Monday, March 4, 2013

Lawrence Gooley:
Amazon, Collusion, and Local Book Stores

Book House imageSix months ago, I wrote about a major court decision and the negative impact it could have on many regional Adirondack businesses, especially booksellers. The next phase has arrived in a convoluted, “if-you-can’t-beat-’em, join-’em” story, challenged by one of upstate New York’s top independent bookstores. The defendants in the earlier case included several of the nation’s largest publishers―Hachette, HarperCollins, Macmillan, Penguin Group, and Simon & Schuster. Their e-book titles were being deeply discounted by Amazon, and to fight back, the group signed an exclusive agreement with Apple to sell the same e-books at artificially inflated prices.

The government called it anti-trust collusion, and when the courts approved a settlement in favor of Amazon last September, the Justice Department lauded the agreement as “in the public interest, and consumers will start to benefit from the restored competition in this important industry.”

Here we are, six months later, with order restored, right? Not hardly. If you haven’t heard the news, a lawsuit has been filed by three independent bookstores, including Book House of Stuyvesant Plaza in Albany. The suit alleges anti-trust collusion by the Big Six, and I note with the greatest of irony that the name refers to America’s six largest publishers: Hachette, HarperCollins, Macmillan, Penguin Group, Simon & Schuster, and―yes, you guessed it―Amazon!

Since the first five publishers mentioned above failed in their earlier attempt to control Amazon’s pricing of e-books, they took the obvious next step: joining with the “enemy” (Amazon) in controlling the prices of those same e-books.

And how did they do it? With two simple strategies. They made Amazon the only place where their e-books are available, and those books can only be read on a Kindle or a device with a Kindle app.

As a consumer, go ahead, choose any book published by the Big Six. Want a hard-cover or soft-cover copy? No problem. Buy or order it from just about any bookstore. Find a sale; look for a deal.

Want an e-book version of the same title? Don’t bother shopping around because you won’t find any sales, discounts, or competitive prices. In fact, you won’t find anything unless you go to Amazon. And the benefits to Amazon are evident: the sale of a book, and the need for a Kindle or Kindle app to read the book. Amazon CEO Jeff Bezos said last year, “We want to make money when people use our devices, not when they buy our devices.” Apparently Bezos has discovered that both is better.

And Amazon was certainly looking ahead. In the past three years, they have released free Kindle apps allowing customers to read Kindle e-books on Android devices, Blackberries, iPads, iPhones, Mac computers, and PCs―and the Big-Six books for all of those Kindle apps can only be purchased from Amazon. Sounds like a pretty good definition of the term monopoly.

Section III of the new lawsuit notes that the Big Six “are responsible for approximately 60% of all revenue generated from print books sold in the United States,” and moreover, that “85% of all revenue generated from the sale of New York Times Bestsellers is from books published by the Big Six.” With the Big Six exclusive agreement on e-books, those two facts drastically reduce the ability of all bookstores to attract sales since they are excluded from selling the majority of the most saleable products in the e-book world. Stores nationwide rely heavily on consumers making impulse purchases, which in this case are eliminated by the millions because shoppers can’t shop for those e-books in any store but Amazon.

The suit claims that “consumers have been injured because they have been deprived of choice, and also denied the benefits … of competition. …Competitors, actual and potential, have been, and will continue to be, restrained from vigorously competing with one another for selling e-books as a result of the contracts and combination described herein.”

In the end, the charges are stated clearly: “a. AMAZON has achieved and maintained a monopoly in the sale of e-books in the United States; b. AMAZON has restrained, suppressed, and eliminated actual and potential competition in the sale of e-books in the United States.”

While Book House is the first of three plaintiffs named in the court papers, the complaint section adds that the filing is “on behalf of themselves and all other similarly situated independent brick-and-mortar bookstores.” They’re stepping forward in defense of their brethren.

Consumers, and that means you, need to understand the importance of the many “buy local” initiatives. It’s an unhealthy trend to browse in regional stores for what you want, and then turn to Amazon or Google Shopping to find the lowest price. In the end, it works against the great variety of stores and shops that are vital to local consumers, tourists, communities, and the Adirondack region in general. In the Big Picture, they are an intrinsic part of who we are. We need them, and they need our support. They in turn support our communities by generating commerce, staging events, and participating in fundraisers.

When you shop at Amazon for a book, remember that just because they don’t have it doesn’t mean it isn’t available, and even though Amazon might list a book with the notation “out of print,” it’s only a sales tactic to dissuade you from looking elsewhere. Search that same book online by title or author and you may well find it available from among the dozens of regional authors who market and sell their own work, or from an Adirondack store that also has an online presence.

And in case you weren’t aware, Google Shopping does not offer the best merchandise or the best prices, whether the product is books or other goods. What they offer are the best merchandise and best prices available from their paid advertisers. There’s a big difference. You’re not shopping in the world of the Internet: you’re shopping in the world of companies who have paid to advertise their products on Google.

Consider giving your local community shops and vendors a look. You might be pleasantly surprised. The biggest isn’t always the best.

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Lawrence P. Gooley

Lawrence Gooley, of Clinton County, is an award-winning author who has hiked, bushwhacked, climbed, bicycled, explored, and canoed in the Adirondack Mountains for 45 years. With a lifetime love of research, writing, and history, he has authored 22 books and more than 200 articles on the region's past, and in 2009 organized the North Country Authors in the Plattsburgh area.

