Monday, August 11, 2014

See? Amazon *Does* Think Books Are Special Snowflakes!

Today I found myself ruminating over what might be summed up as the “Books Are Special Snowflakes” argument, much loved among a class of patrician writers. For example, “Authors Guild” pitchman Richard Russo even demanded that Jeff Bezos take a pledge on the topic:
Amazon has never clearly and unequivocally stated (as traditional publishers have) that books are different and special, that they can’t be treated like the other commodities they sell. This doesn’t strike us as an oversight. If we’re wrong, Mr. Bezos, now would be a good time to correct us. First say it, then act like you believe it.
And founder of the reactionary group “Authors United” Douglas Preston puts it like this:
For [Amazon] to treat me as if I were a poster or computer cables or a TV set is really hurtful.
I have to admit, the Russovian Pledge notion feels weird and totalitarian to me (also hypocritical—does Russo have links to those “clear and unequivocal traditional publisher statements, or did they come about in a more, shall we say, imaginative way?). And Prestons hurt over apparently being confused with a TV set made me smile.

But then I realized: Amazon is giving books special treatment! After all, they’ve gone on selling Hachette’s books since February, when the Amazon/Hachette contract expired.

How special is that? Richard and Doug, do you think if Amazon can’t come to terms with the wholesaler of any other product (is it okay for me to call books “products”? You know what I mean), they’ll just go on selling it regardless? You think if they can’t work things out with the supplier of the Three Wolf Moon Tee Shirt, they’re going to keep that gorgeous example of apparel on their shelves? You think if the contract for Haribo Gummi Candy Gold-Bears (5-Pound Bag) expires, Amazon won’t immediately yank those bad boys (and save customers a hell of a wild gastrointestinal ride in the process)? And continuing to sell Tuscan Whole Milk (1 Gallon, 128 fl oz), without a contract? Fuggedaboudit!

But books? Totally different story. With books, you have a Hachette contract that’s been flat-lining for something like the last six months, and yet Amazon just keeps on performing CPR. No contract, yet the supplier’s wares are still available in the retailer’s store? Who else but a publisher receives heroic measures like these?

You see? If Amazon really did think books were just like hemorrhoid wipes and duct tape or even the AutoExec Wheelmate Steering Wheel Attachable Work Surface Tray, you wouldn’t expect them to try to discourage Hachette from contract-renewal-foot-dragging merely by removing a few preorder buttons. You would expect them to just take all those books Doug Preston claims are “hostages” and… well, free the hostages, so to speak.

But they don’t. I don’t know what to conclude from this other than that Jeff Bezos is mad for books. That he loves books, demonstrably loves them more than he loves anything else Amazon sells. Certainly that he loves books more than he’s irritated by all the crazy accusations about his lust for retaliation. Otherwise, he actually would retaliate, and drop any books for which a supplier won’t enter into a new contract. But instead, no matter what, he just won’t stop selling the damn things. If that’s not love, if that’s not “books are different and special and can’t be treated like other commodities”… I ask you, what is?

Well, there is one other possibility. Yes. One other.

It could be that Bezos is in fact secretly dying to treat books the way he’d treat any contract-expired hamster wheel… but he knows he can’t. There would be too much fallout and he wouldn’t be able to get away with it. So he has to keep selling those damn books—which to him are nothing more than interchangeable widgets!—even though his supplier won’t negotiate a new contract with him.

But if that’s the explanation—if Bezos wants to retaliate, but knows he can’t—well, then, it’s almost like… almost like Amazon doesn’t have quite the despotic market power its detractors constantly claim.

I can’t figure out which it is. If Bezos doesn’t especially love books, then he must not be all powerful. But if he is all powerful, he must especially love books.

Maybe that’s why Bezos won’t take the Russovian Pledge... he wants us to figure it out for ourselves?

Okay, okay, enough teasing Preston and Russo (though obviously I’m not being entirely facetious). Let me add in all seriousness something I hope we can all agree on: that anyone who decides to get into the book business—as a writer, editor, bookseller, whatever—probably didn’t do it for quite the same reasons that motivate someone to choose, say, a life of investment banking. We all love books, obviously. We all think they’re special. The problem is that Preston and Russo et al conflate this axiom with the dubious notion that therefore the optimal, and perhaps the only, way for books to be published and sold is the legacy route they’re accustomed to and from which they’ve personally benefited. Such a notion is without logical or empirical support and has more in common with theodicynarcissism, and cargo cults than it does with rational thinking (see also my thoughts on Candide and the “All is for the best in the best of all possible worlds” mentality in this post on James Pattersons own Norman Rockwellesque vision of publishing and bookselling).

