the company store, playing and paying by the company's rules."

We don't really want to be the ones to say, "Told Ya" but there you go. It seemed inevitable, didn't it?

However, there is some good news on the horizon as well, and we do take deep comfort in this:

Saturday, November 26 is Small Business Saturday. It's traditionally the beginning of the Christmas shopping season. Small Business Saturday is a program begun in 2010 to encourage folks to support their local, small businesses, the ones who employ their friends and neighbors. Support has grown over the years, coming from elected officials from local offices all the way to DC (glad they can unite behind something once in a while...). By 2014, $14.3 billion was spent at small independent outfits. By 2015, 95 million showed their support on that day. 

Monday, November 28 is Cyber Monday. If you can't make it to an independent to shop on Saturday the 26th - isn't it sad how many people no longer have small businesses nearby? - you can order from one of us by phone or on-line.

Casting a ballot is critical. But you you also vote with your money as well, and where you spend it is just as important as casing ballot.

Vote for Small Business!

Guest Column by Sarah Bagby in Wichita Business Journal Decries Amazon Subsidies

From the American Bookseller's Association

By David Grogan, Tuesday, Apr 19, 2016

On April 15, the Wichita Business Journal published a guest column by ABA Board member Sarah Bagby, of Watermark Books & Café in Wichita, Kansas, in which she questioned the state’s economic policy in providing an out-of-state competitor with subsidies.

The column, “Kansas’ deal with Amazon a slap in the face to small businesses,” was prompted by the news that Amazon will be awarded tax incentives to open a facility of more than 822,000 square feet in Edgerton, Kansas. According to the company, the distribution center will create approximately 1,000 jobs.

In the column, Bagby wrote: “I think all the [media] updates have missed the real story: How many thousands of jobs ultimately will be lost because of Amazon’s growth in the state?... Let’s look at other states where Amazon has opened facilities in exchange for tax deals. If the results there are anything to go by, Amazon will end up costing our region and state quite a bit while providing very little in return.”

To entice the online giant to open the facility in Edgerton, Kansas agreed to pay $1.8 million in road improvements, and the Kansas Department of Commerce has granted incentives to Amazon for its facility.

While that may be good news for Amazon, the recent study “Amazon and Empty Storefronts,” commissioned by the American Booksellers Association and conducted by Civic Economics, “makes clear that this facility is a very poor long-term investment,” Bagby wrote.

She also cited numbers from the study showing how in 2014, while Amazon operated 65 million square feet of distribution space employing roughly 30,000 full-time workers and 104,000 part-time and seasonal workers, Amazon sales still produced a net loss of 135,973 retail jobs at the national level. Moreover, in Kansas, where Amazon already has some 300,000 square feet in distribution space and employs 533 people, Amazon sales still produced a net loss of 1,922 retail jobs in the state even factoring in these jobs at existing distribution centers. All told, Amazon has produced a net jobs loss in 42 of the 50 states.

“Those who say they support job creation should then stop rewarding large, corporate chains,” Bagby said. “The job creators in this country are small businesses. In 2014, small businesses created nearly two million of the roughly three million private sector jobs generated, according to data from the Small Business Administration. More than seven million of the 11 million jobs created during the nation’s economic recovery have been generated by startups and small enterprises, SBA reported.”

Bagby called on her state lawmakers and city officials to provide more than “lip service” to small businesses and “instead, support them with policies and regulations that foster smart growth. And as a hard-working small business person, at the very least, my elected officials should stop asking me to subsidize my own competition.”

A New Year's Resolution

 "I claim to love books; and, more than that, to love bookshops. Yet for eight years I have poured money into a company that many booksellers regard as the greatest threat to their survival.... It is the time of year to make resolutions. You could resolve to eat less, or jog more. Or you could join me in making a simple pledge: to buy every book you read next year from a bookshop. I don't know about you, but Amazon has had quite enough of my money already."

--Laura Freeman in a piece for the Daily Mail headlined "Why I'm boycotting Amazon"

Ursula Le Guin: "I Think Hard Times are Coming"

 

The 65th National Book Awards were held last night in NYC.

The New Yorker's website noted: "But it was Ursula K. Le Guin, accepting the Medal for Distinguished Contribution to American Letters early in the evening, who gave the definitive remarks of the ceremony, gliding through the genre debate and the Amazon-Hachette debacle on her way to explaining the crucial role that literature must play in our society. Petite, her silver hair shining, Le Guin shrugged and grinned when Neil Gaiman placed the medal around her neck. She said that she wanted to share the honor with her fellow-fantasy and sci-fi writers, who have for so long watched “the beautiful awards,” like the one she’d just received, go to the “so-called realists.” Then she continued:

Thank you Neil, and to the givers of this beautiful reward, my thanks from the heart. My family, my agent, editors, know that my being here is their doing as well as mine, and that the beautiful reward is theirs as much as mine. And I rejoice at accepting it for, and sharing it with, all the writers who were excluded from literature for so long, my fellow authors of fantasy and science fiction—writers of the imagination, who for the last 50 years watched the beautiful rewards go to the so-called realists.

I think hard times are coming when we will be wanting the voices of writers who can see alternatives to how we live now and can see through our fear-stricken society and its obsessive technologies to other ways of being, and even imagine some real grounds for hope. We will need writers who can remember freedom. Poets, visionaries—the realists of a larger reality.

Right now, I think we need writers who know the difference between the production of a market commodity and the practice of an art. Developing written material to suit sales strategies in order to maximize corporate profit and advertising revenue is not quite the same thing as responsible book publishing or authorship. (Thank you, brave applauders.)

Yet I see sales departments given control over editorial; I see my own publishers in a silly panic of ignorance and greed, charging public libraries for an ebook six or seven times more than they charge customers. We just saw a profiteer try to punish a publisher for disobedience and writers threatened by corporate fatwa, and I see a lot of us, the producers who write the books, and make the books, accepting this. Letting commodity profiteers sell us like deodorant, and tell us what to publish and what to write. (Well, I love you too, darling.)

Books, you know, they’re not just commodities. The profit motive often is in conflict with the aims of art. We live in capitalism. Its power seems inescapable. So did the divine right of kings. Any human power can be resisted and changed by human beings. Resistance and change often begin in art, and very often in our art—the art of words.

