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On several forums that I visit, there has been ongoing discussion about Amazon and monopolies and how no one need worry because if Amazon were a monopoly and did raise prices, a new competitor would instantly appear. The discussions often also evolved to criticizing anti-Amazon posters for not having a solution to the problem, just whining about the problem.

I think those who do not see a potential problem with an Amazon ebook monopoly for authors, publishers, and consumers are simply fooling themselves. The ebook market is not like the TV market. Unlike TVs which all meet certain standards so that a Sony can be substituted for a Samsung, which can be substituted for a Panasonic, ebooks do not meet a set of standards and a Kindle-compliant ebook cannot be substituted for an ePub-compliant ebook without some finagling and without removing any DRM.

Consequently, should Amazon drive out of the ebook business its primary national competitors, the likelihood of someone coming along and overnight becoming a major competitor is nearly nil. Consider the cost of duplicating Amazon’s already-in-place infrastructure. Plus, how would a new competitor break the Amazon eco system? The only way competition might have a chance at surviving would be with Department of Justice intervention.

Picture the ebook marketplace with Sony, Apple, Kobo, and Barnes & Noble gone, leaving just Amazon. If Amazon raised its pricing to insure profitability (or, alternatively, followed the Walmart practice and instead kept pricing stable but squeezed authors and publishers), what could be done about it? Not much. To say that a new competitor would see an opportunity and exploit it is naive.

The new competitor would have to build a business from the ground up. How likely is it that Amazon would sit back for a few years to give such a company a chance to gain a foothold? How likely is it that venture capitalists would be willing to fund the necessary billions for such a venture? And if the new competitor was ebook focused, for how long do you think they could underprice Amazon? Remember that Amazon has other, well-established divisions that could support a money-losing book division, something that a new competitor wouldn’t have.

To think that with the fall of the current crop of competitors new competitors would rise that could compete with Amazon nationally is simply wishful thinking with no basis in reality. The response is that Walmart didn’t raise prices, but ignores that Walmart has strong national competition in companies like Costco, Kmart, and Target — once you eliminate Sony, Kobo, and B&N, Amazon doesn’t. Apple is currently a weak ebook competitor and no one thinks much of the Google ebookstore’s competitive status.

This problem with Amazon was brought about originally by publishers who didn’t look beyond their noses when giving Amazon significant product discounts in the early years. The problem is being compounded by the same publishers’ inaction and by authors scrambling to join the Amazon exclusivity club. If publishers and authors do not take steps to halt the rise of Amazon, there soon will be no outlet but Amazon for national exposure.

The question is what can publishers and authors do? For authors, the only option is not to give Amazon exclusivity and to actively promote other ebookstores where their books can be found. If you promote Amazon primarily, you are feeding the problem, not starving it.

Publishers really are in the stronger position to halt Amazon’s dominance; they just lack the willpower to do more than whine. Agency pricing (which is legal; the Department of Justice is investigating whether there was collusion to impose agency pricing, not whether agency pricing itself is legal) was a first step but as done by publishers, insufficient.

What really needs to be done is for publishers to decide that their ebooks can only be sold in the ePub format and only with Adobe adept DRM (i.e., essentially social DRM like B&N uses). Once you break the Amazon closed eco system, everyone can compete on the same terms. Combine this with correct agency pricing, and the playing field becomes perfectly level. Now ebooksellers will have to compete on other factors, such as customer service.

If Sony’s ebookstore went under, it would go under because of other factors, factors that were within its control, rather than because of format wars.

The forcing of ePub and one type of DRM doesn’t directly address the exclusivity problem, but it could do so obliquely. If competitors to Amazon began to increase market share, the incentive to be Amazon exclusive would diminish.

One other thing to consider: I see no reason why, now that Amazon is a direct competitor of traditional publishers — it has established its own publishing houses to sign on authors for Amazon exclusives — traditional publishers can’t simply refuse to sell their books — both p and e — to Amazon. It seems to me to be illogical to require them to provide the means to fund their own funerals.

The longer the publishers dawdle in taking action against Amazon, the more power they devolve to Amazon. The point will soon arrive when publishers will be able to take no effective action against Amazon and we will be writing their obituaries.

The same is true of authors who sign up for Amazon exclusivity and who promote Amazon. There will soon come a time when the only game in town will be Amazon and you will be at Amazon’s mercy. You will find that no one will stand beside you should you decide to fight at that late point in time — publishers won’t because they will be powerless; consumers won’t because all they are interested in is lowest available price; other ebooksellers won’t because they will be nonexistent.

The time to fight to prevent monopolization of the ebook marketplace is now. The way to do it is to encourage publishers to only permit the sale of their ebooks in ePub format with a standard DRM and for authors to not give Amazon exclusivity. In the absence of such action, we can wear the lemming label.

(Via An American Editor.)

14 COMMENTS

  1. Even more than the absurdity of “an Adobe monopoly is better than an Amazon monopoly”, “Now ebooksellers will have to compete on other factors, such as customer service.” stands out. Other booksellers are failing dismally to compete on these factors now, so I don’t see any particular reason to believe they would somehow magically do so if Amazon were forced at gunpoint to change file formats and DRM scams.

  2. Adobe adept DRM is NOT a “social DRM” If Adobe’s servers are down you will not be able to move the book to a new device. The B&N DRM is supposed to be a social DRM in that you can move the book to a new device and enter the name and CC number and read the book on the new device, even if the new device isn’t connected to the net. I’ve not actually tried it, so my guess is that it doesn’t work, but the DRM they modeled it on did work that way. That’s the old eReader DRM.

  3. @GregWeeks
    No offense, but that bit about not trying something so concluding it doesn’t work is a rather vaporish logic chain.

