George Packer: Is Amazon Bad for Books? : The New Yorker - 0 views
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Amazon is a global superstore, like Walmart. It’s also a hardware manufacturer, like Apple, and a utility, like Con Edison, and a video distributor, like Netflix, and a book publisher, like Random House, and a production studio, like Paramount, and a literary magazine, like The Paris Review, and a grocery deliverer, like FreshDirect, and someday it might be a package service, like U.P.S. Its founder and chief executive, Jeff Bezos, also owns a major newspaper, the Washington Post. All these streams and tributaries make Amazon something radically new in the history of American business
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Amazon is not just the “Everything Store,” to quote the title of Brad Stone’s rich chronicle of Bezos and his company; it’s more like the Everything. What remains constant is ambition, and the search for new things to be ambitious about.
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It wasn’t a love of books that led him to start an online bookstore. “It was totally based on the property of books as a product,” Shel Kaphan, Bezos’s former deputy, says. Books are easy to ship and hard to break, and there was a major distribution warehouse in Oregon. Crucially, there are far too many books, in and out of print, to sell even a fraction of them at a physical store. The vast selection made possible by the Internet gave Amazon its initial advantage, and a wedge into selling everything else.
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it’s impossible to know for sure, but, according to one publisher’s estimate, book sales in the U.S. now make up no more than seven per cent of the company’s roughly seventy-five billion dollars in annual revenue.
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A monopoly is dangerous because it concentrates so much economic power, but in the book business the prospect of a single owner of both the means of production and the modes of distribution is especially worrisome: it would give Amazon more control over the exchange of ideas than any company in U.S. history.
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“The key to understanding Amazon is the hiring process,” one former employee said. “You’re not hired to do a particular job—you’re hired to be an Amazonian. Lots of managers had to take the Myers-Briggs personality tests. Eighty per cent of them came in two or three similar categories, and Bezos is the same: introverted, detail-oriented, engineer-type personality. Not musicians, designers, salesmen. The vast majority fall within the same personality type—people who graduate at the top of their class at M.I.T. and have no idea what to say to a woman in a bar.”
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According to Marcus, Amazon executives considered publishing people “antediluvian losers with rotary phones and inventory systems designed in 1968 and warehouses full of crap.” Publishers kept no data on customers, making their bets on books a matter of instinct rather than metrics. They were full of inefficiences, starting with overpriced Manhattan offices.
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For a smaller house, Amazon’s total discount can go as high as sixty per cent, which cuts deeply into already slim profit margins. Because Amazon manages its inventory so well, it often buys books from small publishers with the understanding that it can’t return them, for an even deeper discount
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According to one insider, around 2008—when the company was selling far more than books, and was making twenty billion dollars a year in revenue, more than the combined sales of all other American bookstores—Amazon began thinking of content as central to its business. Authors started to be considered among the company’s most important customers. By then, Amazon had lost much of the market in selling music and videos to Apple and Netflix, and its relations with publishers were deteriorating
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In its drive for profitability, Amazon did not raise retail prices; it simply squeezed its suppliers harder, much as Walmart had done with manufacturers. Amazon demanded ever-larger co-op fees and better shipping terms; publishers knew that they would stop being favored by the site’s recommendation algorithms if they didn’t comply. Eventually, they all did.
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Brad Stone describes one campaign to pressure the most vulnerable publishers for better terms: internally, it was known as the Gazelle Project, after Bezos suggested “that Amazon should approach these small publishers the way a cheetah would pursue a sickly gazelle.”
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ithout dropping co-op fees entirely, Amazon simplified its system: publishers were asked to hand over a percentage of their previous year’s sales on the site, as “marketing development funds.”
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The figure keeps rising, though less for the giant pachyderms than for the sickly gazelles. According to the marketing executive, the larger houses, which used to pay two or three per cent of their net sales through Amazon, now relinquish five to seven per cent of gross sales, pushing Amazon’s percentage discount on books into the mid-fifties. Random House currently gives Amazon an effective discount of around fifty-three per cent.
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In December, 1999, at the height of the dot-com mania, Time named Bezos its Person of the Year. “Amazon isn’t about technology or even commerce,” the breathless cover article announced. “Amazon is, like every other site on the Web, a content play.” Yet this was the moment, Marcus said, when “content” people were “on the way out.”
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By 2010, Amazon controlled ninety per cent of the market in digital books—a dominance that almost no company, in any industry, could claim. Its prohibitively low prices warded off competition
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In 2004, he set up a lab in Silicon Valley that would build Amazon’s first piece of consumer hardware: a device for reading digital books. According to Stone’s book, Bezos told the executive running the project, “Proceed as if your goal is to put everyone selling physical books out of a job.”
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Lately, digital titles have levelled off at about thirty per cent of book sales.
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The literary agent Andrew Wylie (whose firm represents me) says, “What Bezos wants is to drag the retail price down as low as he can get it—a dollar-ninety-nine, even ninety-nine cents. That’s the Apple play—‘What we want is traffic through our device, and we’ll do anything to get there.’ ” If customers grew used to paying just a few dollars for an e-book, how long before publishers would have to slash the cover price of all their titles?
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As Apple and the publishers see it, the ruling ignored the context of the case: when the key events occurred, Amazon effectively had a monopoly in digital books and was selling them so cheaply that it resembled predatory pricing—a barrier to entry for potential competitors. Since then, Amazon’s share of the e-book market has dropped, levelling off at about sixty-five per cent, with the rest going largely to Apple and to Barnes & Noble, which sells the Nook e-reader. In other words, before the feds stepped in, the agency model introduced competition to the market
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But the court’s decision reflected a trend in legal thinking among liberals and conservatives alike, going back to the seventies, that looks at antitrust cases from the perspective of consumers, not producers: what matters is lowering prices, even if that goal comes at the expense of competition. Barry Lynn, a market-policy expert at the New America Foundation, said, “It’s one of the main factors that’s led to massive consolidation.”
