Apple, Amazon, Antitrust, and You: More Links to Chew On

Today’s post is really going to be a whirlwind tour and roundup of links.  I’ll have a few thoughts and commentary on a few of these links but mostly, at this point, I’m in learning mode.  The last few weeks have seen some major upheavals and changes in the publishing industry, and things are changing faster than you can blink: from the Department of Justice filing a lawsuit against 5 major publishers, to 3 of those publishers settling, to the sudden announcement by one imprint of one of the 2 remaining defendants that it will drop DRM… I don’t know everything about what’s going down in this case, I don’t know how this case is going to impact the future of books and ebooks, and I’m not even sure I can articulate what I think a best-case scenario looks like.  So, without further ado… More Links to Chew On, the Apple, Amazon, Antitrust, and You Edition:

  • Acclaimed Sci-Fi author Charlie Stross on “Understanding Amazon’s Strategy” is an excellent piece.  He hits a lot of points that I’ve tried to make here in the past, among them a fairly lucid and clear explanation of the Monopsony Problem.  The Monopsony problem is something that a lot of people don’t really understand – they don’t even know what it is much less how critical it is to understand it if one is to understand Amazon’s role in the current market.  Stross’s conclusion is also an interesting one, and the first time I’ve seen this idea articulated so clearly: the logical, strategic conclusion of the DOJ suit against Apple and various publishers is an end to ebook DRM.
  • Equally articulate and excellent is John Scalzi’s plea to people treating the ongoing battle between Amazon, Apple, Traditional Publishers, and the DOJ like a game of football: “Dear Consumers Who Apparently Think the Current Drama Surrounding eBooks is Like a Football Game“.  To those people he has a very truthful revelation to share: it’s not like a Football Game at all.  More to the point, none of these sides, really is your team and none of them is on your side.  They are all very much on their own sides, and sometimes that means screwing you, the consumer, over quite handily.
  • C. E. Petit of Scrivener’s Error has some really interesting analysis of various matters pending before the court and how they might impact the result of the DOJ lawsuit.  I won’t pretend I understanding everything he discusses there – legal matters can be pretty dense for the non-legal-professional.  I’m not positive I can tell you what I think Petit’s position on these matters is – but in keeping with Scalzi’s exhortation, Petit doesn’t seem to be on either “team”.  One important comment, I think: “Suffice it to say that nothing in this action [i.e. the DOJ suit against Apple et al.]  forecloses any action against [Amazon]…” This seems to suggest, I think, that Petit suspects the possibility that although Apple and the Publishers are currently in the DOJ’s sites, Amazon itself, having a history of abusing its monopoly position, may well find itself in those same sites soon…
  • The SFWA blog has a pretty clean run-down that gets you up-to-date on what’s going on, posted by Victoria Struass.  Her overview is sprinkled heavily with links, some of which may be of interest.
  • E-publishing Consultant, Author and Publisher Mike Shatzkin analyzes the DOJ suit and the impact on the industry in “After the DOJ Action, Where Do We Stand?”  In his analysis, he makes an interesting observation about how the impact of this litigation hurts digitally self-published authors.  His argument is basically this: as the big titles put out by traditionally publishers are aggressively discounted by Amazon after the Agency model goes away – as seems likely to happen if the remaining publishers battling the DOJ lawsuit fail – then the price for ebooks generally will fall.  This decrease in e-book pricing will erode the price advantage enjoyed by digitally self-published authors, who typically price at a discount to what a major publisher prices their ebooks.  This erosion in price advantage will hurt their long-term discoverability: that is, what’s the point in gambling on a no-name author without traditional publisher backing when you can get a polished, traditionally-published ebook without paying a price premium?  It’s an interesting argument, logically speaking.  There are other possible factors that might affect this, of course.  Give his article a read for further context.
  • A fellow named Baldur Bjarnason, who studied eBooks in his PhD, writes about “How to Beat Amazon“.  (Note that this is actually the subtitle to his article, which I use because the main title by itself is too oblique to be immediately useful.)  Baldur does an analysis of Amazon’s strengths and weaknesses, and what he thinks Publishers and others can do to take advantage of Amazon’s weaknesses and what Amazon can do to neutralize those weaknesses.  His conclusion is in many ways similar to Charlie Stross’s: the best competitive approach to Amazon’s current attempt at a Walled Garden is to embrace open standards and to avoid DRM (with a few other useful tactics).  But he swings it both ways: Amazon’s approach at a Walled Garden is rather doomed to failure (in part because they don’t do it nearly as well as Apple), and they can counter this by embracing openness and modularity early, themselves.
  • Mark Coker, CEO of Smashwords (an “Indie” digital self-publishing aggregator) asks “Does Agency Pricing Lead to Higher Book Prices?”  He digs into some data, and finds the answer is “no”: in fact, prices have gone down under the Agency model.  The problem with his data?  It’s pretty much limited to what Smashwords sells, or in other words, prices of small-time digital self-publishers.  That doesn’t tell us much about what happens in the space where most people are actually reading: traditionally-published NYT-Bestselling-grade books.  But Coker’s analysis largely agrees with Mike Shatzkin’s: the end of agency pricing for traditional publishers targeted by the DOJ will hurt “Indie” publishers, for various reasons.  Primarily, Coker’s argument is in favor of agency pricing as a model, and not in relation to whether the publishers targeted by the DOJ were in collusion with Apple.  Notably, however, the DOJ suit does not implicate Agency Pricing per se as illegal.  Rather, it specifically targets the suspicious behavior of the publishers, as each entered these agreements with Apple in a rather lockstep fashion.
  • Coker follows up his blog piece on Smashwords with an opinion piece on CNN, where he mostly repeats many of the points he made in the longer Smashwords blog article.
  • I must admit, I don’t understand the antipathy Passive Guy has for traditional publishers, but he let’s that flag fly in his post critiquing a Seattle Times article: “Speculation Abounds That Amazon Triggered E-Book Lawsuit“.  There, he likens Amazon to the hapless victim of a crime and the DOJ suit to a criminal complaint – a spurious analogy at best (anti-trust actions are, first and foremost, supposed to be about consumer protections – and the consumer is the one who best ought to be likened to the victim).  His followers (in the comments) are even more aggressive in their hatred and antipathy for traditional publishers and their unmitigated support for Amazon.  I’m not sure why Passive Guy is so offended by the idea that the DOJ lawsuit had anything to do with Amazon.   I do want to comment on one quote from the Seattle Times piece that Passive Guy pulls out:

“If Amazon becomes more of a monopolist than it already is, and it tries to raise prices, then other people will enter the field,” he [i.e. Steve Berman, managing partner of Seattle law firm Hagens Berman, lead counsel in the separate antitrust lawsuit on behalf of e-book buyers] said. “There are market checks out there.”

  • Well… Methinks Mr. Berman of law firm Hagens Berman doesn’t know a thing about business, market forces, competition, and barriers to entry, now does he?  Either that… or he’s being intentionally disingenuous about it.  There’s a reason we have Anti-trust and anti-anticompetion laws: because “market checks” alone have historically been insufficient to ensure that a monopolist does not abuse their monopoly position.  That said, Passive Guy’s point – that Hagens Berman only happens to be located in Seattle in the same building as one of Amazon’s large offices is only coincidental – is… well, on the one hand it’s laughable ( coincidence you say? O RLY?)  On the other… given Amazon’s history of anti-competitive behavior, I should think Amazon likely wouldn’t want to draw the attention of the DOJ to itself, even as a complainant in a DOJ case targeting an Amazon competitor.  This gets back to Petit’s musings on possible future DOJ actions…
  • Author Chuck Wendig has some advice for authors worried about all of this in “Prepping for the Publishing Doomsday“.  His advice is… not to worry about it.  Whatever happens is what will happen, and as a writer you can’t do anything about it, really.  (True.)  And he has some assuaging words: “People always want stories.”  Of course, these reassuring words don’t really… um… reassure someone who’s worried about questions of long term discoverability, and how you achieve that in the changing marketplace.  But whatever.  He’s right about one thing: you can’t do much about it, anyway.  So worrying doesn’t really help.
  • GalleyCat disects some of the allegations against Apple and the Publishers in “Publishers Allegedly Deleted Emails ‘To Avoid Leaving a Paper Trail’ in Agency Model Discussions“, and they claim to have direct evidence of the conspiracy to collude.  Have to say: this looks rather damning for the Publishers.  To borrow a quote from the Passive Voice article linked above: “If Big Publishing didn’t want to be sued for price-fixing, the CEO’s of Big Publishing shouldn’t have gotten together over lovely little dinners to engage in price-fixing.”  As I suggested in my post when news of the DOJ action first surfaced: the facts on the case definitely look like collusion occurred – although the same outcome could theoretically be arrived at without collusion, that doesn’t look like what happened here.
  • What Does the DOJ EBook Pricing Lawsuit Mean for Readers Now” has some speculations and predictions about how the industry and market will change as a result of the DOJ lawsuit.
  • In “Why I Break DRM on EBooks: A Publishing Exec Speaks Out” an anonymous executive at a publishing company (which purportedly uses DRM on its books) explains why he has come to routinely break DRM on ebooks he purchases.  This story has echoes with Charlie Stross’s argument in the very first link above.
  • On top of that comes the announcement from Tom Doherty Associates/Tor/Forge that it will, in fact, be the first of the major publishing imprints (Tom Doherty/Tor Books is an imprint of one of the defenders of the DOJ lawsuit, Macmillan, which has not yet settled the dispute).  At this point, Charlie Stross is starting to look eerily prescient.
  • Then turning back to John Scalzi, he shares some of his thoughts on the news of Tor/Forge dropping DRM.
  • And finally, back once again to Charlie Stross, he reveals his own role in the announcement from Tor/Forge. (He was called in to to offer his argument on why publishers should drop DRM, which hints that the publisher in question was already mulling this decision over, and was exploring the limits of its reasoning.)

