Amazon scrapes bottom, sells books cheaply to public, talks to Democrats

Just when you thought they could sink no lower, Amazon has added fresh offenses to their litany of crimes. So you’d conclude, at any rate, from the scrupulously impartial, limpidly objective coverage of their head-to-head discounting battle with Overstock in The Bookseller and Shelf-Awareness. Indeed, if you believe the latter, all that’s keeping those unscrupulous bad hats out of the courts is their overly chummy dealings with the Democrats.

AmazonYes, fresh from being pilloried for not discounting enough, Amazon is discounting too much again. Of course, Overstock didn’t exactly help the situation by calling Amazon out, specifically advertising its limited-period discount run on selected titles as 10 percent lower than Amazon’s. Amazon duly counter-attacked, discounting the same bundle of titles to below Overstock’s new levels. But that didn’t stop commentators such as John Mutter at Shelf-Awareness painting Amazon’s reactive move as part of its grand strategy “of retail domination.”

Other writers didn’t exactly agree with Mutter’s interpretation. At The Digital Reader, Nate Hoffelder concluded that “it would tend to debunk the commonly held belief that Amazon is willing to lose money with wild abandon. Instead Amazon has chosen a measured response that goes one small step further and hurts their opposition even more.”

Yet Mutter rebukes such action which “hurts traditional bricks-and-mortar stores and feeds consumer perception that a fair book price is lower than its cost.” Fine: What is the cost of a book? Who decides? In practice, it’s what the publisher says it is. Actually, the agency pricing case showed that that is exactly what they think it should be. The Big Six (oops, Five) settled out of court, and Apple was found guilty, for conspiring to fix the price of books at what suited them, rather than at the cheapest level anyone could manage to sell to the public. And remember that, as Hoffelder points out, the anti-trust settlement specifically forbids Amazon from discounting e-books below the cost that it pays to their publishers. Amazon’s only way to beat them on price is to produce better e-books than they do: something that KDP authors already seem to be doing.

But why let the facts stand in the way of a good piece of rabble-rousing? Especially if there’s a political angle to be worked in. ”Another possible reason for Amazon’s boldness is its apparently cozy relationship with the Obama administration—whose Justice Department pursued the agency model case, which mainly benefited Amazon,” writes Mutter in Shelf-Awareness. “This relationship will be highlighted this coming Tuesday, when the president will give another major speech on the economy and aiding the middle class at, of all places, the Amazon warehouse in Chattanooga, Tenn.”

And there you have it. What GOP promise keeper wouldn’t burn their Kindle in protest now? Naturally, the DoJ is going to launch one of its widest-reaching anti-trust investigations purely to benefit Obama’s liberal buddies. I always thought Jeff Bezos had a sneaking resemblance to Dr. Evil. Now I know why…

5 Comments on Amazon scrapes bottom, sells books cheaply to public, talks to Democrats

  1. Here’s Chris McVeigh’s brilliant rebuttal of this have-it-both-ways Amazon-bashing – from The Bookseller’s Futureread, no less:
    http://www.futurebook.net/content/jeff-bezos-ate-my-hamster

  2. Never forget that Amazon isn’t just talking to Democrats, it’s talking to Chicago Machine Democrats and even being praised by them (i.e. Obama on Tuesday). In Chicago, crony capitalism is the only kind of capitalism there is. You don’t pay, you don’t play. Make trouble, and you get singled out for retribution, as with the IRS targeting small-government and pro-Israel groups but not their liberal counterparts. This is rocket science. It’s all too obvious what’s driving our politics.

    Keep in mind too that, at the time the DOJ filed its lawsuit, Apple had 0% of the ebook market, a rather poor platform from which to drive prices upward, while Amazon had some 90% of the market and was selling below cost for the most obvious of reasons–to drive away that anemic 10% competition.