I have had a long career and a good one. In good company. Now here, at the end of it, I really don’t want to watch American literature get sold down the river. We who live by writing and publishing want—and should demand—our fair share of the proceeds. But the name of our beautiful reward is not profit. It’s name is freedom.

Thank you.

[thanks to parkerhiggins.net for the transcription of her speech.]

Amazon's Monopoly Is Not OK

Oct 19, 2014

From Nobel-prize wining economist Paul Krugman:

"Amazon.com, the giant online retailer, has too much power, and it uses that power in ways that hurt America....

....Which brings us back to the key question. Don’t tell me that Amazon is giving consumers what they want, or that it has earned its position. What matters is whether it has too much power, and is abusing that power. Well, it does, and it is."

The last Month in SPECTRE news

With our last SPECTRE post on June 12, we've been tracking the stories concerning the tyranical outfit. Here's what we've seen, listed according to the day on which we saw it:

        June 13, 2014 

From The Guardian: Amazon Living Wage campaigners place dummy book on site as protest

From The Stranger's "The Slog", links to two stories:

"Stephen Colbert: Because of Amazon's Scorched-Earch Tactics, More People Are Getting Screwed Than in 50 Shades of Grey"

[from 7/28/13, our own post: Scorched Earth Business Practices]

"Here's a great interview with David Sedaris about Amazon"

        June 19, 2014

From the LA Times: "Amazon Fire smartphone includes retail bombshell" - "Of course, Firefly will work not just in bookstores but in retail establishments, from a Prada boutique to Wal-Mart. It can identify up to 100 million items."

June 20, 2014

From the NY Review of Books, Steve Coll writing about Citizen Bezos

        June 23, 2014

From The Bookseller, Benedicte Page's "Amazon pressing for new terms in UK"

[if you're keeping score, that's three countries in which SPECTRE is exerting presser on publishers - US, Germany, and now the UK]

        June 24, 2014

From Melissa Eddy, writing in the NY Times: "German Publishers Seek Amazon Enquiry" - "The publishers contend that Amazon’s action should be considered 'extortion.'"

SPECTRE: SPecial Executive for Counter-Intelligence Terrorism Revenge and Extortion

        June 25, 2014

From The Guardian: "Amazon's Jeff Bezos: the man who wants you to buy everything from his comnpany"

“His main motivation is not to make money selling phones, but to encourage customers to buy even more stuff – from books and DVDs, to nappies and pet food – from Amazon. Specifically, he wants them to sign up and buy from Amazon Prime, a special service that offers free speedy delivery, ebooks and access to an online library of films and TV shows for £79 a year. Analysts at UBS reckon Amazon will lose £176m on smartphones this year and up to £330m next year. To make up for this, each phone owner would have to spend £207 more on Amazon products than the average customer.

This might well happen because the phone is primarily designed as a shopping device. It has a button called Firefly, which allows users to take a photograph of an object and immediately see its listing on Amazon. The software, which is linked to the user's Amazon account and credit card, can also recognise music – much like Shazam – and direct you to buy the album or concert tickets on Amazon.

Bezos, who is normally seen in jeans and a formal blazer, spent as much of the 90-minute presentation speaking about the success of Amazon Prime as he did on the new phone.

The numbers explain why. The average Prime member spends £719 a year on Amazon, £411 more than a regular user. Prime members' purchases and membership fees make up more than a third of Amazon's US profits. And membership is projected to rise 150%, to 25 million, by 2017.”

Also from The Guardian, Alison Flood wrote "New Amazon terms amount to 'assisted suicide for book industry, experts claim' "According to book industry bible the Bookseller, to whom UK publishers spoke on condition of anonymity, Amazon is putting publishers under "heavy pressure" to introduce new terms. The Bookseller reports that these include the proviso that "should a book be out of stock from the publisher, Amazon would be entitled to supply its own copies to customers via its print-on-demand facilities", and that "books cannot be sold for a lower price than Amazon's anywhere, including on a publisher's own website".

        June 26, 2014

Agence France-Press: French lawmakers adopt 'anti-Amazon' bill to help out small bookshops'

As we noted in a post on June 21, 2012, bookselling in France has always been much different.

        July 1, 2014

From the New Zealand Herald, "Amazon Defends Tactics Aganst Publisher Hachette"

        July 3, 2014

Amazon says its delivery delays on Hachette books will benefit readers

        July 7, 2014

In The Independent, author Emma Chapman asks "Do you want to live in a world run by Amazon? Their plans for domination of the digital world are deeply concerning."

we asked the same thing in our 2/3/12 post, Welcome to the Company Town and the Company’s Rules

        July 8, 2014

From The Washington Post: "Amazon "Dangles E-Book Offer Amid Hachette Dispute; Hachette Rejects Web Retailer's Proposal That Writers Keep E-Book Sales During Contract Talks"

        July 11, 2014

The French Do Buy Books, Real Books

Author’s Guild president to Amazon: No, thanks. We don’t want your money.

FTC Sues Amazon over purchases by kids

 

SPECTRE: relentless.com

On The Slog, (6/9) The Stranger's Paul Constant reported yesterday that due to contentious negotiations with another supplier, Ama - er, um SPECTRE has suspended the pre-ordering fuction for Warner Brothers/Paramount movie releases.

He quotes from Bill Hunt on The Digital Bits: "Not done yet... some of you have been asking why your Amazon.com pre-orders for select Warner Bros, Paramount catalog, Viz Media (and other Warner-distributed) titles have been suspended. We’ve learned through industry sources that Warner Home Video and Amazon.com are in the middle of negotiations on a new contract, so pre-orders on Warner titles have been suspended until a deal is reached. Hopefully, the situation will be resolved soon."

Sounds like SPECTRE is spreading it's 'negotiating tactic' beyond just Hachette. Keep an eye on this to see if they up the ante.

Jeremy Greenfield, writing in The Atlantic on May 28th, notes: "Hachette is the first among the world's five largest publishers (Penguin merged with Random House last year) to sign another contract with Amazon since its court-mandated contract in 2012—and likely the most important. In the coming two years, Amazon and its competitors will renegotiate contracts with all of the world's largest publishers and in 2015 they will be again allowed by law to negotiate contracts where they determine the prices of e-books. Amazon likely doesn't want this and, by the looks of it, is even willing to inconvenience its own customers in the short term to ensure this long-term outcome."

