Editor’s Note: The following article was first published in the “Weekly
Wonk,” a digital magazine from New America, a foundation that focuses on the
ideas and policy challenges that will shape the future. New America kindly allows other
non-commercial online magazines like Pillar to Post to republish important
articles that have appeared in New America websites. For more on New America go
to www.newamerica.org. Patrick
Oathout’s post first appeared February 11, 2016.
GUEST BLOG—By Patrick Oathout--“Amazon is the
Darth Vader of the literary world.”
“Amazon is a
monopoly in absolutely every sense of the word.”
“We face the
prospect of a nuclear winter in book publishing.”
These were
just a few of the statements made at an event hosted at New America titled,
“Amazon’s Book Monopoly: A Threat to Freedom of Expression?”
The answer
to that titular question was a resounding “Yes,” an answer given by a dozen
featured speakers: Scott Turow, former president of the Authors Guild; Douglas
Preston, President of Authors United; Susan Cheever, author; Mark Coker,
self-published author; Franklin Foer, former editor of The New Republic;
Jonathan Kanter, antitrust partner at Cadwalader; Eric Simonoff, literary agent
at William Morris Endeavor; Maurice Stucke, professor of antitrust law at the
University of Tennessee; John R. MacArthur, President of Harper’s Magazine;
Jeffrey Rosen, legal academic and expert on Justice Brandeis; and Lina Khan and
Barry C. Lynn, both with New America’s Open Markets Program.
The answer
was also full of anger, expressed both by those who spoke and on behalf of
those who felt they could not. Eric Simonoff noted that the publishing
industries’ relation to Amazon is “marked by fear.” Barry Lynn mentioned in his
opening remarks, “Many of the people we asked to stand with us today chose not
to do so...they were afraid to speak in public about their experiences with
Amazon.”
The
arguments presented at the event centered around two points: whether Amazon has
or will constrain literary content, and whether Amazon has or will conduct
price discrimination. For readers, the benefits of Amazon’s sale of books have
been numerous: lower costs, always-available stock, fast shipping, and ebooks.
There have been downsides, too—the collapse of independent brick-and-mortar
bookstores, the shuttering of many literary and editorial publishing outlets,
and a more risk-averse environment for publishers and authors.
“Many of the
people we asked to stand with us today chose not to do so...they were afraid to
speak in public about their experiences with Amazon.”
Some of
these downsides might be seen as evidence of changing times, but many of those
angry with Amazon are so because, as speakers at the event noted, it appears
Amazon increasingly “controls the marketplace of ideas.” As summarized by
Vauhini Vara last year in The New Yorker,
the argument is that “Amazon has used its market power both to influence which
books get attention (by featuring them more prominently on its Web site).
These
practices, the authors argue, squeeze publishers, which makes them more
risk-averse in deciding which books to publish. And this is bad not only for
the non-famous writers who go unpublished, but for their would-be readers, who
are denied the ability to hear those voices.”
Foer extended
this argument by discussing how Amazon’s book ratings have created “an ethos of
quantification” in book publishing, a paradigm shift away from literary content
to books purchased, positive ratings received, and pages read. “The economics
of book making,” Foer continued, “shape the actual books themselves.”
Cheever
mentioned that midlist authors specifically have suffered and “have decided to
write less” because “advances are lower” and they can’t financially justify
publication at Amazon’s low prices. Coker noted that Amazon has created a
“caste system” in ebooks between authors who have agreed to sell their books
only on Amazon and those who want to sell with all retailers. In effect, Coker
said, this system functions likes “a gun to the heads of authors” to force them
to deal exclusively with Amazon.
One could,
of course, raise the point that some of these arguments sound more about a
change in middle-men than in negative impacts on readers—it might be one
business has simply replaced another business. The cultural monopoly argument
demonstrates an impact on readers, but the data on that diminished supply of
ideas is anecdotal from authors and publishers.
Indeed,
publishing houses have always reserved the right to say no to a manuscript, and
when it was around, Borders got to decide which books were featured in the
window display. The difference here, however, is that the authors believe
Amazon has inordinate influence over publishing—hence its actions can make or
break a book, an author, or a publisher. The infamous example is Amazon’s
tangle in 2014 with the publisher Hachette. The publisher objected both to the
way Amazon priced its books and to the prices Amazon charged for use of its
services. Amazon reportedly responded by lengthening delivery time, removing
discounts, refusing pre-orders, and eliminating promotions for Hachette books.
Perhaps the
most powerful argument raised concerned price discrimination. Khan explained
that giant firms like Amazon are able to collect data on customer preferences
and patterns, and could use that information to determine the highest price
each customer is willing to pay.
As a result,
buyers who shop online are increasingly losing a sense of what constitutes a
“fair” price. While there is debate in neoclassical economics over whether
price discrimination is good or bad, it’s obviously bad PR. Stucke continued by
arguing that there are antitrust implications when a company amasses a lot of
data, from raised entry barriers, insurmountable network effects, and privacy
and quality costs to buyers.
The
difference here is that the authors believe Amazon has inordinate influence
over publishing—hence its actions can make or break a book, an author, or a
publisher.
Up to now,
Amazon has avoided antitrust cases centered on these arguments, Kanter argued,
partly because antitrust law focuses on measurable effects on buyers, like
price, and not hard-to-measure effects, like quality. Kanter also blamed a
“lack of political will” among regulators and politicians for taking on Amazon.
To be clear:
The legal system remains of two minds whether such forms of price
discrimination are anticompetitive or just smart business. But it is worth
noting that Amazon has faced accusations of what looks a lot like price
discrimination before: In September 2000 Amazon apologized for testing
different prices of the same product on different customers.
Other online
companies have been accused of conducting price discrimination through using
customer data, most notably Staples.com and Orbitz, the latter of which steered
customers using Macs to more expensive hotels. So while individual anecdotes
can raise false red flags, they can also point to manipulations of price.
While all
the speakers were critical of Amazon, they did not come to consensus around
solutions. Some asked for government litigation while others felt antitrust law
as it stands is too weak. An audience member asked, “Why can’t we boycott?” to
which the panelists demurred, saying, “Amazon is too powerful” and “We wouldn’t
be able to organize the publishers together.” Some suggested legislation that
would ban companies that are foremost platforms for sales from competing with
sellers who use their site. But how far would laws like this go? There are many
arenas for this kind of platform-seller relationship (online and
brick-and-mortar) and many variables for such transactions (store-brand items,
for example), so case law could be a deep thicket.
We don’t
know, then, what the solutions would be, or what form they might take, or how
far they might go, or if they’re even needed. And, to quote Khan, “In not all
of these instances do we know for sure if Amazon is doing [price
discrimination] ...what we do know,” she continued, “Is Amazon has the
capability to do these things.”
We do know
that fear of Amazon’s abilities has stoked much anger towards Amazon in the
American book community. If a DOJ probe is initiated, as demanded by Authors
United, the public will be eager to see what those pricing algorithms suggest.
Patrick
Oathout is New America’s editorial intern.
No comments:
Post a Comment