Latest Salvo in the War Against Amazon Books Retailing

[Troy]

Accusing Amazon of Antitrust Violations, Authors and Booksellers Demand Inquiry
from today's NY Times Technology Section

The Authors Guild, the American Booksellers Association, the Association of Authors’ Representatives and Authors United said in letters and statements being sent this week to the Justice Department that “Amazon has used its dominance in ways that we believe harm the interests of America’s readers, impoverish the book industry as a whole, damage the careers of (and generate fear among) many authors, and impede the free flow of ideas in our society.”

Here are the actual letters that were sent to the Justice Department.  These letters, incidentally, were copied from Amazon's cloud servers!

American Booksellers’ Letter to the Justice Department

July 14, 2015
The Hon. William J. Baer
Assistant Attorney General for the Antitrust Division
United States Department of Justice
Washington, DC

Dear Assistant Attorney General Baer:

On behalf of the American Booksellers Association, a 115-year-old national trade association representing America’s independently owned bookstores, which do business in more than 2,200 locations nationwide, we are writing to urge that you give careful consideration to the letter sent to you on July 14, 2015, by Authors United.

A central tenet of the ABA’s mission is to ensure that a broad array of books is as widely available to American consumers as possible. The greater the number of books, the greater the number of voices and ideas; the greater the number of voices and ideas, the richer the lives of our citizens and the stronger our society.

As with our author colleagues, we are concerned that the mega-book-retailer Amazon.com has achieved such considerable market power with such questionable business tactics that it is undermining the ecosystem of the entire book industry in a way that will be detrimental, especially to mid-list authors, new authors, and minority voices. A May 2014 study from the Codex Group, a respected industry research organization, found that Amazon has a 64 percent market share of e-book sales and a 41 percent market share of all new book sales [Troy's Note: The NY Times article cites 33%].

Given Amazon’s dominant market share, no publisher — regardless the size — can afford to not do business with them [Troy's Note: This belief is why Mainstream publishing is doomed to remain at Amazon's mercy] NY Times article cites 33%], whatever the cost. And no one knows this better than Amazon, which has ruthlessly cut off the sales of publishers large and small when they have not yielded to Amazon’s strong-arm negotiating demands.

While independent bookstores have done well the last few years  [Troy's Note: This comes across as completely disingenuous otherwise what are you complaining about?] by becoming vital centers of their communities, and by providing literary experiences and personalized service that cannot be replicated online, their continued viability and growth will only be possible if they can continue to offer their customers the unparalleled opportunity to discover new authors, especially debut authors and authors from smaller publishing houses.

We fear that Amazon’s business tactics directly threaten publishers’ ability to support these authors and publications, which take time to identify, edit, market, and support — business activities previously supported by publishers’ profits on bestselling works sold by mega-retailers such as Amazon. We have already seen fewer titles published by the major publishing houses each year. And while it might be tempting to chalk this up to a changing economy, the truth is that these changes have been manipulated by one retailer, which uses scorched-earth tactics to extract concessions and kickbacks from publishers in exchange for offering their books for sale. Last year’s dispute between Amazon and Hachette, pursuant to which Amazon decimated Hachette sales and author royalties in order to extract its preferred payment terms, is but one example of the company’s misuse of its extraordinary market power. Other examples include:

1. Predatory Selling: Huge numbers of book titles appear to be sold below cost, and indeed it is not clear whether Amazon makes money on its book sales at all, or simply uses the category as a loss leader to entice sales on other segments of its websites. Discounts of 50 percent or more on leading new titles are the norm in circumstances where the wholesale price is typically 50 percent of the recommended retail price.  [Troy's Note: Yeah this seems pretty obvious unless I'd be willing to bet publishers are selling to directly amazon at a steeper discount than other retailers.  The real problem is that Amazon is supported by a Wall Street bolstered share price; indie bookstores have to depend upon actual profit to stay in business.]
2. Abuse of Monopsony Power Over Publishers: In addition to the Hachette dispute, Amazon has engaged in various punitive tactics designed to force major and smaller publishers to do as Amazon dictates. Measures include delisting books, delaying delivery, removing books from pre-order, discriminating by saying a specific title from a particular publisher is not available but similar titles are available from others, etc. [Troy's Note: Hachette simply should not have folded, there are other channels to make books available online, including the ABA member stores]
3. Closed Kindle E-book System: Unlike other e-readers, Kindle e-readers and the Kindle app are configured to allow readers to only read books sold by Amazon and using its proprietary format. E-pub and PDF formats, which are industry standard formats widely read on other devices, cannot be displayed on a Kindle, further enhancing and perpetuating the retailer’s 64-percent e-book market share. [It is not clear to me that dedicated eBook readers are the end of the story.  A better product with more potential is a multifunction tablet that has an eBook reader build in.  The that ebook reader software is non-proprietary, those ebook can not be dominated by Amazon, and anyone could sell them]
4. Free Riding: Amazon is the classic free-rider. Amazon has long enjoyed three major competitive advantages over its brick-and-mortar counterparts: Without any physical stores, Amazon has low fixed costs, which enables it to offer lower prices than brick-and mortar stores, even when not selling below cost. Amazon can and does free ride off the sales and promotional efforts of brick-and-mortar stores (consumers browse the books at brick-and-mortar stores and then purchase them online at lower prices), greatly encouraging “showrooming.” Showrooming is the phenomenon whereby customers go to a physical bookstore to make a purchasing decision but actually purchase the item from an online retailer, in most cases Amazon. Amazon has even created an app to facilitate this practice, which allows a customer to scan the barcode of a book in a brick-and-mortar shop and complete the purchase from Amazon’s website through their smartphone. Multiple industry research studies demonstrate that this is occurring, and publishers themselves have noticed increased Amazon sales during author events at bricks-and-mortar bookstores. State governments have subsidized Amazon with sales taxes avoidance. (Unlike bookstores, Amazon does not have to collect sales taxes in many locales.)  [Troy's Note: Yeah I've scanned books in B&N stores, saving $14 and having the book delivered to my front door the very next day.  As long as this option is available to consumers, and Amazon can sell the books this activity it will persist.  What is more interesting is that I learned about the existence of the ap from someone complaining about it's existence!]

We are pleased to join with our colleagues from Authors United in urging that these matters receive the attention of the Department of Justice.

Sincerely,
Oren J. Teicher, CEO
American Booksellers Association

Betsy Burton, President
American Booksellers Association
The King’s English Bookshop
Salt Lake City, Utah

----------------------------------------------------------

The Authors United Letter to the Justice Department

Authors United
P.O Box 4790
Santa Fe, NM 87502
July 14, 2015
The Hon. William J. Baer
Assistant Attorney General for the Antitrust Division
United States Department of Justice
950 Pennsylvania Ave., NW
Washington, DC 20530
Dear Assistant Attorney General Baer,

From the beginning of our nation, Americans have understood the central role that open and competitive markets play in promoting freedom of expression and protecting our democracy. The country’s founders, Congress and the Supreme Court have repeatedly made it clear that a concentration of private power over any marketplace of information is incompatible with American ideals of liberty, free speech, and the unfettered flow of ideas.

Today a single company, Amazon, has gained unprecedented power over America’s market for books. We are not experts in antitrust law, and this letter is not a legal brief. But we are authors with a deep, collective experience in this field, and we agree with the authorities in economics and law who have asserted that Amazon’s dominant position makes it a monopoly as a seller of books and a monopsony as a buyer of books. According to published figures, this one corporation now controls the sale of:

• More than 75 percent of online sales of physical books.
• More than 65 percent of e-book sales.
• More than 40 percent of sales of new books.
• About 85 percent of ebook sales of self-published authors.

With its own traditional imprints and its near-total control of self-publishing, Amazon has also become the largest publisher and distributor of new books in the world. In recent years, Amazon has used its dominance in ways that we believe harm the interests of America’s readers, impoverish the book industry as a whole, damage the careers of (and generate fear among) many authors, and impede the free flow of ideas in our society.