Here's the view of it from The Guardian in the UK (June 11): Amazon Pulls Warner Bros movies as Trade Dispute Expands

One can infer that if the scorched earth practices used against Hachette continue and prove beneficial to SPECTRE they will use them against other suppliers - as they currently are against Warner.

SPECTRE has battled the NYC publishers. Are they now going to take on the LA studios?

Maybe the music industry at the same time?

Janet I. Tu, writing in the Seattle Times (6/11, Amazon launches streaming music for Prime subscribers), "Artists from Warner Music Group, Sony Music Entertainment and a number of independent labels are included. But artists from Universal Music Group, the world’s largest music label, aren’t." So they'll sell Warner Music but not Warner movies? The issue with Hachette for their books and Warner Brothers for their movies has been discount amounts - that is, how much SPECTRE makes from each sale. Tu notes "Negotiations with the music companies began about six months ago but slowed when those companies considered Amazon’s offers too low, according to a New York Times report."Those who do begin using the system should bear in mind SPECTRE's history of removing e-books from customer's devices. This music system will be cloud-based, which would seem to make it even easier for a supplier to monkey with someone's purchases. And, of course, their customers have to pay to be prime members even before they pay for the music they want. They'll pay twice.

And if all of that isn't enough, SPECTRE "...plans local services marketplace this year". Writing for Reuters (6/11), Deepa Seetharaman reports that it "later this year plans to launch a marketplace for local services, a broad term that encompasses anything from babysitters to handymen to birthday clowns, beginning with a single market, several people familiar with the matter said."  What market are they going after now? "The move takes direct aim at consumer review sites Yelp Inc and Angie's List Inc as well as U.S. home improvement chains Home Depot Inc and Lowe's Companies Inc, which have both invested in ways to link customers with local plumbers, painters and other service providers." (thanks to Paul Constant for pointing toward this article.)

Americans usually have a distrust of huge institutions. A huge segment of the population distrusts, and indeed fights, Big Government. At the start of the Great Recession, there was understandable fury at the big banks and the idea of Too Big To Fail. Supposedly, some of the most hated instutions on the planet are the cable companies and the monopolies they have our TV and internet connections.

Then, too, people have been outraged over the intrusiveness of the NSA and them sticking their noses and fingers into the lives of private citizens by hoovering up all sorts of private information. It's Big Goverment, Big Military-Industrial Complex, Conspiracy Theory stuff and all of it feels counter to the Open Range of American Myths.

So why aren't more alarm bells being sounded over SPECTRE's incursions into EVERYTHING? Cloud computing for the CIA and finding you a baby sitter? Your music, your movies and your reading material? When does SPECTRE become 'too big'?

As George Packer wrote in The New Yorker, "Bezos originally thought of calling his company Relentless.com - that URL still takes to to Amazon's site...". Later in the same article, Packer writes "Before Google, and long before Facebook, Bezos had realized that the greatest value of an online company lay in the consumer data it collected."

The relentless acquisition of power, influence, and information.

 SPECTRE

Authors Talk about SPECTRE

Sherman Alexie on The Colbert Report talking about SPECTRE vs. Hachette

Charlie Stross : Amazon - Malignant Monopoly, or Just Plain Evil?

Here's Barry Eisler writing in favor of Amazon

Douglas Preston says he feels betrayed: "...after having supported the online retailer even as its growing power raised alarm bells. Some of his books now face shipment delays and higher prices because they are published by Hachette. 'I’ve supported Amazon from the time it was a struggling startup,' Preston said in an interview. 'I feel betrayed personally by this company now that it’s become one of the largest corporations in the world that it would do this to me.'”

Derek Beres wrote from a different perspective: Why the Amazon-Hachette Debate Means Nothing to Writers. Beres dismissed concerns about one company's control of communication and the exchange of ideas: "That’s exactly what you’d expect when people think they’re more important than they are."

We thought it might be instructive to detail some of the authors are affected by this.

Authors published by Hachette (with either new books or backlist titles) - not an exhaustive list of ALL of their writers but authors we have had on our shelves:

Jeff Abbott, Megan Abbott, Kate Atkinson, David Baldacci, Josh Bazell, M.C. Beaton, Lauren Beukes, Mark Billingham, Holly Black, Sara Blaedel, Lawrence Block, Sandra Brown, Stella Cameron, Gail Carriger, Donato, Carrisi, Lincoln Child, Marica Clark, Michael Connelly, Jeffery Deaver, Ted Dekker, Nelson DeMille, Robert Dugoni, Warren Ellis, Zoe Ferraris, Colleen Gleason, George Dawes Green, Derek Haas, Brian Haig, Carl Hiaasen, Anne Holt, Anthony Horowitz, David Hosp, Elizabeth Singer Hunt, Charlie Huston, Joshilyn Jackson, Hannah Kent, Sherrilyn Kenyon, Dorothy Koomson, Michael Koryta, Richard Lange, Joe R. Lansdale, Margaret Maron, Archer Mayor, Brad Meltzer, Deon Meyer, Denise Mina, David Morrell, Walter Mosley, Thomas Mullen, Marcia Muller, James Patterson, George Pelecanos, Benjamin Percy, Elizabeth Peters, Douglas Preston, Ian Rankin, Cornelia Read, Michael Robotham, Karen Rose, David Rosenfelt, Sebastian Rotella, JK Rowling (as Robert Galbraith), Greg Rucka, James Sallis, CJ Sansom, Nick Santora, Maria Semple, Darren Shan, Duane Swiercynski, Alic Sebold, Dan Simmons, Tom Rob Smith, Trenton Lee Stewart,  Donna Tartt, Laini Taylor, Jim Thompson, Scot Turrow, Carrie Vaughn, Urban Waite, Joseph Wambaugh, Donald E. Westlake, Kate White, Don Winslow, Tom Wolfe, Daniel Woodrell, Carlos Ruiz Zafon, Anne Zouroudi

SPECTRE, the gatekeeper

The SPECTRE/Hachette controversy continues to burble. With the annual national book trade show last weekend in NYC, it's stayed a raging conversation. Here's more:

May 28 - David Streitfeld wrote another detailed account of where the battle stands. Hachette and Amazon Dig In for a Long Fight Over Contract Terms. He notes "Amazon wants to do away with gatekeepers. It promises a world where books are cheap, where anyone can publish anything, where there are no editors or distributors saying this is not what is selling now, go away." The nauseating irony is, of course, that SPECTRE is now the bullying gatekeeper it has always denounced.