His book Oliver’s War: An Adirondack Rebel Battles the Rockefeller Fortune won the Adirondack Literary Award for Best Book of Nonfiction in 2008. Another title, Terror in the Adirondacks: The True Story of Serial Killer Robert F. Garrow, was a regional best-seller for four years running.

With his partner, Jill Jones, Gooley founded Bloated Toe Enterprises in 2004, which has published 83 titles to date. They also offer editing/proofreading services, web design, and a range of PowerPoint presentations based on Gooley's books.

Bloated Toe’s unusual business model was featured in Publishers Weekly in April 2011. The company also operates an online store to support the work of other regional folks. The North Country Store features more than 100 book titles and 60 CDs and DVDs, along with a variety of other area products.





5 Responses

  1. Charlie says:

    If i live to be 109 i will never resort to a kindle or whatever the medium is that brings the written word to a lit up screen.There is nothing like the real thing,like being able to turn the pages manually,to caress them with my fingertips. There’s just no charm to reading a book on a kindle.I can see the benefits of a kindle if someone has poor eyesight and needs to enlarge the words,such as the technology allows,but please never let it come to that with me O great spirit,keep my eyesight sharp until i’m down to my last breaths. I’m a book man,I like to hold the printed matter in my hands.Never will a kindle cast the same spell that an old out of print book does,never will it have that same magical feel.There are so many upsides to the real thing,the least of which are the individuality in dust jackets,the feel and smell of the pages,especially in those oloder books. And of course there are the signed copies:to hold in your hand a great piece of literature,a quality bind that you know was in the hands of the author who has been dead over a hundred years… this a kindle can never achieve.

  2. Curt Austin says:

    I thought it odd that the original suit, nominally aimed at maintaining competition, would hand Amazon more pricing power – how could that be good? The feds seemed to confuse lower prices with competition, even when Amazon’s pricing was indistinguishable from predatory pricing. The Anti-Trust guys have a history of being very slow to react to technology – perhaps in this case they went too fast – they clearly missed something fundamental here. Of course, they’re attempting to apply laws passed around the time the light bulb was invented.

    Anyway, exhortations to buy local or buy paper books isn’t going to work, and is not the answer. The best thing we can do as citizens is elect smart, forward-thinking representatives that encourage the government to anticipate changes and set appropriate rules for new games before those wonderful free market forces lead to Bad Things. Railroads, steel, petroleum, mainframe computers, internet browsers – every new technology has produced abuses that are slowly recognized and dealt with. The sort of elected official or bureaucrat that resists new rules are the bad guys, in my opinion, but since we elect them, it’s our own fault.

  3. Lawrence P. Gooley Lawrence P. Gooley says:

    Curt,

    Personal exhortations might not be the answer, but the sad truth is that appealing to individuals has a better chance of success than hoping to “elect smart, forward-thinking representatives” and setting appropriate rules. After all, Americans elected the wonderful high achievers in today’s Congress.

    But let’s say we DID elect, as you suggest, “smart, forward-thinking representatives.” Once they’re in office, they learn (if they don’t already know) that the key to getting re-elected is campaign financing, and that doesn’t come from the likes of you or me. For the most part, and to the greatest effect, it comes from billionaires, big unions, and from behemoths of the industries you mentioned: “railroads, steel, petroleum, mainframe computers, and internet browsers.”

    Why? Because they’re basically purchasing opinions and influence, while the average citizen who donates $50 to a candidate does it with nothing but hope and with no expectation of a return. (Which is a good thing because they won’t see one.)

    Electing smart people already happens often. What matters is HOW we elect them. Until that changes, nothing else will.

    For starters, let’s try two British practices―a 30-day campaign, and this one―“Paid political advertising in the broadcast media is prohibited in the UK. Political parties receive a certain amount of broadcasting time on national television and radio free of charge.” (Quoted from the Library of Congress.)

    Having to press the Mute button on our remotes for only a month leading up to Election Day would be way better than doing it for 2 years. We could use that extra time to read a book … a paper one!

  4. For a long time, I swore I’d never get an e-reader too.

    A few months ago, I did.

    Although I was a bit skeptical I’d like it, I actually love it. As someone who walks and bikes everywhere, its compactness is a great bonus for me. Even one of the several hundred page non-fiction books I often read is quite heavy. The e-reader allows me access to as many books as I want. If I’m not in a non-fiction mood, I can call up the novel I’m also reading. I actually find I’m reading MORE since I got the e-reader.

    Furthermore, the new book store in my town closed last year, leaving the nearest chain book store 20 miles away and the the nearest independent book store about 35 miles away… and remembering I walk and bike everywhere… the concept of the e-reader gained a lot more appeal to me than paying a ton of money for “shipping and handling” from an online site.

    I don’t pretend it’s for everybody but I understand its appeal. And Charlie can boycott if he wants but they’re not going away. Issues like these need to be sorted out so we still have a diverse array of sellers and that writers themselves don’t get screwed.

    • Lawrence P. Gooley Larry says:

      Brian,

      Many good points, and very well said. I enjoy both formats. I support the printed work produced by regional authors, but part of my job is producing some of that work, which ironically means most of my reading involves digital files.