Amazon Also Creates Competition

The big topic (again) seems to be Amazon and competition. Whether it is a monopoly, or is heading in that direction, and if it should be “stopped” – although it’s never clear what that entails. Barry Eisler dealt with this fear, rather conclusively, in a guest post on Joe Konrath’s blog.

This post is from 17 February 2012. It has not been updated except to clean up broken links but the comments remain open.

But lately, the hysteria has been ratcheted up a notch by Mike Shatzkin’s (sensible) prediction that Amazon will soon be responsible for 50% of most publisher’s sales.

The Author’s Guild now has Amazon firmly in their sights. An article at the end of January entitled Publishing’s Ecosystem on the Brink: The Backstory was followed by another yesterday: Amazon, Innovation, and the Rewards of the Free Market. The anti-Amazon views contained therein are hardly surprising, given that the President of the Author’s Guild, Scott Turow, considers Amazon the “Darth Vader” of the publishing industry.

It appears that those labeling Amazon a monopoly (or on the road to becoming one) have failed to take account of the following:

(a) The definition of the word “monopoly” (the OED describes it thus: the exclusive possession or control of the supply of or trade in a commodity or service). I would like to see anyone attempt to make the argument that Amazon has either “the exclusive possession or control of the supply of or trade in” print books or e-books, or that Amazon is on the way to doing so.

(b) The fact that a retail monopolies never occur without the assistance of legislation outlawing competition (such as the Swedish prohibition on the sale of hard liquor outside of government-run stores).

(c) The inconvenient truth that Amazon’s share of the e-book market has dropped from a high of around 90% two years ago to around 65% today, largely thanks to the entrance of fresh competition in the form of Barnes & Noble, Kobo, Google, and Apple.

When a company’s competition contains names like Apple and Google – two of the biggest corporations in the world – and virtually anyone can hang out their shingle and open an e-bookstore, you can’t make the monopoly argument and expect to be taken seriously.

I don’t see Amazon as a threat to competition. Quite the opposite, in fact. Amazon has done more to foster competition than any other player in the industry.

As Mike Shatzkin points out, five years ago the overwhelming majority of all books were sold in bricks-and-mortar stores (he estimates it at 80%). As any self-publisher or author published by a small press will know, large publishers essentially have a lock on those spots, and were only really competing among themselves.

The world has changed dramatically in the last five years. The convergence of four key trends – rise in online bookselling, the widespread adoption of e-readers, the rapidly increasing popularity of e-books, and the ease of digital publishing – have introduced a new level of competition in the industry.

One company has been more responsible for that than anyone: Amazon. Instead of large publishers monopolizing all the spots where most books were sold (stores), Amazon has blown it wide open so that anybody can compete with the large publishers (including self-publishers, Amazon’s own imprints, literary agents, and small publishers).

Out of the all the players, Amazon has had far more influence over the rise in online bookselling, the adoption of e-readers, the popularity of e-books, and the ease of digital publishing. Large publishers had a lock on distribution, but now Amazon has blown it wide open so that anybody can compete with those large publishers

And they certainly are competing. Amazon’s imprints regularly propel books to the top of charts. Self-publishers and small publishers are taking over the bestseller lists. Anybody can upload their book to Amazon (and Smashwords, and Barnes & Noble, and Apple, and Diesel, and AllRomance, and DriveThruFiction, and Xinxii, and Waterstones, and Tesco, and Kobo, and Sony) and sell their work to readers across the globe.

Writers have more choices than ever before. No longer do they have to accept crummy advances, restrictive terms, and laughable royalty rates in the vain hope that their piece of publishing spaghetti will be the one that sticks to the wall.

They can sign with a progressive small publisher, on much more favorable terms, confident that they can’t be excluded from the online or digital marketplace the way they are from most bricks-and-mortar stores.

Or they can self-publish, knowing that simply by uploading to a few websites, they can match the digital distributive reach of the largest publishers, earn over four times the royalty rates, and have someone passionate in charge of the every little detail of how their book is presented to the reading public, someone that is truly invested in its success, someone that knows that book better than anyone: themselves.

And the greatly increased viability of both of those paths is largely down to one company. Amazon are doing more to change the status quo than anyone, and this makes a lot of people mad, because a lot of people have a vested interest in nothing changing.

Large publishers would prefer to have a lock on distribution and to be the sole arbiters of what gets published and what doesn’t. Literary agents would like to remain the gatekeepers who decide which writers can submit work to large publishers. Barnes & Noble is pissed because when they put an indie bookstore out of business, they don’t get to scoop up all their customers anymore; many move online and into the arms of Amazon.

And if you are a bestselling author who shifts huge amounts of print books through those channels (which your publisher has a lock on), you’re probably scared of things changing too. But for the rest of us writers, we’ve never had it better.

A final point. As Joe Konrath pointed out earlier this week, Amazon is winning because they are better than the competition. And sometimes it seems that those they are competing with aren’t even trying.

There is nothing stopping large publishers from raising royalty rates and removing ridiculously restrictive terms. Barnes & Noble excludes international self-publishers and purchases from anyone outside the US, for no good reason. Apple has a horrible e-bookstore. Kobo doesn’t let (most) authors upload directly. Most bricks-and-mortar stores aren’t even attempting to sell e-books (despite the availability of a free platform from Google).

If you’re not even going to try, you will get little sympathy when you lose.

David Gaughran

David Gaughran

Born in Ireland, he now lives in a little fishing village in Portugal, although this hasn’t increased the time spent outside. He writes novels under another name, has helped thousands of authors build a readership with his books, blogs, workshops, and courses, and has created marketing campaigns for some of the biggest self-publishers on the planet. Friend to all dogs.