June 1 - David Carr's column in the NYTimes reads as if he can't quite decide which side of the battle to cheer on. In Amazon Absorbing Price Fight Punches, he opens by mentioning how lively the book convention was over the weekend. He goes on to say selling books is vastly different than selling tires or tube socks. "By blocking inventory, Amazon has become the less-than-everything store. Books may be a small fraction of what it sells, but books are precious, troves of speech, not just products for commerce. They were also the linchpin of the company’s early march to retail dominance. The symbolism is profound." Here he highlights that books are nothing like any other item that anyone sells. Yet, later in the column, he trumpets the ease of ordering from, and saving money with, SPECTRE. He doesn't seem to understand that buying anything from SPECTRE says you support what they do and how they do it.

May 29 - writing in The Guardian, Suzanne McGee's subtitle would lead you to believe she's grasped the larger picture ("Is Amazon Wrecking Your Beach Reads? The retail giant has been good to customers so far, but its petty fight with a publisher should make fans nervous about the future") but fails to make it clear if she does. "Amazon is collecting millions of dollars revenues – which it has poured into marketing and infrastructure development, growing the company to making us more reliant on it to meet our needs." Yes - reliant is a synonym for dependent. Dependent people don't think to shop anywhere else, can't imagine shopping anywhere else, and if SPECTRE continues to rule the roost and drive out competition, those that are reliant on SPECTRE will have no alternative but to shop there. You only have choice when choices are available. 

But McGee goes off the rails with her last sentances: " It’s worth taking minute to remember that while the publishing industry may indeed be inefficient, as its critics have claimed, Amazon isn’t a crusader for consumer rights. It’s in business to make money for its shareholders. If it can help us save money along the way, well, that’s great. But we’d do well to remember that Amazon, like any other business, has no higher moral purpose at stake here." While it is true that any business must make profits to pay the bills and continue in business, as others are noting, selling books is not at all the same thing as selling tomatos or tricycles. Books are many things - forms of entertainment, works of art, messengers of ideas, tomes of warnings, methods of education, and forms of shared thoughts. It is worth repeating what David Carr wrote:  "...books are precious, troves of speech, not just products for commenrce."

But back to her point about shareholders: see James B. Stewart's April 25 column, "Amazon's Shrinking Profit Sets Off a Seismic Shock to its Shares"

May 30 - in Slate, Evan Hughes' column ("Bringing Down The Hachette: Publishers could have thwarted the latest Amazon power grab. They didn't and books will suffer for it.") clearly deliniates the core of the threat: "If Amazon prevails and gains revenue that could have—and should have—gone to writers, that would be a lamentable outcome for literature. The available pot of money in the publishing business is essentially divided up among three key players: the retailer, the publisher, and the author. To the extent that the retailer—in this case, Amazon—wins a bigger share, the other two parties collectively lose. Amazon disputes this point by arguing that its low prices and convenient Kindle platform make people buy more books, thus “growing the pie.” But it’s hard to imagine that people are going to spend more and more of their finite income on books just because Amazon is getting its way and thriving. Among the three key players, the author and publisher are the ones devoted to producing interesting books, or at least trying. Amazon just sells the end product. (Its beleaguered publishing division remains a sideshow.) At heart, Amazon is basically a Walmart with some tech-company trappings. It is not truly a part of the book world. Amazon’s executives have never seemed sensitive to the fact that constantly squeezing the people who write and edit and publish the books could easily damage the quality of the books. Don’t you get what you pay for?"

June 1 - David Streitfeld published an interview he conducted with one of the Hachette authors affected by the fight. In "Amazon vs. Hachette fight 'heartbreaking to Malcolm Gladwell'". As a bookseller, I have to say Gladwell's egocentric view is stunningly narrow. He never once voices any concerns about questions of free speech, the dangers of monopolistic influence, or the impact all of this is having on other authors or his publisher as a whole. "It’s sort of heartbreaking when your partner turns on you. Over the last 15 years, I have sold millions of dollars’ worth of books on Amazon, which means I have made millions of dollars for Amazon. I would have thought I was one of their best assets. I thought we were partners in a business that has done well". Nowhere does he speak about any other type of bookseller than Amazon - as if it is the only game in town, certainly the only one of importance:

Q: Amazon’s critics would say you were naive about this being a true partnership.

A: I don’t think it was destined to blow up. And I don’t think it’s entirely impossible that it can’t be fixed. We need Amazon and Amazon needs us. That’s a classic partnership.

Mr. Gladwell talks about it like it is an romantic relationship that allows no others. If that is the case, perhaps other booksellers should respect the relationship and stop stocking and selling his books. As a specialty shop that doesn't do either, I'm glad I can stand out of that spat. He does not appear to need independent booksellers at all. He comes off as tone-deaf to the larger issues of the fight and sounds concerned only with his own centrality.

All of this uproar about books may be eclipsed by other battles. June 3 - "Why Amazon Can Toy With Booksellers" by Timothy Stenovec points out 'Twice as many [Amazon] customers buy electronics as buy books these days,' said Mike Levin, a partner and co-founder of Consumer Intelligence Research Partners (CIRP), a Chicago-based research firm. What's more, Levin said, it may not be long before books, which are the retailer's second-biggest category, get eclipsed by groceries, a category that includes diapers, cereal and toilet paper. CIRP's findings about the shopping habits of Amazon customers come from a survey of more than 1,000 people in the U.S. who purchased an item at Amazon between August 2013 and March 2014. 'People are as likely to buy groceries as buy books at Amazon,' Levin said. 'That should scare the s*** out of Kroger and Safeway.'" 

