Amazon is not a bookseller, and why that matters for writers

Technology behemoth Amazon is in the firing line of publishers, authors and the combined might of the literary world again today. Like the ultimate alpha predator Godzilla on a rampage across Tokyo, Amazon crushes a little bit more of the publishing industry just by moving. And it’s about as worried by the protests of writers as Godzilla is by tank-fire.

Amazon’s crime is pretty heinous this time. After a squabble with the publisher Hachette, one of the big beasts of the industry, Amazon is “disappearing” Hachette authors – up to and including J K Rowling herself – from their website. And it seems there is very little either Hachette or the authors can do about it. But heinous as this is, it really should come as no surprise. These are exactly the kinds of practices marketplaces have always used to squeeze the most possible profit out of their sellers.

Amazon is being widely criticised for operating unethically as a bookseller. Amazon may or may not be unethical. What they certainly are not, any longer, is a bookseller. Continuing to think of Amazon as a bookseller is a major part of the reason so many publishers and writers struggle to understand Amazon’s actions, or see them coming.

Amazon were a bookseller. That kookie seeming company that people started mail ordering books from back in the mid 1990s. I remember the first time I bought a bunch of books from them, having to pay in dollars on my card. It felt like that company really loved books. Of course we all know Amazon grew, and started selling all kinds of other things. Media, electronics, and ultimately anything that could be retailed. As Amazon grew, its presence in the world of book-selling grew disproportionately. Publishing is a relatively small industry. Amazon isn’t just a big fish in that small pond any more. It’s a Godzilla trying to swim in a puddle.

Amazons insight was that ebooks would require a marketplace.

The tipping point that transformed Amazon from bookseller to book marketplace was the introduction of it’s very, very savvy Kindle ebook platform. To be clear, the Kindle is not the e-ink reader device Amazon sells. Kindle is the entire ecosystem that allows a person to buy an ebook and then read it on their computer, phone or tablet. Amazon timed Kindle perfectly for the proliferation of such devices. And it engineered Kindle ideally so that publishers and also, significantly, writers themselves, could sell their books through their new marketplace.

Marketplaces have been integral to commerce for as long as humans have bought and sold, bartered and traded. Imagine you are a farmer with a crop of cereal. You can try setting up a stall on your farm to sell your stock. But unless you are blessed with a throng of visitors, you won’t do very well. To sell your crops you have to take them to the marketplace. Because that’s where the buyers are. And the buyers are there because it’s convenient. Instead of taking dozens of journeys to dozens of farms, each buyer makes one journey to the marketplace and gets all the things they want. And the person who establishes the marketplace gets very rich, because in one way or another, they get a share of every transaction.

Amazon’s insight was that ebooks would require a marketplace. This is counterintuitive at first. Surely its as easy for people to visit any given website with just a few mouse clicks? Readers could easily buy ebooks directly from publishers. Most publishers have their own ebook store. Few of them do significant business. Many authors sell ebooks directly through their websites, very few sell many, and none the kind of stratospheric numbers writers can potentially sell through the Kindle marketplace.

Convenience. Giving your credit card details to a new vendor is inconvenient. Downloading an ebook to your computer then finagling it on to each device you might want to read it on is inconvenient. Not having the ebook sync to the same page on each device is inconvenient. If you don’t know what book you want, looking at lots of different unrelated websites is inconvenient. If you want to see annotations made by other readers of the books, a normal ebook won’t do that. Inconvenient. The list goes on. Lots of small inconveniences. Most of which, the Kindle marketplace solves. It doesn’t solve them simply to provide a good experience. It solves them so that cumulatively, Amazon ends up owning the marketplace for ebooks.

Marketplaces make money from their sellers, who in turn make money from their buyers. Amazon’s profits in the book marketplace turn on exerting as much power as possible over sellers – who in the digital marketplace are now the publishers themselves. It’s not Waterstones or Barnes & Noble uploading ebook files to the Kindle marketplace. It’s publishers themselves laying out their wares on the stalls of Amazon’s marketplace. And it’s publishers being gouged in exactly the way all marketplaces have always gouged their sellers.

In the conflict between Hachette and Amazon the question is not which side to take, but how to keep the competition going.

A traditional marketplace will often choose to sell from a number of stalls itself. This allows the marketplace to negotiate relationships with suppliers. If one seller is doing well with melons, the marketplace can offer the melon farmer a marginally better price, and scoop the profits. Which is exactly what Amazon are doing by establishing publishing imprints within its own marketplace. What’s important to understand here is that Amazon has no real interest in being a publisher. But by owning a few of the publishers that sell through its marketplace, Amazon wields greater control over all of the others. Similarly, Amazon has no real interest in fulfilling the creative ambitions of the thousands of “indie authors” self publishing their books in their marketplace. But it has served to strengthen their marketplace to offer independents, for now, a very good rate on their wares. A traditional marketplace might do very much the same thing, burning the major landowners it does most of its business with by letting the small holders trade on better terms. Historically however, these conditions are temporary, and when they snap back, the small holders are wiped out. When Amazon reduce their 70% royalty to 50, or 20, or 5%, you’ll see the same misery among writers as when small holders are forced off their land.

Unless writers – who are the producers of all the goods that both publishers as sellers and Amazon as marketplace rely on – begin to think seriously and act collectively to ensure their interests. The battle between Hachette and Amazon, and the wider conflict between publishers and Amazon, is a conflict between sellers and the marketplace. Neither side is good or evil. They are business entities, which do what business entities do, which is to act selfishly in their own interests at all times and in all things. The competition between publishers and Amazon is actually very good for writers – it is raising advances and adding new income sources for writers as the sellers and the marketplace compete for the goods they supply. In the conflict between publishers and Amazon the question is not which side to take, but how to keep Godzilla and Gojira fighting as long as possible. At the point one side wins, writers will face harder days again.