I’m still processing all of this.  As I’ve pointed out before, I’m not immediately impacted by any of this.  I don’t own an EReader, so I’m not directly impacted as a consumer.  I don’t have a book in the marketplace, so I’m not affected as a writer.  And I don’t even have a finished manuscript that I’m trying to position for publication (neither self- nor traditionally-), so it doesn’t impact me in that way, either.  At least, not for me in the present.  But all of this radically alters the future landscape of publishing.  I’ve also said before, and this bears repeating, that whatever the world of publishing is going to look like in the future, we’re not in the end-game yet.  The changes are going to keep coming.

Collusion

I am not a lawyer*, but I do have some appreciation for the legal environment of business (need I mention, again, the MBA?).  You don’t have to be either to have an interest in the outcome of the US Justice Department’s recent decision to sue Apple and 5 of the Big-6 publishers for collusion.

I linked to John Scalzi’s post on the topic quite intentionally.  If I may, I’d like to quote him on the subject:

The question of whose side I am on is simple and obvious, to me at least: I’m on my side. My side wants my work available to readers in a way that that is affordable and easy to get in whatever format they prefer while at the same time allowing me to make a living doing what I do. In a larger sense, I’m also on the side of other writers, so that the end result of all this punching back and forth is not that authors are obliged to take contractual or retail positions that are detrimental to their interests, either as businesspeople or rights holders. Basically, my side doesn’t want anyone else to screw up what I see is the actual goal of all of this as a working writer, namely, connecting my words to readers, and their cash to me.

I, too, am on my side, and on the side of writers and of readers.  To say that the emergence of this case gives me pause would be quite accurate. Continue reading

More Amazon Pricing Horror Stories

I wrote a while ago linking to a story in which Amazon had arbitrarily reset the price of an e-book published by a self-published author.

Today, I’m linking to another such story, this by established, traditionally-published author Jim Hines whose self-published book of short stories has been given the Amazon pricing treatment.

The punch-line?  Amazon has added a term to their Terms of Agreement that specifically absolves them of any liability for their own mistakes

As Jim Hines says:

I’m not telling people not to publish through Amazon; I am telling you to go in with your eyes open, and to understand that despite what the cheerleaders might suggest, Amazon is not pro-author. They’re pro-Amazon.

Let me second that sentiment.  I’m a long way from being in a position to tell anyone how to publish anything – I’m a long way from being able to publish anything I’ve written.  And I’ve consistently said that I’m glad that these new publishing options exist, insofar as they change the publishing paradigm sufficiently to tip the balance of power ever-so-slightly towards the favor of writers.

But were I in a position to self-publish something now, while I certainly wouldn’t discount the market position of Amazon, I’d make sure I put in the effort to make my book available in as many non-Amazon venues as possible, and to promote those venues, in order to try to insulate myself from getting the Amazon treatment myself.  Because to keep the balance of power tipping back toward authors, a singular publishing hegemony must be prevented.

UPDATE:

Jim Hines has updated his thoughts on his experience with Amazon here.

And as Jim points out in the link above, it looks like Amazon has been in the news in other ways lately.  Here are some links of possible interest:

Amazon Removes Kindle Versions of IPG Books

The Author’s Guild on Amazon

UPDATE 2:

Writer Beware takes on some of the recent Amazon news

Bait & Switch

A few more Amazon entries to keep you infotained.

The first link was brought to my attention by Jo Eberhardt (thanks, Jo) of “The Happy Logophile“. 

This article tells the story of a failure in Amazon’s Auto-pricing for e-books.  It repriced one author’s book to “free” – inciting a huge spike in downloads, each with $0 in royalties.  The whole sordid tale is here.  But the kicker: although Amazon eventually owned up to the mistake, they refuse to refund the author in question for the lost royalties.