To end, I include Paul Constant's column from The Stranger's website, "It's Time To Turn Your Back on Amazon: Why the Online Giant's Fight with a Publisher Signals the End of Guilt-Free Amazon Purchases."  He rightly compares SPECTRE to Walmart (they treat their employees similarly and are both contributing to the 'Aspenization' of America) and how folks will give money to one company but not another even though there's not a nickle's worth of difference between them. "Seattleites who would never set foot in a Walmart are passionate about their love of Amazon. Ideals become easy prey when convenience is at stake. And it’s a matter of perception, too: Walmart puts its low-paid employees up front, parades their lack of dignity around for customers to see. Amazon gets to hide its poorly treated employees in warehouses, far from public view. Walmart’s cheaply made goods, all lined up and hanging on a rack, evoke the assembly lines of China. Amazon’s cheaply made goods, delivered individually in an attractive cardboard box to your door, seem like something magical; they don’t bear the fingerprints of people working for pennies a day in slave-labor conditions. All the ugliness of Amazon is behind the scenes, hidden behind a thick wall of corporate silence, and for that concealment, any number of people who consider themselves good citizens are willing to trade their loathing of Walmart for a deep and abiding love of the Great Walmart in the Sky. Turns out, that love might not be unconditional, after all."

As we've been saying for years - you can't shake the devil's hand and say you're only kidding.

~ JB

 

 

SPECTRE: Speaking Truth to Power

For further reading on SPECTRE's war with civilization:

Amazon's war with Hachette over e-book profit margins intensifies by Juliette Garside in The Guardian (May 27)

Hachette Says Amazon Needs to 'Value Appropriately' Authors, Publishers from Publisher's Weekly (May 27)

Hachette rejects Amazon proposal for joint author fund by Jeffrey A. Trachtenberg and Greg Bensinge (May 28), The Wall Street Journal

Amazon's Hachette Dispute Foreshadows What's Next for Indie Authors, from Smashwords (May 26)

Amazon's Tactics Confirm Its Critics Worst Suspicions by Farhad Manjoo, NYTimes (May 23)

What the Amazon/Hachette dispute is really about by bookseller and publisher Jim Huang (May 28)

In Kindle Post, Amazon Speaks Up About Hachette from Shelfaware (May 28) presents very different views from two independent publishers, one of them being Rob Rosenwald of Poisoned Pen Press

Amazon.com Can't Turn All of These Frogs into Princes by Chad Henage (May 27), The Motley Fool

SPECTRE: In Fiction and In Fact

SPECTRE's heavy-handedness continues to raise hackles and alarms, but now on two continents. As noted by Melissa Eddy and David Streifeld in the NYTimes, "It is using some of the same tactics against the Bonnier Publishing Group in Germany."

Their article also raises an important point: "The Authors Guild accused the retailer of acting illegally: 'Amazon clearly has substantial market power and is abusing that market power to maintain and increase its dominance, which likely violates Section 2 of the Sherman Antitrust Act', said Jan Constantine, the Guild's general counsel.'"

"'How is this not extortion? You know, the thing that is illegal when the Mafia does it', says Dennis Loy Johnson, of Melville House, echoing remarks being made across social media."

On Facebook (5/13), James Patterson was blunt:

"The press doesn’t seem to consider this newsworthy, but there is a war going on between Amazon and book publishers. This war involves money of course, and though I have an opinion, I’m not here to comment on what might be a fair and reasonable settlement.

There are other significant issues people might want to consider. Currently, Amazon is making it difficult to order many books from Little, Brown and Grand Central, which affects readers of authors such as Malcolm Gladwell, Nicholas Sparks, Michael Connelly, me, and hundreds of others whose living depends on book sales. What I don’t understand about this particular battle tactic is how it is in the best interest of Amazon customers. It certainly doesn’t appear to be in the best interest of authors.

More important—much more important—is the evolution/revolution that’s occurring now in publishing. Small bookstores are being shuttered, book chains are going out of business, libraries are suffering enormous budget cuts, and every publisher—and the people who work at these publishing houses—is feeling a great deal of pain and stress. Ultimately, inevitably, the quality of American literature will suffer.

If the world of books is going to change to ebooks, so be it. But I think it’s essential that someone steps up and takes responsibility for the future of American literature and the part it plays in our culture. Right now, bookstores, libraries, authors, and books themselves are caught in the cross fire of an economic war. If this is the new American way, then maybe it has to be changed—by law, if necessary—immediately, if not sooner."

"'Like all repressive regimes, Amazon wants to completely control your access to books,' fellow Hachette author Sherman Alexie, who is based in Seattle, said in a Twitter post."

Their aritcle ends with this:

"One of the books made scarce by Amazon's actions is an updated edition of Brad Stone's The Everything Store: Jeff Bezos and the Age of Amazon.

The book revealed how Bezos said Amazon should approach vulnerable publisher for better terms 'the way a cheetah would pursue a sickly gazelle.'

'What irony', said Stone, a former New York Times reporter. 'A book detailing Amazon's heavy-handed tactics in business negotiations becomes, at least in a small way, a victim of those tactics.'"

SPECTRE

SPecial Executive for Counter-Intelligence Terrorism Revenge and Extortion

We did not choose this term to refer to Amazon lightly; we chose it because it fits.

From the Wikipedia page on SPECTRE: "Fleming's SPECTRE has elements inspired by mafia syndicates and organised crime rings that were actively hunted by law enforcement in the 1950s. The strict codes of loyalty and silence, and the hard retributions that followed violations, were hallmarks of U.S. gangster rings, Mafia, the Unione Corse, the Chinese Tongs/Triads and the Japanese Yakuza/Black Dragon Society."

Jeff Bezos doesn’t think Amazon is secretive: ‘We’re just quiet’

Preditory business practices to get special deals on discounts. Heavy-handed tactics. Extortion.

Retribution and revenge? The Book Industry Is So Scared of Amazon, No One Will Talk on the Record

The fictional SPECTRE was bent on world domination, power, and wealth at the expense of all others.

Aren't you glad nothing like that could really exist?

SPECTRE: Up the Rebels!

It's been awhile since we posted about SPECTRE. Seemed as if no one was paying attention and there were no astonishing stories to write about. Recently that changed:

This facet of the SPECTRE Saga started earlier this month. From David Streitfield at the NYTimes on May 8: Hachette Says Amazon is Delaying Delivery of Some Books.  He followed it up on May 9 with Writers Feel an Amazon-Hachette Spat

On May 16, again from Streitfield: Amazon vs. Hachette: When Does Discouragement Become Misrepresentation?

From the May 21 Seattle Times, Jay Green wrote Bezos expects 10,000 robots at Amazon warehouses by 2015. What does that mean for the warehouse humans? Fewer human workers means less payroll, less payroll spent in the locations of the warehouses, less economic flow out from the company but maybe Wall Street will finally see the profits it seems to be ambivalent about when it comes to SPECTRE.