• Amazon, to pressure publishers over the past eleven years, has blocked and curtailed the sale of millions of books by thousands of authors; [Troy's Note: Book Retailers ALWAYS did this].
• Amazon, during its dispute with Hachette in 2014, appears to have engaged in content control, selling some books but not others based on the author’s prominence or the book’s political leanings; [Troy's Note: Book Retailers ALWAYS did this too].
• Amazon has used its monopsony power, and its ability to threaten punishment, to extract an ever greater share of the total price of a book from publishers; this has resulted in publishers dropping some midlist authors and not publishing certain riskier books, effectively silencing many voices; [Troy's Note: Hummm... welcome to the Black Author's world].
• Amazon routinely sells many types of books below cost in order to acquire customers for unrelated lines of business and to drive less well capitalized retailers – like Borders – out of business. This practice, extending over many years, has caused price deflation across the industry and reduced the amount of revenue available for publishers to invest in new books, thus depriving readers of wider choice; [Troy's Note: True Dat].
• Amazon routinely uses its market power to steer readers toward its own books and away from books published by other companies; [Troy's Note: Naturally].
• Amazon dictates pricing to self-published authors, requiring them to price their books within a specific range or be subjected to a 50 percent cut in royalties. [Troy's Note: Still for the vast majority of authors, this is still preferable to not being published at all].

The present inaction by regulators is not in keeping with the history of government response when a single company has come to dominate a venue for communication. In the 20th century, Congress repeatedly passed laws that prevented a concentration of ownership in vital informational markets, including newspapers, radio and television. But the precedent for this thinking extends back to the First Amendment and in 19th Century law. In 1866, long before the creation of antitrust law, Congress passed the Telegraph Act, which blocked a private company from gaining monopoly control of this very first electronic medium of communication.

The courts have regularly found that existing antitrust laws can and should be used to protect information markets from private monopoly. Justice Anthony Kennedy, in the 1994 Turner Broadcasting v. FCC case, articulated the reasoning. He wrote: “Assuring that the public has access to a multiplicity of information sources is a governmental purpose of the highest order, for it promotes values central to the First Amendment… The First Amendment’s command that government not impede the freedom of speech does not disable the government from taking steps to ensure that private interests not restrict, through physical control of a critical pathway of communication, the free flow of information and ideas.”

Americans are just as opposed as ever to seeing private interests gain control of any marketplace of information. In February this year, the FCC, responding to the strong consensus view of the American people, ruled that no private interest should be allowed to manipulate the flow of information across the Internet, and established rules for “net neutrality.” Only a few months ago, your Division was reportedly among the regulators who opposed excessive consolidation of ownership in broadband Internet, which halted the merger of Comcast and Time Warner Cable. As recently as 1999, the FTC made clear that such principles also apply specifically to the book business, and blocked the purchase of Ingram Book Group, the country’s largest wholesale book distributor, by Barnes & Noble, the country’s largest retail bookstore.

For two centuries, America’s book business was the freest, fairest, and most competitive in the world. More than a business, it was a marketplace of ideas, with publishers acting as venture capitalists, advancing funds to give authors the freedom to write books, and thereby hoping to make a profit. In this way the profit motive was put in service of a vital national interest and our fundamental rights. “The best test of truth,” Oliver Wendell Holmes wrote in 1919, “is the power of the thought to get itself accepted in the competition of the market.” What Americans seek, Holmes said, is “free trade in ideas.”

Over the years, Amazon has benefitted readers and authors in many ways. But no temporary price cut can compensate for the costs to free expression and the health of America’s book industry that have resulted from Amazon’s abuse of its dominance in the world of books. Accordingly, we respectfully request that the Antitrust Division investigate Amazon's power over the book market, and the ways in which that corporation exercises its power, bearing in mind the very special constitutional sensitivities that have historically been applied to any business that has established effective control of a medium of communication.

Sincerely,
The undersigned authors:

 

 

Edited July 16, 2015 by Troy

[Troy]

You may download the pdf files of the full text of these documents:

Authors Guild’s Call to Investigate Amazon

We once again request the Department of Justice to investigate Amazon for its anti-competitive behavior, a far more dangerous variant than that of Apple.