    When I buy DRM’d books, I buy them exclusively through B&N for several reasons. One they do allow other readers to use it, not just the Nook (that none of the big names have adopted it is another issue, but there are a few of the smaller players who have). Two, as far as I can tell, there is no limit to the number of devices I can register with my B&N account. Three, the credit card number and your name really are all you need — their smartphone app does download the information, but if you have the credit card number and the name used to buy the book, it is simple to obtain access to the contents of the book. Finally of course I want to support a competitor to Amazon. In America the most viable competitor seems to be B&N.

  4. B&N’s DRM is completely enclosed within the ebook file. After downloading the ebook no DRM server or online connection is needed anymore. You can just copy the ebook file to as many devices as you want, as many times as you want.
    Even if B&N and the credit card would no longer exist, you will still be able to read the ebook, and to copy it to any device as many times as you want to.

  5. No. What publishers need to do is to abandon DRM entirely. Yes, there will be pirates. In the world of print books, there are used book stores. Only by abandoning DRM can publishers avoid being beholden to ANY entity–amazon, Adobe, Apple, and so on.

    DRM-free books available as mobi files can be read directly on a Kindle. But amazon owns Mobipocket. Ah, but DRM-free books in ePub can be easily converted to mobi files, as can several other e-reading formats.

    I don’t favor an amazon monopoly, but I’m already heavily invested in their e-book ecosystem and would regard publishers boycotting it as equivalent to an act of war.

  6. > MarylandBill says:
    > April 11, 2012 at 12:02 pm

    > @GregWeeks
    > No offense, but that bit about not trying something so concluding it doesn’t work is a > rather vaporish logic chain.

    Why? I should just assume it works because some previous generation of product that it is modeled on did? You’ve not been involved in much software development have you. If you’ve tried it, I’m willing to take your word for it, but I’ve not talked to anyone who has. It requires a nook that’s not connected to my account to test the supposition that it works that way the eReader did.

  7. Ditto to what Rudy says. Take away DRM and all of this goes away.

    I buy tech ebooks from O’Reilly because I can get it DRM free in any format I want. Nothing stops any other publisher out there from doing the same thing. This is all it would take to “make the ebook market like the TV market” and allow any start-up to become a success. And doing this doesn’t require forcing Amazon to make any changes. It doesn’t require getting all the publishers to agree to the same plan. It just requires a publisher to decide to do it. After all – it was just a few days ago that Teleread posted an article about how DRM keeps the little guy e-bookseller from being able to compete in the marketplace. It is DRM that is preventing the leveling of the playing field – ie, it is the publishers and their insistence on DRM that prevents the leveling of the playing field.

    DRM doesn’t stop the pirates. They know how to break it. It stops casual sharing of books between friends in some cases – and that is all it does – in essence, it prevents something that readers have done legally for years with paper versions and the publishers have managed to survive it just fine. Is stopping this type of sharing really worth all of this?

    If so – publishers would rather feed and support the Amazon monster that they fear so much than put faith in their readers. When publishers learn to respect me, then maybe I will take them seriously.

  8. @GregWeeks
    Actually, I am approaching 20 years working in the computer industry, a significant junk of which has been involved in writing code in half a dozen languages. I am fully aware that features are frequently broken in future updates.

    That being said, you didn’t say you didn’t know if it worked or not, you said you guessed it didn’t based on the fact that you had never tried it and didn’t claim you had heard from others who had. In other words you are judging a product on exactly zero knowledge. That is why I said your logic chain was vaporish.

    Generally, the nook software appears to need to synch to your nook account when you first start it up (on my phone this was done by simply logging in). However, once its synched up, you don’t need to be connected to decrypt new books. Certain third party applications will let you read your Nook purchases without any connection to the internet at all.

  9. Publishers and independent authors could always sell ebooks directly to the consumer, using their own websites.

    That way, there’s no ebook retail monopoly because there’s no such thing as an ebook retailer in the first place. It’s an inherently redundant concept.

    But epub only, no mobipocket. That will keep Amazon from gouging people on the price of ereader hardware.

    Also- why is a Rich Adin reprint tagged “Paul Biba”.

  10. As Rudy and Vonda Z say, DRM is the problem, not part of the solution. If non-DRM ePub became the norm outside of the Amazon behemoth, competition could flourish. Online booksellers could come and go as the market dictated and readers would not be penalised if they were left with an ereader full of books bought from a now-defunct retailer. This would also allow non-branded devices to drive down the cost of non-Kindle readers. Amazon versus any single competitor is a one-horse race. Amazon versus the world? That’s another matter entirely…

  11. Timothy – to be fair DRM is an integral part of the article where Adin says in the middle of it What really needs to be done is for publishers to decide that their ebooks can only be sold in the ePub format and only with Adobe adept DRM”.

  12. Howard – exactly. Amazon monopoly = evil, Adobe monopoly = divine, apparently.

    Do away with DRM entirely and the vendor lock-in question…doesn’t really go away, since a lot of “vendor lock-in” is people locking *themselves* in. I know a lot of people with e-readers, and they all fall into one of two categories:

    – the tech-savvy ones who know what DRM is and know something about ebook formats, but don’t worry about any of this, since they just disinfect the DRM and convert to whatever;

    – the non-tech-savvy ones, who either buy wirelessly from the device-tethered store or rely on the software that came packaged with the reader and are astonished to learn they could buy from somebody else (although honestly it’s faster and simpler to just set them up with a copy of calibre and the appropriate plugins than it is to show them how to do it in some cases).

    Even in some parallel world where everybody settles on AdobePub (even if Amazon were to go for it, no way Apple would unless somebody there wakes up with a horse’s head in his bed) a lot of people will still be “locked-in” to vendors.

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