From today's (May 23) Publisher's Weekly: Amazon Ramps Up War with Hachette

From Time's website today (May 23), Amazon is Cracking Down on Publisher, Say Critics

From Tom McCarthy atThe Guardian (May 23), in writing about authors who have been affected by this mess, sighted this from Jeffery Deaver: “'Because of a dispute with Hachette Book Group, which publishes The Skin Collector, Amazon has chosen to attempt to intimidate publisher, authors and readers alike by significantly reducing purchase price discounts of my books and those written by other Hachette authors,' Deaver wrote on his Facebook page earlier this month."

The Christian Science Monitor (May 23) reports: Amazon takes 'buy' buttons off upcoming Hachette titles

Consumer Affairs reports (May 23) Amazon stops selling Hachette book titles:Is this in retaliation for Hachette publishing an unflattering account of the company? and asks What does Amazon.com have against Hachette Book Group?

Finally, we'll leave it up to the American Booksellers Association (May 22) to note the obvious:

Indies Highlight Shelves Well Stocked with Hachette Titles

Team SPECTRE

As you may've heard, Ama - er, um - SPECTRE recently put forth an offer to independent booksellers to become part of their 'team'. The gist of it is that we can sell their gizmos and their e-files and get a slice of their action for a period of two years. Here's their press release on the deal.

From The Verge you get the math on this 'offer':

"Let’s clear up some numbers in this article.

            Amazon is offering a 6% discount on wholesale purchases of Kindle devices and up to a 30% discount on accessories. That means a KF HDX would cost a bookstore $216. Amazon will then give them a 10% commission on ebooks sold (and only ebooks sold, not apps, movies, music, audiobooks, or ebook rentals). Given that the upper limit selling price for a trade ebook is around $15, they’re looking at a maximum of $1.50, but with average prices in the 6 or 7 dollar range they’re looking at chump change in commissions.

            Also, because of Amazon’s proprietary DRM, the bookstores can’t sell their own ebooks directly to try and get more of the pie.

        The second option is to forgo the commissions in exchange for a 3% increase on the margin for the devices. Yeah… $7.50 isn’t going to convince anyone.

        The thing is that people running independent bookstores aren’t stupid. For them to survive in the current state of the physical book selling market means that they’re actually probably very business savvy. So they are going to be able to see right through the smokescreen here. Business Insider summed it up perfectly: “Amazon has a plan to get indie bookstores to kill themselves”.

            In every respect this is a terrible ripoff, especially when Kobo is offering a much better program through the ABA." [We here at SMB are part of the Kobo program.]

The New York Time's David Streitfeld asked JB for his thoughts on this and he's what he sent back:

I can't help but see this as a misleading attempt to counter the in-roads that Kobo has made with readers and fans of independent booksellers. Recently, we've read of Amazon shutting down part of its publishing due to a lack of success and profits (and stories about how Amazon itself is still not profitable). Something about this move has a feeling of retreat.

This release really doesn't provide much info. What's the discount that they're offering to booksellers on their gizmos? If independents can't make much money on the sale of the devices, they're at a disadvantage - selling the competitor's hardware, enriching the competitor, and not making much in return. There's also the issue of how an independent's customers get to the place to order they e-books. Are our customers just clicking on link on our website that then takes them to Amazon's? All that means is that they're selling independents the opportunity to become a new set of portals to funnel customers to Amazon. We help Amazon grow its business and, in return, we get a thin slice of the sale? That's not cooperation; that's being willingly complicit in your own execution.

Here's the final Streitfeld's article in the New York Times.

Since then, there have been any number of reactions, some bemused, some scornful, some perplexed, and some outraged.Here are just a few noted by Melville House Books on their website:

 “We are not enticed in the least by the latest ‘offer’ from Amazon. It’s a dagger disguised as an olive branch – the latest effort by Amazon to gain traction with indie customers and loyalists.”

— Lissa Muscatine, Politics and Prose, DC

“Hmmm, let’s see. We sell Kindles for essentially no profit, the new Kindle customer is in our store where they can browse and discover books, the new Kindle customer can then check the price on Amazon and order the ebook. We make a little on their ebook purchases, but then lose them as a customer completely after two years. Doesn’t sound like such a great partnership to me.”

— Carole Horne, Harvard Book Store, MA

“If past experience is any indication, Amazon is not doing this to be sweet to indies.”

— Dorothy Massey, Collected Works Bookstore, NM

and our personal favorite -

“They can go fuck themselves.” — Sarah McNally, McNally Jackson Books, NY

Shelfaware ran a story with similar quotes:

David Bolduc, owner of the Boulder Book Store, Boulder, Colo., called participation in the program "sleeping with the enemy. If anyone thinks Amazon is going to do you a favor, you better have someone walking behind you so you don't feel the stab. Their whole entire business model is predatory.... I don't see any possible way to live in the same ecosystem as Amazon. They don't want anybody else. They want to be the go-to source for everything in the world."

For me, it's a Main Street issue," said Anne Holman, co-owner of the King's English Bookshop, Salt Lake City, Utah. "If I sell their Kindles after everything they've already done to indie bookstores, where would I be? It's about more than just bookstores: it's about the bike shop across the street, it's about the restaurants.... And it's not just the booksellers they've put out of business, it's the electronics store down the street, it's the other small businesses. I like our small businesses ecosystem and want it to flourish."

Nor should you think these reactions are limited to US booksellers. From The Bookseller:

Sheila O'Reilly, owner of Dulwich Books in London, told the Bookseller: "I think I would search my heart and find that morally I just couldn't stock the Kindle. I know Amazon employ lots of people in this country but they also have head offices in Luxembourg and Ireland for tax avoidance reasons and I couldn't ignore that. If it was more of a level playing field between Amazon and independents, then maybe I would think about it, but it isn't."

David Dawkins, manager at Pages of Hackney bookshop in East London, said Amazon "has made a point of aggressively diverting people's habit of using the high street. The company has made it clear that is what they want to do and I would be very surprised if this signals a change in policy towards independent retailers and the high street. I also wouldn't want our customers to think that we were doing trade with 'the bad guys.' I think we may lose quite a lot of  respect if our customers thought we were sleeping with the enemy."

