NYT Can\’t Get It Right: Amazon and Hachette

\"Gatekeepers?\"So I read the NYT article on the Amazon and Hachette SNAFU, and it was too good to pass up. There\’s just too much nonsense written into this blatant attack piece. From the opening image – a piranha with the Amazon smile – on through the text, it\’s one slam on Amazon after another.
Except, of course, that the writer (Bob Kohn) has no clue what he is talking about.

Here\’s the essay – http://www.nytimes.com/2014/05/31/opinion/how-book-publishers-can-beat-amazon.html?_r=0

And my reply (Bob\’s words in bold, my reply after):

AMAZON has caused no small controversy of late by refusing to accept presale orders on books to be released by the publisher Hachette and by understocking Hachette’s titles.

Well no, Bob. Technically, it was HACHETTE who has caused no small controversy by refusing to send Amazon their orders on time, thus resulting in Amazon pulling the presale buttons from Hachette books.

These punitive maneuvers, which follow a dispute between Amazon and Hachette about e-book contracts, have led to significant delays in shipments of Hachette’s books to Amazon’s customers.

No, again, it\’s actually HACHETTE failing to send the orders to Amazon on time that are delaying shipments to customers.

Take the e-book market, dominated by Amazon, which buys what a federal court once found to be 90 percent of all e-books sold in the United States.

That was then. At one time, Apple sold 90% of the tablets in the US, too. It\’s called \”first to market advantage\”, Bob, and it\’s not illegal unless it is illegally used. Today Amazon has perhaps 2/3 of the ebook market, if that.

When Macmillan, the fifth largest book publisher, displeased Amazon in 2010 by proposing certain changes in business terms, Amazon exercised what has been described as its “nuclear option”: It promptly deleted the “buy” buttons in the Amazon online store for all of Macmillan’s books. In an instant, Macmillan’s entire business was in jeopardy.

To be fair, Macmillan \”displeased\” Amazon by committing a flagrant anti-trust violation, for which it was later sued by the DOJ.

The nuclear option was exercised for only a few days, a mere flexing of Amazon’s muscles. But imagine what would have happened if it had continued.

Yeah. Imagine. Amazon customers would have gone elsewhere to buy those books. Oh no. How terrible. You really think that people are going to take a pass on the next book by their fave writer because they can\’t get it from one bookstore? Bob, do you even READ books? You clearly do not understand readers.

Amazon can\’t do that sort of thing long term because every time a customer goes elsewhere to buy a book, they might decide to buy a computer, new shoes, or new TV elsewhere too. Amazon wants to be the place a customer can come to find EVERYTHING they want. They don\’t want to lose a major publisher. They can\’t afford to.

With a major publisher out of the market for new manuscripts, authors would receive less money.

This line is a joke, right? Writers for Macmillan today make less per book than they did in 1990 – WITHOUT taking inflation into account. Go ahead, ask those Macmillan execs to take executive salaries from 1990. See what happens.

Right now more writers are making a living from their work than any previous moment in human history. Mostly thanks to Amazon. Don\’t count on writers being in the publishers\’ corner in a dispute with Amazon. Ain\’t gonna happen.

But consider that from the moment it introduced its Kindle product, Amazon sold e-books at prices far below what it was buying them for.

No, that\’s a lie. Amazon sold SOME, very carefully selected ebooks at below cost. Most books, they discounted slightly, if at all. The DOJ investigated Amazon for anti-trust, remember – and found no evidence to support a case. Amazon NEVER lost money on ebooks.

But hey, it\’s the internet, Bob – you can print whatever you want there and not worry about little things like LIBEL, right?

When a company has dominant market power and sells goods for below marginal cost, it is engaging in predatory pricing, a violation of federal antitrust laws.

Again… No. A company needs to sell ALL their goods below marginal cost, or enough goods that they are losing money through the process. Amazon could technically lose money on ebooks, and still be legally sound. They never did even that though – they never failed to make a profit on ebooks. Again – they were investigated for this, and it was found they had not broken the law.

It was the publishers who the DOJ sued. Ironic that people defend the big five by calling anti-trust on Amazon, when it was Amazon that was innocent of anti-trust violations, and the publishers who were sued for it.

All was well until the Justice Department, supported by a white paper supplied to it by Amazon, filed an ill-advised lawsuit against Apple and five of the major book publishers for antitrust violations. The publishers were charged with “price fixing” — but not for fixing prices: Not a single e-book price was fixed by the conspiracy contrived by the government.

Bob, any first year law student knew that the publishers had broken the law. The publishers knew they had broken the law. It was about as blatant and clear cut as any anti-trust suit could ever possibly be.

The publishers were charged with colluding to raise prices for consumers. Which they did, by illegally using their collective monopoly to force Amazon to not discount their goods. That\’s the heart of anti-trust law, Bob: did the actions of the company hurt the consumer? Forcing a major retailer to raise prices is considered \”hurting the consumer\”.

And yes, ebook prices were fixed by the conspiracy. That\’s what \”agency\” pricing was: the publishers forced Amazon to sell their goods at the prices they set. That\’s price fixing.

Unfortunately, the publishers never had their day in court. Buckling under the expense and risk of antitrust litigation, they settled and agreed to restrictions enabling Amazon to resume many of its practices.

No, the publishers wisely chickened out because they knew they were going to lose! EVERYONE knew they were going to lose! It was about as crystal clear as a case like this could possibly be.

And Apple, who continued their defense, DID lose.

If consumers are inconvenienced by the switch, once again they will have only Amazon to blame.

It takes two to tango. What we really have here is two corporations playing hardball. This isn\’t some \”good guys vs the bad guys\” game. It\’s two multi billion dollar companies duking it out over terms. Same thing as what we saw between Simon & Shuster and B&N in January 2013. Happens all the time. But because it\’s AMAZON – oh no! Grab your torch and pitchfork!

Give it a rest.


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