    Apple’s move into the market even proved good for competition. Amazon’s share sunk to a ‘mere’ 70%. If you want to understand motives, look at what is happening. It’s easy to suspect that’s what has this Amazon/DOJ beast hot and bothered is that 20% loss of market share, something the feds should be rejoicing about. And keep in mind that in the 1950s, GM was careful not to grow ist market share past 60%, lest it attract federal scrutiny. Yet Amazon had 90% of the market and got a seemingly bizarre “what can we do to help you–oh, beat up on publishers and Apple” treatment by the DOJ.

    Selling cheap is THE classic move to establish a monopoly. In the late 19th century, small towns were often served by a locally own rail line. One the rail giants would move in, build tracks alongside the existing one, charge half the local line’s rates, and capture almost all its business. Having driven the local firm out of business (think neighborhood bookstore), it then jacked up rates to higher than the local firm had ever charged.

    It’s foolish to think that those current cheap prices will continue when one company owns the market AND has powerful friends in DC. It’s also foolish to make light of an issue this serious by talking about burning “their Kindles in protest.” This isn’t about some fringe feminists. It’s about keeping one of our core rights, free speech and a free press, untainted by political manipulation that’s all the more dangerous because it is hidden.

    In a secretive, tit-for-tat world, a market-dominating Amazon can return the DOJ’s favors by tilting search results and tweaking prices for books to favor one party and one POV over another. In fact, doing that would be far more valuable than political contributions.

    For a parallel, read in Tolkien’s Lord of the Rings where the four hobbits enter the Old Forest and find that, despite their best efforts, the forest is forcing them in a direction they do not want to go. In LOTR, the One Ring is the danger. In the world the DOJ is creating, we’ll have but One Book Vendor. I quote Tolkien’s words, leaving you to make the proper substitution.

    One for the Dark Lord on his dark throne
    In the Land of Mordor where the Shadows lie.
    One Ring to rule them all, One Ring to find them,
    One Ring to bring them all and in the darkness bind them
    In the Land of Mordor where the Shadows lie.

    This is funny.

  3. Not sure what the indie booksellers are looking to get out of the President. Do they want to ban Amazon from commerce? Slap some massive tax on them? They should really be providing an alternative for their customers. The rise of Amazon and decline of bookstores is the result of millions of independent decisions being made by consumers around the world. Despite the Keynesian claim to the contrary you hear from Democrats, one Ivy League-educated President isn’t going to be able to change millions of people’s personal buying decisions.

  4. Isn’t funny? It’s hilarious from where I’m sitting.

    Could Amazon have gotten this big if the publishers hadn’t let it in the first place? Hell no. They were just fine with Amazon when it just sold their print books, and they were happy to let e-books languish. Now all of a sudden publishers are all frantic, ‘cuz, gosh, Amazon’s suddenly huge and doing things they don’t like. What a pity they didn’t have over fifteen years in which they could have nipped that thing in the bud by stopping doing business with Amazon before it started doing all this.

    Oh, wait, they did. But it seems they liked the money Amazon was giving them too much. They never stopped to think that Amazon might extend its practice of giving huge discounts on paper books—something they had already made angry noises about many times—into the electronic world. After all, why would they? Paper and electronic are entirely different things.

    Too bad Amazon forgot that its place was just to give publishers money and not do anything they didn’t like, isn’t it?

  5. Isn’t funny? It’s hilarious from where I’m sitting.

    Amazon, ravening monster threatening to destroy the publishing industry. Yeah. Sure is too bad that the publishers didn’t have over 15 years in which they could have nipped it right in the bud before it ever got to the point of discounting e-books and threatening their industry.

    Oh, wait. They did. But golly, seems they liked the money it was giving them so much that they didn’t even stop to think Amazon might extend its already-obnoxious low-margin discounting practices that it already practiced (and that publishers had already grumbled about) with hardcovers to e-books. Because, after all, paper books and e-books were two different things, and, besides, money.

    Now we’re supposed to pity the poor publishers? Fooey. They made their bed. They’re continuing to sleep in their bed, given that, much as they gripe about Amazon, they’re still letting it sell their books. (Because they still like money.) Of course, at this point they’d probably damage themselves more if they went cold turkey. But, again, whose fault is that?

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