Other news on the subject of SPECTRE:

~ There's been a great deal of press about Brad Stone's biography of Jeff Bezos and his creation. Then there was MacKenzie Bezos' heated criticism of the book. If you don't know what to think or who to believe, here's a story about an early employee the company and his view on Stone's book who posted a four-star review of the book on SPECTRE's own site. Shel Kaplan - the former employee - thinks Stone got it right.

~ Last month, towards the end of October, Ama - er, um - SPECTRE announced that it was raising it's minimum amount an order needed to achieve to get free shipping from $25 to $35. Whether this was to recoup some revenue due to the policy, or to drive people toward their Prime service whereby the customer pays upfront for a membership and then is enrolled to get services whether they use them or not, is anyone's guess. (Free shipping on all orders is one of the services.) Either way, they're moving to do less for free and to use their pervasive computer systems to make suggestions to people so that they'll buy just a little more to get up to the now higher free shipping total.

~ SPECTRE announced a joint plan with the United States Postal Service to provide Sunday delivery.The Postal Service plans to use flexible scheduling to do this and says it will hire no new employees, though we've seen nothing about what this will cost in payroll. Is SPECTRE going to eat these charges or are they to be passed along to their ordinary consumers (Prime members will pay no shipping charges for Sunday delivery)?

~Then there is the inexplicable phenomenom of SPECTRE being a massive, worldwide outfit that still makes little to no profit for its stockholders, an anomoly on Wall Street.

Derek Thompson wrote in The Atlantic in October "Defenders say Amazon is trading the present for the future, spending all its revenue on a global scatter plot of warehouses that will make the company indomitable. Eventually, the theory goes, investors expect Amazon to complete its construction project and, having swayed enough customers and destroyed enough rivals, to “flip the switch,” raising prices and profits greatly. In the meantime, they’re happy to keep buying stock, offering an unqualified thumbs-up for heavy spending.

But this theory assumes a practically infinite life span for Amazon. The modern history of retail innovation suggests that even the behemoths can be overtaken suddenly. Sears was still America’s largest retailer in 1982, but just nine years later, its annual revenues were barely half those of Walmart. “The economic countryside is littered with the carcasses of companies that thought they had a [durable] competitive advantage,” says Alex Field, an economic historian at Santa Clara University. “Just look at BlackBerry or AOL.”

Amazon is not as insulated from its rivals as some think it is. Walmart, eBay, and a bounty of upstarts are all in the race to dominate online retail. Amazon’s furious spending on new buildings and equipment isn’t an elective measure; it’s a survival plan. The truth is that the company benefits from a beautiful but delicate tautology: Amazon has won investors’ trust with a reputation for spending everybody to death, and it can spend everybody to death because it has won investors’ trust. For now."

Greg Satwell, writing in Forbes Why Amazon Is A Lousy Business

Benedict Evans wrote this past August, "Equally, the problem with saying 'we can't tell from outside how Amazon is really doing, but it will become profitable, just wait and see' is that you could be waiting for ever without ever knowing if you're wrong."

Eugene Wei is one who thinks SPECTRE's business model is genius, that in this model short-term profits are not the point and are unimportant. Which business model is it that he approves of? The original one where there were to be no warehouses at all, that everything would be done in the great flowing river of the internet, where it would have no physical presense, no stock, no stockers - just office workers sitting at computers and sending customers' orders to manufacturers. Is that the genius business model, the one that was ditched long ago?

Oh - in case you were wondering if we were going to become part of SPECTRE's continuing efforts at Global Domination...

Do you really need us to answer that?

Rapping the Bully in the Nose

Recently, there have been a couple of news pieces that demonstrate others are sick of Ama - er, um SPECTRE's business practices and are willing to sing out.

First there was an interview with the noted literary agent Andrew Wylie which appeared in The New Republic, a man reknown for his outspokeness as well as his insistance on representing authors and books of "enduring quality". Having been in the publishing business for a great, long time, and having done a little bit of business with SPECTRE, he has strong opinions.

"Question: Do you feel as hostile toward Amazon as you used to?

Answer: I think that Napoleon was a terrific guy before he started crossing national borders. Over the course of time, his temperament changed, and his behavior was insensitive to the nations he occupied.

Through greed—which it sees differently, as technological development and efficiency for the customer and low price, all that—[Amazon] has walked itself into the position of thinking that it can thrive without the assistance of anyone else. That is megalomania."

The second piece is from the Seattle Times, "Book: Bezos' tactics not for faint of heart" with Jay Greene writing about a new biography of Jeff Bezos by Bloomberg BusinessWeek senior editor Brad Stone. While Green notes that the book delves into some psychological profiling of SPECTRE's creator to explain how the company operates (knowing how erroneous profiles of serial killers have been over the years, we put little stock in them), we point to the end of the article, where the scorched-earth business practices are detailed:

"Stone writes about a 2009 meeting between an Amazon executive and the founders of Quidsi, a startup making a name for itself with mothers with its Diapers.com site. Amazon was planning to move into the category. At first, Quidsi’s founders told Amazon that the company wanted to remain independent. But as Amazon moved into the business, their thinking changed.

Amazon cut prices up to 30 percent, and quickly matched any price movement at Diapers.com. Revenue growth at the startup began to stall and venture capitalists became reluctant to pump new money into the company that was clearly in Amazon’s sights.

Quidsi began talks to be acquired by Amazon archrival Wal-Mart Stores. When the Arkansas retail giant made a lowball bid, Quidsi turned to Amazon. At the exact same time that the Quidsi founders met with Bezos in Seattle, Amazon issued a news release announcing Amazon Mom, a deal that gave them a year of Amazon Prime, with its free two-day shipping, and 30 percent off diapers if they signed up for regular monthly deliveries.

'Quidsi could now taste its own blood,' Stone wrote.

Two months later, Amazon acquired the company for a slight premium over Wal-Mart’s original bid, but below its final offer.

'Bezos’ Khrushchev-like willingness to use the thermonuclear option had had its intended effect,' Stone wrote. 'The Quidsi executives stuck with Amazon, largely out of fear.'"

As Mr. Wylie notes in his interview: "If you eat all the grass on the hill, eventually you don’t have any topsoil, Mr. Bezos."

They call it a 'scorched earth policy' for a reason. Nothing useful is left, nothing is left alive, and nothing can regenerate.

That's SPECTRE's business model.

