Why I am not afraid of Amazon’s “Monopoly”

Amazon and one of the big five are at it again. I have been trying to do some background research and come up with a rational opinion. What I came up with was this, there isn’t enough information available for anyone to have a rational opinion about what’s going on.

We know the negotiations are over the price of ebooks and what sort of discount Amazon gets on their books. The publishing industry, and it’s apologists, would say that the greedy Amazon is driving publishers out of business by forcing them to pay higher discounts or accept lower prices. Amazon supporters would say that the big publishers are dinosaurs intent on fixing prices to keep the new wave of indie authors at bay.

It wouldn’t be a good Amazon controversy without the word monopoly being thrown around, or better still monosopy. A monosopy is the mirror opposite of a monopoly, a company that has total control of a buying market, instead of a selling one.

Amazon is certainly a big player in the market. Whether you are a publisher or an indie author you can’t ignore Amazon. It’s share of the ebook pie is so great that publishers feel they can’t afford not to do business with it.

For readers, it’s a different matter, which is why Amazon is not a monopoly. Many readers choose to buy books on Amazon. Many choose to read on a kindle device. They don’t have to. Apple has it’s own reading apps, so does Google. Edistributors like Smashwords sell ebooks in multiple formats. DRM notwithstanding, you can download your books to your own computer and port them to whatever device you have.

I don’t think Amazon is a monopoly for authors or publishers either. Amazon is a platform. It’s a huge platform, accounting for over 85% of book sales according to some self published authors. For as big as it, it’s still a platform. They don’t demand exclusivity. There’s no contract and you can opt out at any time.

In order for Amazon to become a monopoly they have to have control of the market. Control is about more than market share. Amazon may have the largest market share currently, but it doesn’t control the market.

What about DRM and consumer lock in? DRM is a joke. Google DRM stripping software and you will quickly see what I mean. DRM simply doesn’t work. As far as consumer lock in, that’s pretty much a red herring as well. If I have hundreds of kindle books (and I do) I am now locked into the kindle because if I buy something else I won’t be able to access that library, right? But there is a kindle app for android, ios, and windows. Or I can use software like Calibre to convert all my kindle books to epub, or whatever format I want. It doesn’t matter what platform you move to, your kindle library can move with you.

So what would happen if the entire publishing industry decided to tell Amazon to take a flying leap? They could easily hire engineers and build their own ebook platform, sell at whatever price they wanted and take whatever cut they wanted.

In the short term, they would take a huge hit. Losing Amazon sales would hurt. In the long term, Amazon would take the hit. Consumers would quickly realize that if they want the latest bestseller from their favorite author, they need to switch to the new platform. And Amazon would start losing sales.

The same is true for indie authors. If Amazon were to turn unfriendly towards the indie crowd, they would move to other platforms, like smashwords or the Apple iStore. They would sell direct on their website. It would likely be a painful transition for many writers, but over time it would be Amazon that would suffer.

If you doubt that an internet platform like Amazon could ever have their fortune reverse dramatically, just look at what happened to Myspace. There are a lot of difference between a social media site like Myspace and an commerce site like Amazon, but the underlying principle is the same.

Myspace’s loss to Facebook had nothing to do with features or control, it had to do with people. People started migrating to Facebook because it was hip. As more people made the switch, it just started to snowball. If you wanted to stay connected you had to make the switch, too.

It could just as easily happen to Amazon. The only difference between social media and writing is that in writing to roles are more distinct. On social media every member is both a content producer (they post stuff) and a content consumer (the read posts). Most people choose to be active on the sites where people post content they are interested in reading and where people read the posts they make.

Readers shop on websites that have the books they want. If a new site appears with books people are interested in reading, readers will discover it soon enough. By the same token authors make their books for sale on platforms that seem to have the right kind of readers. Its really that simple. Amazon has the books readers want and the readers authors want. If someone offers a better mix, people will switch.

Do I think that will happen? Not in the short term. Amazon seems to be pretty savvy about the web and about selling books. However in the long term, I almost guarantee it. That’s the nature of the web, someone will have a bright idea that tops Amazon and things will change. But it’s also why I am not afraid that Amazon has a monopoly on publishing.

 

Two really random asides:

 

Why don’t publishers create their own ebook site and compete with Amazon?

I think the real reason is indie authors. For all their dismissal of the indie revolution, publishers know the score. If they desert Amazon, Amazon will still be able to produce a huge list of new books, because they have indie authors. Furthermore, indie authors tend to set their prices lower. Publishers might grouse about Amazon’s pricing, but really its indie authors that set their own price.

So what happens when you can get the latest ebook from Janet Evanovich or James Patterson on site A for 14.99 or four novels from an indie author over at Amazon? It will only hasten their demise. The telling point is what publishers are fighting over. It’s discounts, stock and pre-order buttons this time. It’s hard to get much sympathy from indies on this because we don’t get these perks anyway. And there’s the bottom line. They need their perks in order to compete.

Publishers don’t want to compete with Amazon and they don’t want to compete with indie authors. They want to fix the price on Amazon and keep as many perks on their side as possible.

 

How did Amazon get to be so big?

The genius move on Amazon’s part was to be friendly to indies from the start. It’s not that indies are all great, it’s that it built a huge amount of content on their site, and did it quickly. Just as people are what make social media sites tick, content makes e-commerce work. When I was trying to decide on my first ereader, I searched multiple sites for books I would like to read. I made lists of books and what platform they were available on. Amazon and the kindle won, again and again. They had more books, at a better price, than any other ereader.

 

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