In DoJ antitrust action, Amazon may not be the bad guy and publishers need to innovate

Could Amazon turn out to be the “good guy” of the publishing industry? It’s a provocative suggestion posed by Laura Dawson, in a post to her blog discussing Amazon’s perception in the wake of agency pricing.

Dawson points out that, in the 1990s, the American Booksellers Association sued Barnes & Noble and Borders for much the same thing publishers are objecting to Amazon over—predatory pricing that stifled competition. Now Borders doesn’t even exist anymore, and Barnes & Noble is considered one of the “good guys.” How times have changed.

Essentially, Dawson posits, Amazon is doing a good enough job appealing to readers that it will be the store that they most want to deal with.

But we have to ask ourselves, with the collapse of physical retail for books, which company will book suppliers want to deal with most? Just as iTunes supplanted record stores, Amazon is supplanting bookstores. Of all the bookselling options out there, only the remaining indie bookstores and B&N are more “bookish”. Should they eventually collapse (or transform or get sold), Amazon will be the most bookish place for readers to go to buy books.

Which means, says Dawson, that it will be generating the majority of sales for publishers, making it “the good guys” by definition.

I’m not so sure I buy that. A monopoly is a monopoly, after all. But on the other hand, not all monopolies are necessarily bad. In a piece on the Huffington Post, author Dan Agin reminds us that “monopoly = evil” is not always the case:

A monopoly is against the public interest only when it results in artificially high prices that cost consumers extra money. A monopoly that results in LOW prices is NOT against the public interest. All over the country, we have monopolies of electric power, transportation, natural gas, and so on — because it’s ultimately cheaper for the public than having sixteen power companies in one city driving everyone crazy competing with each other.

He also points out that, if the publishers did what they were accused of doing, they did break the law. “If stopping the collusion benefits Amazon, the Big Six and Apple need to find a better way to compete. Breaking the law is not an option.”

In an interview with O’Reilly Radar, Don Linn, president of digital publishing consulting firm Firebrand Associates, suggests that Macmillan, Penguin, and Apple may have bitten off more than they can chew—the circumstantial evidence is pretty damning, and the fact that three publishers settled without a fight certainly makes it look bad for the others. But he also points out that it’s not as if the DoJ is going away after it makes the publishers back down.

As I mentioned before, consumers get the immediate benefit of lower prices, though there are those who argue that Amazon, once it controls the market, will ultimately raise prices for their locked-in consumers. The DOJ may have inadvertently created a less competitive marketplace with this action, though I feel sure they will be back if Amazon or any other party misbehaves to the detriment of consumers.

Meanwhile, small publisher Shawn Coyne posts his own thoughts about the agency publishers versus Amazon. He respects Macmillan CEO John Sargent for standing up for what he believes in—and for referring to himself as “I” in the announcement he made instead of using the faceless corporate-speak “we”. But in the end he thinks Sargent is picking the wrong fight.

Coyne thinks that instead of fighting the DoJ, Sargent should be helping Macmillan come up with ways to out-Amazon Amazon:

Let’s face it; the future of book publishing is B2C—business directly to the consumer. If you can talk to the consumer and the consumer trusts you, you’ll survive. If you rely on other people to talk to customers for you, you’re in deep trouble.

So make publishing personal again.

Come up with business models that allow the strange creatures within your citadels that dedicate their lives to books shine. You know who they are—editors, artists, sales people, publicists, marketers. Introduce these people to readers. Let them be weird. Let the conversations begin…and make sure to have your own store. Sell direct.

I will point out that Sargent’s habit of addressing his comments to other people in the publishing industry rather than to consumers has been quite annoying to a number of the consumers who were concerned about price changes for the books Sargent’s publisher was selling. It would be nice if he would pay more attention to the consumers who ultimately buy his books.

(Some links found via Writing on the Ether #34 and #35, which also feature some interesting and thoughtful discussion of posts we’ve already covered here.)