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Publishers sometimes pass on this cost to authors, by redefining royalties as a percentage of the publisher’s receipts, not of the book’s list price. Recently, publishers say, Amazon began demanding an additional payment, amounting to approximately one per cent of net sales
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brick-and-mortar retailers employ forty-seven people for every ten million dollars in revenue earned; Amazon employs fourteen.
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Since the arrival of the Kindle, the tension between Amazon and the publishers has become an open battle. The conflict reflects not only business antagonism amid technological change but a division between the two coasts, with different cultural styles and a philosophical disagreement about what techies call “disruption.”
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Bezos told Charlie Rose, “Amazon is not happening to bookselling. The future is happening to bookselling.”
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n Grandinetti’s view, the Kindle “has helped the book business make a more orderly transition to a mixed print and digital world than perhaps any other medium.” Compared with people who work in music, movies, and newspapers, he said, authors are well positioned to thrive. The old print world of scarcity—with a limited number of publishers and editors selecting which manuscripts to publish, and a limited number of bookstores selecting which titles to carry—is yielding to a world of digital abundance. Grandinetti told me that, in these new circumstances, a publisher’s job “is to build a megaphone.”
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it offers an extremely popular self-publishing platform. Authors become Amazon partners, earning up to seventy per cent in royalties, as opposed to the fifteen per cent that authors typically make on hardcovers. Bezos touts the biggest successes, such as Theresa Ragan, whose self-published thrillers and romances have been downloaded hundreds of thousands of times. But one survey found that half of all self-published authors make less than five hundred dollars a year.
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The business term for all this clear-cutting is “disintermediation”: the elimination of the “gatekeepers,” as Bezos calls the professionals who get in the customer’s way. There’s a populist inflection to Amazon’s propaganda, an argument against élitist institutions and for “the democratization of the means of production”—a common line of thought in the West Coast tech world
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“Book publishing is a very human business, and Amazon is driven by algorithms and scale,” Sargent told me. When a house gets behind a new book, “well over two hundred people are pushing your book all over the place, handing it to people, talking about it. A mass of humans, all in one place, generating tremendous energy—that’s the magic potion of publishing. . . . That’s pretty hard to replicate in Amazon’s publishing world, where they have hundreds of thousands of titles.”
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By producing its own original work, Amazon can sell more devices and sign up more Prime members—a major source of revenue. While the company was building the
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Like the publishing venture, Amazon Studios set out to make the old “gatekeepers”—in this case, Hollywood agents and executives—obsolete. “We let the data drive what to put in front of customers,” Carr told the Wall Street Journal. “We don’t have tastemakers deciding what our customers should read, listen to, and watch.”
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book publishers have been consolidating for several decades, under the ownership of media conglomerates like News Corporation, which squeeze them for profits, or holding companies such as Rivergroup, which strip them to service debt. The effect of all this corporatization, as with the replacement of independent booksellers by superstores, has been to privilege the blockbuster.
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The combination of ceaseless innovation and low-wage drudgery makes Amazon the epitome of a successful New Economy company. It’s hiring as fast as it can—nearly thirty thousand employees last year.
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the long-term outlook is discouraging. This is partly because Americans don’t read as many books as they used to—they are too busy doing other things with their devices—but also because of the relentless downward pressure on prices that Amazon enforces.
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he digital market is awash with millions of barely edited titles, most of it dreck, while r
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Amazon believes that its approach encourages ever more people to tell their stories to ever more people, and turns writers into entrepreneurs; the price per unit might be cheap, but the higher number of units sold, and the accompanying royalties, will make authors wealthier
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In Friedman’s view, selling digital books at low prices will democratize reading: “What do you want as an author—to sell books to as few people as possible for as much as possible, or for as little as possible to as many readers as possible?”
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The real talent, the people who are writers because they happen to be really good at writing—they aren’t going to be able to afford to do it.”
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Seven-figure bidding wars still break out over potential blockbusters, even though these battles often turn out to be follies. The quest for publishing profits in an economy of scarcity drives the money toward a few big books. So does the gradual disappearance of book reviewers and knowledgeable booksellers, whose enthusiasm might have rescued a book from drowning in obscurity. When consumers are overwhelmed with choices, some experts argue, they all tend to buy the same well-known thing.
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These trends point toward what the literary agent called “the rich getting richer, the poor getting poorer.” A few brand names at the top, a mass of unwashed titles down below, the middle hollowed out: the book business in the age of Amazon mirrors the widening inequality of the broader economy.
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“If they did, in my opinion they would save the industry. They’d lose thirty per cent of their sales, but they would have an additional thirty per cent for every copy they sold, because they’d be selling directly to consumers. The industry thinks of itself as Procter & Gamble*. What gave publishers the idea that this was some big goddam business? It’s not—it’s a tiny little business, selling to a bunch of odd people who read.”
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Bezos is right: gatekeepers are inherently élitist, and some of them have been weakened, in no small part, because of their complacency and short-term thinking. But gatekeepers are also barriers against the complete commercialization of ideas, allowing new talent the time to develop and learn to tell difficult truths. When the last gatekeeper but one is gone, will Amazon care whether a book is any good? ♦