 

Sticking a Finger in Their Eye

There's a new ad on TV from Ama - er, um SPECTRE - touting their newly updated reading gizmo. You see a carefully chosen variety of 'civilians' sitting in a 'pseudo-living space', with fake walls and big chairs and they're reading on this flat piece of techonology and are simply ecstatic about the experience.

No, they're not reading books. They're reading files on a computer...

The camera pulls back at the end to show this little staged area is right in front of one of New York City's icons, the Flatiron Building. You'll recognize it - it is triangular but seems to be pretty flat, leaving you wondering what the offices and hallways inside it are like. It sits on a wedge of land point north, where Broadway and 5^th Avenue intersect. This is mid-way between Wall Street and Central Park, pretty much dead center of the publishing center of the United States.

Coincidence?

Now - think back to the big lawsuit where the US government sued Apple and a raft of major publishers for collusion in setting e-book prices in an attempt to stop Ama - er, SPECTRE - from completely monopolizing the e-book market. And here's an ad about the wonders and joys of e-reading staged in the heart of American publishing.

Coincidence?

One last bit of this that eliminates any question of coincidence: the Flatiron Building is the home of St. Martin's Press, one of those publishers charged of collusion and the one more vociferously resisting to settlement, and most adamant about the dangers of what Ama - er, um SPECTRE was doing to publishing.

No, no coindence.

Just a bully sticking a finger into the eye of a foe.

Scorched Earth Business Practice

In 1939, Germany invaded Poland using a new kind of warfare - the Blitzkrieg. This translates to lightning war. It utilized the airforce and the tank corps and it moved fast and hard and it overwhelmed the Polish nation before they knew that was happening.

Friday, Amazon declared war on the entire publishing Universe. We've been blitzkrieged.

SPECTRE, as we prefer to think of them, has begun discounting many hardcovers between 50% and 65%. To put this in persepective, when we order a hardcover from a publisher, we're generally given 46% (to be clear, there are specials that might, rarely give us 50% and one distributor's top discount is 45% - the wholesalers are lower that this). That means we pay the publisher 54¢ out of each $1. As we've explained in past postings, out of the 46¢ that we make on the sale of that book, we pay the rent, payroll, supplies, media (websites, blogs and other fees) and for the occassional bag of Fritos. That 46¢ is otherwise known as 'profit'. The lower the discount, the more difficult it becomes to pay the bills. There is no way anyone outside of a megacorporation can afford to offer those steep discounts and stay in business.

"'It's an open declaration of war against the industry,' said Jack McKeown, president of Books & Books Westhampton Beach, Westhampton Beach, N.Y. Like several people familiar with Amazon's move, he speculated that Amazon has been "emboldened" by the Justice Department's victory against five major publishers in the e-book agency model case as well as Wall Street's acceptance of continued losses by Amazon for now in the expectation of retail domination--and major profits--eventually. This last point was seen most recently on Thursday, when Amazon's quarterly results included a net loss and were below Wall Street expectations but did not provoke the usual rush to sell, as is the case with most companies whose results are disappointing."

How cozy is the relationship between SPECTRE and the Obama administration? This coming Tuesday, the President is scheduled to give another of his major speeches concerning the economy, the middle class and the need for good paying jobs at the Amazon fullfillment center in Chattanooga. If you've been reading along over the last couple of years on SPECTRE's business practices, you know there have been a continual flow of articles about how badly SPECTRE has treated it workers. So first the Justice Department works to hand the publishing world over to SPECTRE and then the President visits to champion them as a business model...

John Mutter, author of the story in ShelfAware notes that "The discounts are far below the usual 40%-50% range sometimes offered by Amazon, warehouse clubs and other discounters and are more typical for remainders than frontlist hardcovers. In some cases, the hardcovers are priced below the Kindle editions."  We've noted in past posts that SPECTRE's own publications are priced higher than their own electronic versions, that they're seeminly content to sacrifice their own works to sales of their e-books, now we can see that they're content to sacrifice ANYONE's works to their own designs.

One has to wonder if this is aimed at any particular location. Payback to the publishers for trying to keep Amazon from taking over all of the electronic books world by agreeing to the 'agency pricing' system, the system the Justice Department targeted? After Borders declared bankruptcy in Feb. of 2011, the publishing industry has been worried about the health of Barnes & Noble. B&N has been struggling with the failure of their Nook, the great real estate costs of their massive stores and the general problems that have plagued all booksellers the last few year. Might this be a coup de grace aimed at their last major corporate competition? After all, trying to match SPECTRE's new discounts in their precarious state would be financial suicide for B&N - or anyone else. If B&N were to finally implode, SPECTRE would have no rival of comparable size and heft.

Whatever their aims, it is something than no independent can compete with. Little places like us have no deep pockets. Wall Street may be satisfied to sit back and watch Amazon bleed money. Wall Street is so awash with money that they're indifferent to what goes on along Main Street. And let's be clear - if Amazon is giving these levels of discounts, they're losing money on each sale. What is the merit of a business policy that says let's make sales by losing money? How long can they do that?

And who will be left standing - or crawling - when they're done?

The term 'scorched earth' comes from a military practice. It is as old as time and humans have been inflicting it upon one another as long as they've been fighting. In the Civil War, Sherman's March to the sea was an example - destroy everything that can be of use to the enemy. Literally, burn it all down the the ground. The retreating Germans did this as they left the Russian Front, the Russians used it against Napolean, it was applied in the Boer War. It is so brutal and so unforgiving that it was officially outlawed by the 1977 Geneva Convention. "It is a military strategy where all of the assets that are used or can be used by the enemy are targeted, such as food sources, transportation, communications, industrial resources, and even the people in the area. The practice can be carried out by an army in enemy territory, or in its own home territory."

At the begining of July, the NYTimes noted that Amazon was lowering the discounts it was paying to self-published authors and small publishers - meaning they were paying them less, and keeping more, of the sale. In the past, they've removed buy buttons from various publishers whose actions they disliked. They've eliminated entire types of books if thought controversial. They've deleted books from customer's e-readers that were paid for. And the poor treatment of their own international work force has been written about repeatedly. You can find our posts, with embedded links to the pertanent news articles, on our blog under the heading "Bookselling these Days"

And remember, Amazon is working with the CIA to supply cloud-sourcing security.

Welcome to SPECTRE's world. We're all just spectators.