Anti-Competitive Companies, Amazon, & Authors

by August Wainwright on April 12, 2013

Quite a bit has been said about Amazon and their “monopolistic” practices lately. Let me start this post by putting my thoughts right out in the open: This entire discussion is bullshit.

Many authors have weighed in publicly with their opinions on the evil overlord known as Amazon. It’s common to hear about used ebooks, the ridiculous idea that could destroy the publishing industry, as if it’s a complete inevitability looming around the corner. Or about how it’s only a matter of time until B&N starts folding under the weight of their massive stores, leaving Amazon in an even more powerful position.

The fact that both of these things may never happen is never really discussed. But the end of most of these discussions usually contains some line referencing Amazon’s desire to take over the world.

My response: so what?


Just for a moment, let’s take a look at the facts.

1. Amazon and the Kindle are almost entirely responsible for the massive shift in publishing

Usually, if the arguments that are taking place are based solely on the fact that the platform in which we are arguing about exists, then maybe we should take a long hard look at what it is that’s so bad and so frustrating and so down right evil about said platform.

I don’t know about you, but I wouldn’t be able to publish my works if it wasn’t for Amazon. You know what, let me rephrase that: I wouldn’t be able to publish the way I want to, market the way I want to, or take responsibility for the successes AND the failures of my own work. I wouldn’t be able to make royalties between 35%-70% of all sales. I wouldn’t be able to fluctuate pricing, do my own promotions, or test new ways to reach readers.

Some authors thrived in the old Big 6 publishing world and it’s a guarantee that other authors would have made it big if things hadn’t changed. But look at the environment we operate in now, look at what keeps you from “making it big” now; absolutely nothing. Put the work in, dedicate the time, and reap the rewards.

You don’t have to spend a year or more trying to find an agent to represent your book. You don’t have to wait while the agent fails to sell your book to a publisher. You don’t have to act happy just to have the chance to be published, even when the editors tell you to completely change the entire idea of what your book was supposed to be. And you don’t have to start all over when the publisher decides to pull your book one month before it was supposed to go out, and your agent decides it would be better if you went separate ways.

This brings me to the point of this post and the second fact that is so easily overlooked:

2. Monopolies are NOT inherently bad for the free market

Yes, you read that correctly. No, I’m not anti-competition, anti-democracy, or anti-American (all of which you might be called by implying that monopolies aren’t bad). But, there is an important distinction to make here.

The main reason that authors freak out over Amazon’s “stifling” business practices is actually quite simple: fear.

Fear is also the reason that monopolies are labeled as being evil, competition killing mega-corps that couldn’t care less about the consumer (see everything that AT&T does for example).

Now, this fear makes perfect sense. And it’s a completely valid and warranted opinion. If a company is allowed to snuff out all competition, only to turn around and lower the quality of services while raising prices for consumers, then that company is a tried and true monopoly, deserves to be broken up, and should be looked at in the same light as Enron and Bernie Madoff.

But nothing, absolutely nothing, points to the fact that Amazon operates this way.

If you have facts and data that prove otherwise, I’d be more than happy to take a look at them and re-evaluate. But so far, I’ve never seen it to be the case.

As a matter of fact, I would say that, although Amazon and the Kindle are the iPhone of the digital book universe, they actually do everything within reason to empower authors, pay them what they deserve, all while LOWERING the costs to consumers, not raising them.

Let’s suspend the Amazon argument for a moment so we can look at another massive tech company: Google.

Take a second and remember back to the birth of the search engine. Consumers had plenty of choices (they still do). You could use Google to find what you’re looking for online, or you could use Yahoo, Hotbot, AOL, Excite, Ask/AskJeeves, AltaVista, MSN/Bing, Netscape, and on and on and on.

So why does Google now keep a market share north of 80% and the phrase “Google it” is as ubiquitous as “Man, this grilled cheese is delicious”?

Because they were, and still are, better than everyone else.

There’s a lot more that goes into why that’s true, and what your opinions are towards what the word “better” means, but ultimately, the fact that Google was just flat out better at the search engine game is all that matters.

So is Google a monopoly? Google chairman Eric Schmidt all but admitted that they were back in 2011.

Has Google made your life easier or harder because of their huge market share? I can’t see how it’s been harder.

Has Google, because of market share and consumer confidence, fueled new technologies, donated huge sums of money to private space exploration and alternative fuel sources, and created a car that drives around by itself?

Yes, yes, and yes.

Part of the reason they are able to do these things is because of economies of scale.

In microeconomics, economies of scale are the advantages that naturally occur when the sheer size of a company allows the cost of the output to decrease simply because of the number of units being sold. Without getting too technical, it could be described as spreading the fixed costs out across more items sold.

If Apple wasn’t so huge, the iPhone probably would have cost closer to $1000. If Google wasn’t so massive, they wouldn’t be “messing around” in areas like private space exploration and augmented reality. And if Amazon wasn’t so ridiculously large, they wouldn’t be able to stay as ubiquitous as they are to consumers (see readers).

If another company was to come along and build a company that consumers liked more than Google, and THEN Google took actions to limit that companies opportunities in the marketplace, they should be punished.

And if Amazon does the same thing, they should be punished, broken up, or whatever else will deter those actions from happening again in the future.

But the idea that, since authors fear Amazon someday wielding too much power and turning into a monopoly where they take advantage of both writers and consumers, we should punish them now for something they might do tomorrow is absolutely ridiculous. Now who’s anti free-market?