Below is a letter to the Department of Justice, written by Douglas Preston and Barry Lynn in cooperation with the Authors Guild. Preston is a Council Member of the Authors Guild, which from the beginning has been a partner in this initiative. Last summer he spearheaded a grassroots protest against Amazon’s punishment of authors during its dispute with the publisher Hachette. Under the rubric “Authors United,” he gathered over 900 authors’ signatures and took out a two-page advertisement in The New York Times, in a public challenge to Amazon’s actions. The following letter addresses the larger issue of Amazon’s control of the book market and requests an investigation of the company by the Department of Justice. The Authors Guild supports Preston’s actions and endorses his request, as do the American Booksellers Association and the Association of Authors’ Representatives.

Roxana Robinson

President

The Authors Guild

 

The Authors United Position Paper on Amazon’s Book Selling Practices (24 Pages)

The Hon. William J. Baer
Assistant Attorney General for the Antitrust Division
United States Department of Justice
950 Pennsylvania Ave., NW
Washington, DC 20530
Dear Assistant Attorney General Baer:

We believe that Amazon has gathered unprecedented market power over the world of books, which many experts have asserted make it both a monopoly in its role as a seller of books1 to the public and a monopsony in its role as a buyer of books from publishers. We believe Amazon has been misusing that power in many ways, and we seek the benefit of your office to address this situation.

[Troy]

In the wake of all of this Black readers, authors, and business professionals have suffered the most from all of this.  The adverse impact is hard to see unless you look at the situation collectively, because individual successes cloud the picture.

In my almost 20 years in the Black book business here is what I've observed:  Black people will buy the lowest cost book.  Sure there are a few exceptional, conscious consumers who see the bigger picture, but they are exceedingly rare.  We will watch Black owned bookstores, even Black owned websites, disappear to save a few bucks.  All the while failing to realize by not investing in these Black owned business you relinquish control to folks who don't give a damn about you other than your money.  But more importantly control over our very culture is handed over the these very same folks.

I have plenty of anecdotes.  Here is one from the National Book Club Conference a few years ago:  A couple of sisters proudly told me how they did not buy books from the bookseller at the conference (who also owned an indie brick and mortar store), because they were able to buy the books more cheaply at the BarnesandNoble down the street!  This is what I mean by individual success.  The readers saved some money but the cost is one less Black bookstore.  The bookseller was Brownstone Books which had two stores in Brooklyn, NY.  Brownstone Books closed a few years ago (I never even told the owner that story).

Here on AALBC.com and on my Power LIst website, I have sold books every way possible, but people only buy from Amazon (not even B&N).  I'd be willing to bet, though I don't have actually data to support it, that better than 75% of all books Black people buy, that was written by a Black person, was purchased on Amazon.  I say this because B&N and the white independents carry very few Black titles (a Target will probably carry more).  Since we don't have very many Black owned independent stores, and many of those remaining to carry don't a large inventory of new books, our options are limited.  Amazon is literally the only place most Black people can go to buy a book written by a Black author.

Of course not every Black reader is active online, where do these readers go to buy a new book written by a Black author?

I won't even address the issue of how quality books are discovered today, given our collective unwillingness to support the platforms that cover Black books.  AALBC.com is very fortunate, but certainly not immune.  The depressed Black book ecosystem does not allow AALBC.com to publish as many book reviews as I would like.  Indeed where else (serious question) does one read critical reviews of new Black books?

Black writers have been be so cut off from traditional publishing everything Amazon offers is welcome relief to these writers. There will be a never ending supply of authors for Amazon to publish.  This is particularly true when Amazon is willing to publish anything whether regardless of quality or commercial viability--they still make money on the process, not unlike a vanity press. This is a success of the individual author.  But the cost to the reader is a sea of books uncurated and impossible to sort through to find the ones worth reading --despite Amazon's biased reader reviews and algorithms.

