Amazon exposed: The book behemoth is scrutinized
Amazon.com is big. It's a huge online seller of everything, and in the world of publishing it looms particularly large. It's credited with changing the way people buy books -- online! and cheaper! And it also is handed the blame for the crumbling of brick-and-mortar bookstores, including the once-powerful, now-defunct national chain Borders.
And Amazon often has an interesting story to tell. E-books went mainstream with the push of Amazon's Kindle. The online bookseller's experimentation with many aspects of digital media has led the field, including e-book sharing, e-book payment rubrics, sharing sales information directly with authors, e-book bestseller lists, and independent, Kindle-only e-book publishing.
Yet when it comes to media, Amazon is dodgy, and all one way. While competitor Apple publicly announces its iPad sales numbers, Amazon will not disclose the number of Kindles sold -- even as it trumpets that they sold faster that years before. This pattern is mirrored in almost all of its news releases: the company talks figures relationally, but hard numbers are in short supply. And staffers cannot speak to the media -- all questions are funneled through a public relations office. From there, news releases are frequent; replies to follow-up questions are not.
Which makes the recent Seattle Times series on Amazon so important. The newspaper found little cooperation from Amazon, but nevertheless looks -- as closely as it can -- at Amazon's local philanthropic practices, the public troubles about its warehouses, the efforts it's made to keep from having to pay sales taxes, and the pressures it has been putting on publishers. While all of this is interesting to those who see Amazon as an important player in the book business, it's the last that's particularly intriguing. Here's how the report, 'Amazon.com trying to wring deep discounts from publishers," begins:
The bad news came to McFarland & Co. in an email from Amazon.com. The world's largest Internet retailer wanted better wholesale terms for the small publisher's books. Starting Jan. 1, 2012 — then only 19 days away — Amazon would buy the publisher's books at 45 percent off the cover price, roughly double its current price break.
For McFarland, an independent publisher of scholarly books situated in the mountains of North Carolina, Amazon's email presented a money-losing proposition.
"It was the apocalypse," said Karl-Heinz Roseman, director of sales and marketing at McFarland, which has a long track record of giving all its retail partners the same discount.
As noted here and elsewhere, the Independent Publishers Group, which represents more than 400 small publishers, split from Amazon over a similar discounting issue. In the Independent Publishers Group's case, it was about giving Amazon a greater discount on e-books. "They want more margin than what is reasonable to give," Independent Publishers Group President Mark Suchomel told the Seattle Times. "At some point, enough is enough. What we and our publishers do to bring a book to market is so much riskier than what Amazon does to bring it to the reader."
One expert looks at Amazon's dominance in the e-book marketplace and says it may be a monopoly. That's not hyperbole, that's a technical term; it applies when a company's market share exceeds 70%. It also may be the result of a longstanding strategy at Amazon to sell e-books at a loss. From the Seattle Times:
In November 2007, at a news conference to introduce Amazon's Kindle e-reading device, Chief Executive Jeff Bezos revealed that Amazon would sell newly released e-books for $9.99, below the wholesale price.
"When you sell books at a loss, by the millions, to corner the market, you're not interested in competing," said novelist Richard Russo, a Pulitzer Prize-winning novelist. "You're interested in burying your competitors and then burying the shovel."
Leave it to a novelist to come up with a killer metaphor.
A gift from Amazon is considered the devil’s kiss in many corners of the publishing world, and many grantees are in no rush to blow a ram’s horn announcing their acceptance of money, either. (Many grant recipients interviewed for this story didn’t want to say anything negative or positive about Amazon, concerned either with offending Amazon on one hand, or betraying the anti-Amazon indie ethos on the other.)
Apart from that being a crazy metaphor pile-on, the point is clear: If Amazon is disliked by independent publishers, its cash grants are not. Yet that is not universally true. Melville House, in particular, has criticized Amazon's grants; in 2010, it withdrew from a competition that had received Amazon support.
In a March essay for Publishing Perspectives, Bryce Milligan, editor of the independent publisher Wings Press (which is represented by the Independent Publishers Group), looks askance at Amazon's charitable efforts. "So far, these grants have basically landed like cash-laden storks on the doorsteps of otherwise unsuspecting organizations," he writes. "[t]here is clearly a case to be made that this is marketing masquerading as philanthropy — not unusual — but with the double intent of encouraging silence from the very organizations most likely to be vociferous in objecting to Amazon’s predatory actions against independent publishers, distributors and bookstores."
If that premise bears a whiff of conspiracy, the key thing is that it's being made out in the open, on the wide echoey shores of the Internet. In the Salon piece, an anonymous independent publisher declined to go on the record about Amazon. "You can’t really speak out publicly against them. They’ll hear. It’s amazing. You say something in a short blog interview, and they know.”
That kind of fear makes the recent spate of critical articles all the more significant. The Seattle Times took an online beating from some readers in its criticism of Amazon, which is one of the city's largest employers. Yet it stands by the series. "It seemed not only natural, but imperative, that The Seattle Times, as the major journalistic entity in Amazon's hometown, would examine the company's practices as a corporate citizen," writes executive editor David Boardman. It is -- they all are -- worthwhile reading.
-- Carolyn Kellogg
Photo: At an Amazon warehouse in 2004. Credit: Scott Sady / Associated Press Photos