Which leads me to something that all authors should embrace:

3. It’s not your responsibility to help B&N, Smashwords, or any other platform survive

It is not your job as a writer to keep a company in business OR to level the playing field for consumers. Your job as a writer is to do two things: 1. write, and 2. find the readers, wherever they are, who want your product and deliver it to them. It’s really that simple.

Now I understand that there is more to the profession of writing than just selling and profits. I acknowledge and agree with that mentality. But if your ultimate goal is to change lives, or raise money for a certain cause, or help society in some way, first you have to find a readership. Next you have to produce a product worth consuming. Then, and only then, can you create the change you’re after.

If you don’t want to make your titles available exclusively at Amazon because your readers are on multiple devices, then don’t do it. But if you’re making sure that 10-15% of your potential readership is happy at the expense of not being able to reach the other 85-90% as easily, don’t complain about monopolies and anti-competitiveness.

You’re making a choice for your business.

And nobody is forcing you to make that decision – just the same way nobody is forcing you, or consumers, to do business with Amazon.

People are constantly making that choice because Amazon is just flat out better than everyone else right now.

One last thing; the actual definition for a monopoly is:

The exclusive possession or control of the supply or trade in a commodity or service

Is it me or is the definition for monopoly interchangeable with the answer to the question “What did big publishers want, and fight over, for the entire history of their existence?”

Let me know what you think. Do you agree that Amazon having a psuedo-monopoly isn’t inherently a bad thing? Or am I crazy for saying that writers should go where readers go? Leave me a comment below.

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Oil was actually much cheaper when it was under a monopoly because the business had less cost from start to finish. I think you hit it right on with fear being the issue. That’s the reason the oil monopoly was broken up and the rules were created for monopolies, not directly because something big and bad happened, but because there was the fear that something bad would happen.

by Fel Wetzig on April 12, 2013 at 12:02 pm. Reply #

Thanks Fel.

I’m not sure oil is EXACTLY the same thing because it’s a commodity that is sort of the lifeblood of our society. If Amazon decided to do something that really did take advantage of authors, it might hurt us, but not much changes in day to day life. Where as if an oil monopoly decides to make a bad move, it could have dire consequences on our way of life.

That being said, I completely agree that it’s all fear. Authors who, just like myself, probably never would have even had the chance to be in the marketplace, now spend their time afraid of what MIGHT happen, instead of being freaking overjoyed that they’re even in the game.

by August Wainwright on April 12, 2013 at 12:16 pm. Reply #

A thought-provoking post. I don’t have enough knowledge to challenge your comments on the business strategy of Amazon and Kindle or Google. What I can comment on, from my observation of social media, is how many writers spend more time trying to game the system than trying to write a really good book and find their audience. Thank you for reminding us, once again, of what is important!

by mary gottschalk on April 12, 2013 at 3:41 pm. Reply #

Couldn’t agree more Mary. Many of the authors who are the most fearful (and yelling the loudest) about Amazon are the very ones who spend all their time trying to game the system.

I suppose if I spend months and months trying to find one small advantage, and then Amazon sealed up that particular loophole, I might be a little fearful too.

But I choose to spend my time trying to BUILD A BUSINESS, not taking advantage of temporary loopholes. That’s just me.

Thanks for the comment.

by August Wainwright on April 12, 2013 at 4:10 pm. Reply #

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by James Patterson Wants Bailout Money. Wait, What? | August Wainwright on April 24, 2013 at 1:58 pm. Reply #

Well I think it’s unlikely Amazon will ever become a monopoly (the only seller that matters), more likely a monopsony (the only buyer that matters), particularly because of the current anti-trust policies of the feds: keep consumer prices low and you will not be regulated. With a monopsony, consumer prices always stay low, and that’s achieved in part by squeezing suppliers. (See Walmart.) So unless Amazon continues to have some semblance of competition they’ll eventually get around to squeezing authors via lower royalties.

by Eric Christopherson on April 26, 2013 at 6:46 am. Reply #

Eric, I agree that it’s unlikely Amazon will ever become a monopoly, but I’m interested to hear why you think:

“they’ll eventually get around to squeezing authors via lower royalties.”

Do you think that’s a practice that Amazon alone will turn to, or one that all monopsonies engage in? I’m assuming the thought is that since they are the only buyer in the market, they can and will eventually choose to buy for less. In that case, readers won’t see price increases, yet Amazon will still be “squeezing” the market in the same way, just on the opposite side from which a monopoly would – is that your thought?

I stick to the fact that, so far, Amazon hasn’t done anything to make me believe they would squeeze the market from either side. Is it possible they will in the future? Sure. But right now, I would take them having a huge market share and the POTENTIAL for that, over having layer upon layer of barriers setup by publishers who are nothing more than middlemen.

by August Wainwright on April 26, 2013 at 12:00 pm. Reply #

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by Self-Publishing: Carnival of the Indies Issue #31 — The Book Designer on December 20, 2013 at 10:52 pm. Reply #

As both an author and someone who ran a family retail business, I have to agree with your position here. It’s been one that I’ve agreed with for some time. I remember far enough back, too, to remember when Amazon’s ideas were considered pipe dreams… barely reliable enough to consider a public stock offering. In the interim, what they have done is created the most streamlined, cost-effective distribution model on the planet, tailored their operation to their customers needs and serviced them better than any large retail business has ever done, forced new paradigms in Print on Demand, traditional publishing and eBook production standards and paid writers more for their work than has been seen in many years.
Of course, some existing bricks and mortar book sellers and traditional publishers are not going to like the pressure, but Amazon has never done wrong by me, and as a consumer, that counts for a lot.

by Richard Sutton on March 10, 2014 at 10:56 am. Reply #

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