Unfortunately individual success are what make this entire situation impossible to change from the consumer or writer's side.  So approaching the Justice Department seems like the best tactic.  But given the likelihood the Justice Department has been brought off, this tactic seems doomed to failure as demonstrated by Apple's efforts.

The only real option would be for the big 5 to cut off the direct supply of books to Amazon.  But given these are all publically traded companies, the financial hit is one they will not be willing to take.  So we can look forward to watching Amazon exert increased influence over publishing, and COMPLETELY control over the Black book world.

[CDBurns]

Dang, I gotta spend some time with this one.

[Guest Rudean]

Thanks Troy for the info and analysis; lots of food for thought! But what are the present options for the Black book world? I'm already a member of AALBC.

[CDBurns]

Troy, your inserts into those letters are all saying what we've know for a long time, NOTHING is going to change. Just because these angry white men are now facing the hit we faced years ago, they are crying. It will accomplish nothing for them because the machine is moving and Newton's Law is in effect! The only way to stop the Amazon object from moving is like you said, White publishing houses would need to pull the catalogs and that simply will not happen.

In other words the fact that for all of these years people continue to build up platforms outside of their own is just a matter of chickens coming home to roost. You didn't want to publish Black authors. Black authors discovered self publishing, which has always been an option, but the success of certain Black authors swayed even well known and White authors to begin self publishing... only accepting deals to gain greater distribution. Now that writers have gotten over the process of being rejected and having to use the 

1. submit to agent

2. get rejected

3. finally get an agent

4. get rejected by publishing house

5. finally get accepted

6. take 1-2 years for a book to release

model, it is reaching into the pockets of large White publishers and now they have something to say... Nothing is going to happen. These guys will run out of money before they are able to use the monopoly argument against Amazon. This stuff is going no where fast and I know this for a fact because the majority of Amazon's inventory is not, I repeat, is not even purchased by Amazon!!!! It is primarily FBA. In other words the big publishers are delivering the books to Amazon's FBA warehouses and Amazon has the ultimate godfather. You use them because you literally (pun intended) don't have a choice since people just won't buy directly from you or your site.

It's great information to read, but we know as Cynique would say (and Shakespeare) this is much ado about nothing.

 

[CDBurns]

And as further confirmation: http://www.nytimes.com/2015/07/16/business/media/amazon-lands-spike-lees-chi-raq-as-its-first-original-movie.html?_r=0

[Troy]

Obviously, this is just another way to attract Prime subscribers.  Who is going to see this film in theaters when it will be available online in a few weeks.  Spike gets paid and Amazon gets more Prime subscribers no matter how bad the film is. We, the easy marks, get stuck holding the bag.  

Funny of all the Spike Lee films the NY Times slammed, the 2015 film Da Sweet Blood of Jesus, which did about $5 at the box office, was left overlooked, as it was by everyone else.  

I guess as Hollywood continues to focus all of its money on movies derived from comic books, serious filmmaking for the large screen will increasingly become a thing of the past.  Needless to say Black filmmakers will be hurt the most.

 

 

[CDBurns]

Man the things that are occurring inside of the Amazon house are amazing. As a big marketplace my account was automatically integrated with Amazon.ca and will be integrated into Amazon.mx (Canada and Mexico). In the past week I've been invited by Amazon.jp and another Amazon offshoot to become a part of the launch of Amazon in these various countries. I can write more about this, but it gets into a complex web, that all ends in the same spot. In an attempt to offset the oncoming push of the TPP and Alibaba and Rakuten's reorginization's, Amazon is ensuring that they have a foothold in these countries without even as much as opening a warehouse in those countries. It's an incredible business structure that only Amazon could pull off since there will never be a Black company that could get folks to list and sell through their own site. There is a lot more to say about this, but as far as Black folks are concerned, it's not the corps damaging us, it's just us Troy. It's just us.

[Troy]

ANYONE INTERESTED IN ORGANIZING A BOYCOTT OF THE AMAZON BOOKSTORE PLEASE REPLY BELOW OR EMAIL ME troy@aalbc.com. AN YOU WILL BE ADDED TO OUR PRIVATE GROUP.