Here’s the full scoop from the author himself, with a copy of the correspondance he received from Amazon.  The relevant, draconian, and frightening statement from that correspondance:

As per our KDP Terms and Conditions, we retain discretion over the retail price of a Kindle book.

Continue reading

NPR Interviews Barry Eisler

In case you missed it yesterday (or otherwise don’t listen to NPR), here’s an interview with Barry Eisler: he of the turning-down-a-half-million-dollar-traditional-publishing-advance-to-self-publish fame.

What was interesting to me, about this interview: I didn’t know that after Eisler had announced his intent to self-publish he was actually approached directly by Amazon and offered what he calls a “hybrid deal”.  In this hybrid deal, Amazon has become, in truth, the actual publisher of the book (as well as distributor and retailer) offering marketing support, while still leaving all the book production details (editing, cover art, etc.) to Eisler.

The result?  Amazon gets an exclusive title.

In light of my recent articles about Amazon and the changes in the publishing model… this is definitely something that makes me go “hmm”.

I find it interesting that Eisler is being unashamedly mercenary about this – and I find I respect that.  It suggests to me that he’s doing what he’s doing not out of some anti-traditional-publishing principle, but because he is truly looking for what he believes to be the best deal, financially.  I can’t begrudge someone finding a good deal.  But if he was just carrying some anti-traditional-publishing chip on his shoulder (like some self-publishing authors seem to), I’d probably think a lot less of him for it.

Amazon Addenda: More on the Seedy Underbelly of the Digital Self-publishing Revolution

Last week I talked about some of my concerns as they relate to the Digital Self-publishing Revolution.

One of my primary complaints concerned the market dominance of Amazon as the etailer of choice for ebooks.  Most ebooks are sold via Amazon, and most writers openly embracing the digital self-publishing revolution in the process embrace a de facto contractual relationship with Amazon (whether they realize it or not) – and one in which they most likely don’t even know what their own rights and responsibilities are.

Today’s addendum is a link that will serve to further illustrate just what sort of company with which these writers are entering into a relationship.

First, a bit of disclosure: I shop on Amazon. Quite regularly, in fact.  As a consumer, I appreciate Amazon’s low prices, speedy deliveries, and the ability to compare multiple products.  I use Amazon for more than just books.

But that comes at a price, and I’m only now coming to realize the full nature of that price.  This article tells the tale of what it’s like to work in an Amazon fulfillment warehouse located in Lehigh Valley, Pennsylvania.  If you don’t click the link, here’s the short version (the full article is some 9 pages long, though you’ll get the gist before you finish the first page; the rest is just further accounts re-illustrating the same point): it’s not pretty.  It’s not nice.  Not nice at all.  The working conditions are, in a word, barbaricContinue reading

The Seedy Underbelly of the Digital Self-publishing Revolution Part 2

Last time I started talking about what I called “the seedy underbelly of the digital self-publishing revolution”, by which I mean all the things I’ve been learning about it that leave me feeling uneasy.  Specifically, last time, I talked about Amazon’s proposed e-book subscription service, and my general unease with Amazon’s hegemony in the digitial self-publishing world.  But that’s not the only part about this whole thing that makes me worry about it.  Here are a few more posts that gave me further pause.

When one traditionally-published author decided to digitally self-pub some short stories her publisher decided she’s in breach of contract.  The Passive Guy relates the tale here and here.  The long-story-short of this tale: making this move on her own spooked the publisher – rightly or wrongly is not the point – and apparently on some level the publisher was offended.  Many of the most prominent cheer-leaders of the digitial self-publishing revolution will take stories like this as further evidence of the EVIL nature of the traditional publishers – a point that must surely be bolstered by the fact that some agents have written in support of the publishers in this case, as opposed to the author.  I don’t take it that way.  I take it that publishers are human.  And that they’re beginning to buy into the rhettoric of the digital self-publishing cheerleaders that this is an existential dilemma for them. 

The story, itself, wasn’t the least surprising to me.  I’ve heard warnings from established, traditionally published authors warning of something like this well before I read this story.  Self-publishing, they have said, is the kiss-of-death in the traditional publishing world.

The real point, then, that I wanted to make was this: if in the long-term, traditional publishing is your goal, is now the time to rock the boat and go-it-alone, in the hopes that later the traditional publishers will overlook your self-published history? Continue reading

The Seedy Underbelly of the Digital Self-publishing Revolution

So, I’ll start by saying that I see the arrival of the Digital Self-publishing Revolution as largely a good thing.  It’s more confusing than the old world – now instead of a comparatively straight-forward process of submitting to agents and editors and hoping for the best while expecting the worst, you’ve got a thousand different possible levers you can try and pull.  (Some of them you can’t actually reach.  Some of them don’t actually do anything when you pull them.  Some of them have an effect, but it’s hard to figure out what that effect is.)