So yes, books are special. But might it be unwise to get unduly emotionally attached to the notion that books are specially special? With regard to pricing, for example. As I discussed in an earlier post here:
There’s a widespread meme that high legacy prices create an opportunity for indie authors to sell their books for less. But there is another possibility I think is worth considering: that more readers would spend more money on all books overall if more individual books cost less.
To put it another way: if I had a choice between selling my books at $5.00 into a market where all other books were priced at $15.00, on the one hand, and selling my books at $5.00 into a market where all other books were priced at $5.00, on the other hand, I would prefer the second market because it would be so much bigger.
One other way of looking at it: among people who go into a bookstore thinking to buy one $20 hardback, and discover the store is having a three-for-the-price-of-two sale, how many wind up spending $40 and leaving with three books?
The point is, you can grow a market with low prices in such a way that individual sellers make more money in the bigger low-price market than they would have made undercutting prices in the smaller, high-priced market. When perceived value goes up, consumers spend more money. The market thereby grows, and individual sellers, even if the percentage of their slice of that market remains constant, make more money.
I’ve done no empirical studies on the book market and have only my own experience in the world (and my own pricing experiments with my own books) as a guide. So I could be wrong about the book market generally—but as a matter of logic, it seems a mistake to to treat as an axiom the assumption that lower across-the-board book prices must necessarily hurt indie authors’ bottom lines. After all, we know people hoard. But how much? For what products? And why?
In response, literary agent Ted Weinstein lampooned my argument like this:
If Amazon drives down the price of soap then everyone will take more showers and soap makers will make more money!
This got me thinking…

I liked the soap analogy, but felt it was missing something. And then I realized what it is: there’s pretty much only one way to get clean every day, and that way involves soap (maybe I’m not being creative enough, but still). So soap doesn’t face any external “cleanliness” competition.

Which raises an important question: do books face any external entertainment or information competition?

I would argue that, in general, books aren’t just competing against books, but also against other relatively fungible forms of entertainment and information. Amazon makes this point regularly, and I don’t think it gets enough attention. Because if it’s true that there’s a degree of fungibility in the minds of consumers between books, on the one hand, and other forms of information and entertainment, on the other, then the limiting factor on the growth of the book market isn’t just “people can’t read any more than they already do so they wouldn’t buy more books at any price.” The limiting factor might also have to do with pricing, with high prices bleeding off potential buyers into other entertainment venues where they believe they get better value.

I don’t know the answer, but I find the question extremely interesting, and it would be cool if someone could supply some real-word data. For now, the only such data I’m aware of comes from Amazon and Author Earnings. But I’d love to see more.

Anyway. I’m hoping the Russo/Patterson/Preston crowd will recognize, if only privately and grudgingly, that Jeff Bezos really does seem to recognize books are special. I also hope they’ll ponder the possibility that some significant segment of the marketplace might not entirely agree. Because if a significant number of consumers finds anything at all about books interchangeable with other forms of information and entertainment,  the consumers in question might decide they get better value for their information and entertainment dollar elsewhere. In which case, a dogmatic devotion to high book prices might be shrinking the market for books generally. For anyone who feels books have a special place in culture and society, that would seem a shame.


Paolo Amoroso said...

Are Preston's books for sale at Walmart or airports? If so, he might want to share with his publisher the concern that customers may confuse his books with the posters, computer cables, or TV sets next aisle.

Bridget McKenna said...

"...hemorrhoid wipes and duct tape..."

Never, ever confuse these two items.

Thanks for another excellent article, Barry. I'm off to share this with a few thousand of my closest friends.

Unknown said...

I routinely purchase books for my Grandkids on Amazon as the prices often exceed their means and there is competition with games, TV, CD's, etc.. The kids range in age from 4 to 17 and there are eleven of them, so it can get expensive for me. The benefits outweigh the burdens, by a huge number. Several have told me they much prefer the book to the movie as their imaginations are so much more stimulated. Lower book prices mean more books sold in my estimation and a more informed group of citizens. We need that now.

Unknown said...

I think one of the big problems running up and down this issue is that digital goods are too new as a class for people to really grok the market dynamics and the ways in which the retailing is different.

Case in point, whenever I see legacy publishers justifying high ebook prices with a "we need to make so much per unit" type argument, I know they are off the rails. You don't get to break things down into a unit you don't handle. They handle one unit, the final copy delivered to Amazon then they never touch it again. Periodically chunks of money arrive, but there is zero further cost to the publisher. No one is reprinting, warehousing or shipping anything. If it is discounted, no one is eating any costs save opportunity costs.

Anyone making an analogy in retailing digital goods and physical goods is off the rails. It's the difference between classical physics and quantum physics. They seem outwardly similar but have weird different rules.

Digital sales have so much less friction, such a small gap between intention and final product delivery, that everyone in the chain should be focused on THAT CONVERSION. You have a small window of attention in a world full of books, media and other things to do. If you have a potential consumer's attention, the good should be priced to make the sale that second. If it isn't, you will probably never get another chance to make the sale.

