The Apple Shaped Elephant in the Room
What no one has mentioned is the DOJ's antitrust campaign against Apple for its iBooks Store. In 2012, the DOJ sued Apple for orchestrating a conspiracy to raise prices in the ebooks market. Apple was convicted in that trial, though the company is appealing, but it always struck me as utterly bizarre that Apple was the defender, rather than Amazon.
Amazon is the company that had 90 percent share in the ebook market before Apple came along, and Amazon is the company with between 30-50 percent of the physical book market. The DOJ went after a competitor with no share—Apple—that was bringing innovation to the ebook experience and preventing the monopolist from dumping ebooks below cost.
What's worse is that this isn't the first Amazon has used its enormous retailing power to try and punish a publisher. In 2010, Amazon removed the "Buy" buttons for MacMillan books to try and force that publisher to meet its terms. To be fair, MacMillan reportedly won that standoff, but that doesn't change the fact that Amazon's power is a serious issue.
In this passive-aggressive fight with Hachette, authors, small imprints, their employees, Hachette's shareholders, and readers are losing out, but there are even bigger stakes.
I noted above that Amazon doesn't make money doing what it does. Amazon has enormous share in a variety of retailing markets, but the firm doesn't make much profit. In 2012, Amazon lost US$39 million, and the company earned $274 million in 2013.
This company ruthlessly sucks all of the profit out of any market it touches. That's great for customers in the short term, but in the long term no profits inevitably leads to lower quality and less innovation.
I love high quality books. I love great writers. If Amazon lowers Hachette's margins, fewer books will be published, and those that are published will have less editing, oversight, and marketing. If it happens at Hachette, it will then happen at the other publishers, and ten years from now, reading will be less awesome.
This behavior isn't limited to Amazon. Every retailer seeks to get the best terms that it can, but few retailers have as much power as Amazon in the publishing world. There are no real checks on that power, making the company's passive-aggressive bullying dangerous.
Despite all that, however, it was Apple that was sued for antitrust violations, and it's Apple that has a DOJ watchdog making sure the company doesn't err in its ways any further.
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