But, largely, it’s a good thing because it gives writers and readers both new options that they didn’t have before. 

Still, I’m put off by the revolution’s cheerleaders who shout hurrahs: “The Revolution has come! Publishing is disintermediating! The Traditional Publishers are dying, and good riddance for they were made of EVIL and soon it will be complete freedom for writers and readers and puppies and kitties will rain from the skies forever! Amen!  P.S. And we’re all going to get so rich by writing!”

That’s hyperbole.  But the basic message is the same.  If you move in writing circles, you can’t help but read one or two such blog posts on various blogs per week. And that’s if you don’t actively follow Joe Konrath or Dean Wesley Smith or others like them.  But their message puts me off, not only because I think it’s an unrealistic vision of the future, but because something about this vision seems a little off to me.

In the past few weeks, I’ve come to understand a little better why I’m vaguely uncomfortable and unsettled about the digital self-publishing revolution.  There is something dark, something unspoken, something critically unexamined staining the underbelly of the Digital Self-publishing Revolution.  I don’t think these are things talked about enough, yet. Continue reading

Cross-posting: Amazon and the Big Squeeze

In one class I’m taking this semester, called “Strategic Decision Analysis”, we have a course blog where we, the students, are keeping track of things we notice in the news and in our lives that reflect the course topics, which largely revolves around Game Theory.  Earlier this year I posted an entry in this blog about the infamous “Amazonfail” event, otherwise known as the “Kerfuffle”, and what I was then learning about the future of publishing.  Well, recently, the Boston Review published an article that details the whole sordid history of how Amazon has put the squeeze on the publishing industry, and what that means for the future of the industry.  And I noticed that there were a lot of Game Theory aspects to this whole story.  So, I wrote about that for the course blog.  You can find my original entry hereContinue reading

Update from PM Class

It’s time for my weekly update from the Project Management class, for want of anything better to talk about.  Which, this week, is a pretty big want.  In other words, there wasn’t much interesting about the most recent PM class.  This class we had a guest speaker who talked a lot about Microsoft’s Project Portfolio Server program.  I wasn’t really inspired by it.  Certainly, it made organizing large numbers of projects into a single view easier, and easier to do some cursory analysis on them.  But, with the analytics essentially obscured to the user, I didn’t feel confident that it was a good platform for decision analysis when considering multiple projects against constrained resources.  What I’m learning in my Decision Modeling class is much better for that, I think – and there, defining the parameters becomes a much more transparent process.

We also were given our group assignments, and I’m still waiting on feedback from my boss about whether there’s a project here at work that we can use.  If not, one of the other group members may have a project.

Tangentially related, as I was thinking about projects – both for this class and for the Decision Modeling class – I came up with what I think may be a great project idea for Decision Modeling.  In that class, we’ll need to model a complex and non-trivial decision with lots of constraints and uncertainties.  I don’t know all the details of the project’s requirements, but I was reflecting on the A & M Kerfuffle when this idea struck me.  I left a comment on John Scalzi’s blog a few days ago (scroll down to comments #43 and #44) about one of the factors that I thought was entering into the psychology of consumers regarding e-book prices (one which I hadn’t seen really brought up much, that being that physical books, even having the same content as e-books, can be valued higher simply because they have physical, concrete, and tactile existence).  Later, I thought about my comment, and thought: “Stephen, you’re smarter than that.  There’s more that enters into pricing, and perception of price, than any one factor.  It’s a complex interplay of Supply, Demand, Break-even, Equilibrium, and Consumer Psychology, all in one package.  Heck, it’s a complex, non-trivial nut to crack.”  That’s when I thought: “Complex!  Non-trivial!  Nuts-to-crack!  These are the features of the sorts of problems that I’d want to use my new decision modeling ninja skills on.”  Besides that, the prof had mentioned finding a project about which we were interested.

I’ve already reached out at work on that project, too, to see if there was a complex decision problem requiring ninja-level-analysis there.  And that will take precedence if I find one.  But I’d be much more interested in exploring the complex problem of e-Book pricing, if nothing at work pans out.  If I proceed with it, I’ll next have to consider how I’d frame the question, and what, precisely, I’m trying to “decide” and from who’s perspective.  Probably, I’d think that both Amazon’s and Macmillan’s positions on the issue are well vetted within their organizations, so the tack I’d have to take would be: from an author’s perspective, what is the ideal e-Book price?

If this goes forward…

STAND BACK!  I’ll be doing SCIENCE!