This is different for the blockbuster authors, who could care less. People will seek out Turow or King, but for everyone else that first moment of interest may also be their last. Be poised to take advantage of that. Which business entity is historically better at turning these opportunities into realized sales; Amazon or publishers?

David Gaughran said...

If Bezos hates books so much, he really shouldn't have married a writer...

Terri Lynn Coop said...

This whole thing is hilarious because Hachette, in their stockholder brochure, refers to authors as "acquisitions" (especially when poached from another publisher.)

Aren't authors special? If you cut us, do we not bleed? If you spit on us, do we not get wet?

My supermarket carries books, on the same aisle with baby diapers.

The Grapes of Wrath is special. The latest Patterson is a consumable, like a 3 Musketeers bar.

And someone I was talking with today on FB called Amazon childish . . .

Margaret said...

Amazon has used the same hardball tactics to get self published authors to move from Lightning Source to CreateSpace. They just stopped the discounts, put up notice the books weren't in stock and would take two weeks to get and guess what? All the self published authors jumped to CreateSpace putting more money in Amazon's pockets.

That's why I'm on Hachette's side. Amazon can force authors to do anything just by the same tactics they are using with Hachette.

Mark Asher said...

I don't understand why ebooks can't be reduced in price over time. I never bought hardbacks. I waited for the paperback. Why can't that work with ebooks too? When the hardback is out the ebook is $11.99. When the paperback comes out the ebook drops in price to $5.99. Or something like that.

Nowadays you can set price alerts on an ebook you want and wait for the price to drop.

What I'm saying is I don't have an issue with the idea that a publisher like Hatchette be allowed to set the wholesale price of its goods. If they set the price too high it may be bad for readers, their writers, Amazon, and their own business, but it's still their business to run well or poorly.

The Sample Reader said...

I very much doubt Bezos - or whoever is in charge of this negotiation - thinks books are "special."

I believe Amazon is still carrying Hachette titles because:

1) A lost sale is a lost sale, and Amazon can't get it back. Better for Amazon to make the sale than to hard it over with a bow tied on top to BN, Powells, Apple, Google, etc. Besides, books are loss leaders for Amazon. They really want to sell you kitty litter and cases of Lays potato chips. If that book sale goes elsewhere, so does the opportunity to capture impulse (and planned) purchases of higher margin items.

Amazon aspires to be the Hotel California of retail sites. Come in; but never leave. So why provide an easy exit?

2) Customers are creatures of habit. Amazon built mighty revenues (but scarce profits) on providing one stop, one click shopping. But once customers get accustomed to going elsewhere, they might stay there. If a customer goes to Amazon, searches for "The Goldfinch" and can't find it - they'll go to and store their credit card information there, too. And perhaps the next time they want a book, they will start at because why risk their time not finding it on the 'zon?

3) Amazon is "The Everything Store." Not stocking the third largest publisher of English language books would mean not stocking books by authors such as Rowling, Atkinson, Baldacci, Hoffman, etc. And that puts a lie to the moniker. Perhaps it's not so much "books are special" but Amazon believes its status as the Everything Store is.

4) 99% of readers have zero notion of what publisher publishes what. They do not buy based on the publisher name on the spine; they buy because of the author name or the cover art or the subject or the back cover copy. Not having certain titles in stock would lead to customer confusion ("You have Robert Crais but not Michael Connolly or James Patterson? WTF?!") and cause headaches and perception problems for Amazon. Hachete would merely point people to another book store or its own ecommerce solutions.

So, no, I'm not buying the "book are special" argument. Too many years of corporate executive experience to buy such soft and squishy reasoning when it comes to big business decisions.

Besides, Amazon used the exact same negotiating tactic with Warner Home Video and is using them now with Walt Disney Studios Home Entertainment. So are DVDs "special" to Jeff Bezos, too?!

(I also have to LOL at Gaughran's mention of Mackenzie Bezos. Y'know, the author who chose to publish with Random House and Harper Collins.)

Anonymous said...

Here from Scalzi's blog. Amazon's probably not going to delist bestsellers because of what happened with Macmillan. Don't know why they haven't delisted newbies and some midlisters yet. Maybe that's next. After all this is over they're probably going to inject an air bubble into Preston's sales stream.

David said...

Just a few short years ago the legacy publishers where whining that they did *not* make lots more money selling eBooks. There was a P&L in the WSJ showing that a print book and eBook were pennies apart in their contribution to the bottom line. Since then these same publishers have had banner years. Have their authors experienced a commensurate increase in royalties? I think not.

David Manuel said...

I'm surprised that King and all the other authors who are so outraged by Amazon's behavior aren't pulling their books off Amazon. I mean, aren't they compromising their ethics, working with a bullying big corporation? Oh, wait, they already did that when they signed with a big publishing firm...

Whatever else Amazon does, it also gives people like me an avenue to make my books available to the handful of people who read them every month. And some of these people claim they enjoy the experience. Hachette hasn't offered me that opportunity yet. I'm waiting...

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