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Amazon. Big monopoly or several million small ones?
January 30, 2016
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monopoly house

Every time I think this issue is over it finds its way back into the news.

Once again the Authors Guild and their Big 5 masters are screaming a word they just don’t seem to understand. Monopoly. They throw the word around with abandon.

Monopoly: mo•nop•o•ly

the exclusive possession or control of the supply or trade in a commodity or service.

Via: Flickr (license)

These articles always manage to work in the word Antitrust, yet they seem to have a hard time with its definition as well.

Antitrust: an•ti•trust

of or relating to legislation preventing or controlling trusts or other monopolies, with the intention of promoting competition in business.

The antitrust laws are in place to protect the CONSUMER from unfair practices, not to protect companies from competitors or to keep them from being made redundant by disruptive innovation. Amazon does not violate the antitrust laws.

For the sake of debate, let’s play Devil’s advocate here for a moment, and say that Amazon does fit the definition of a monopoly.

Whose fault would that be?

Did Amazon push their way into the market and become a dominant player, slowly edging out the established Big 5 cartel? Or did they innovate their way in the door and then pull the customers in after in order to get where they are?

If someone sets up shop across the street from your store and starts selling the same stuff you do, is it wise to run to the cops and cry that an imaginary law has been broken, or is it better to evaluate what they are doing and find a way to compete? Obviously the Big 5 have chosen to cry.

By crying rather than changing to fit the new dynamic, they are dooming themselves to failure, and I would argue making Amazon a monopoly by default.

If company A runs their business very well, while Company B does just okay, and Company C, D, and E run theirs into the ground and thereby hand company A a monopoly position, is that company A’s fault?

The Big 5 have tried collusion, they’ve tried appealing to the public with full page ads, they’ve published multiple articles and opinion pieces in a bid for government protection, they’ve begged the DOJ for an investigation (the same DOJ that found them guilty of collusion charges and Amazon innocent of any wrongdoing), but in the end it all amounts to bluster. What they accomplish is all talk and very little actual action.

The Big 5 will fulfill their own predictions simply by complaining when they should have been working. Hopefully, this is the last time I’ll feel compelled to write about this.

This is Amazons relationship with the big players in the publishing industry. But what about the self-published authors, the ones who are their own publishers? How is this effecting them?

Amazon may indeed become a monopoly one day, for many of these writers they already are. Millions of them have voluntarily made that choice already.

Amazon doesn’t need to be a corporate monopoly in the world of big publishing, they only need to be one for each individual author.

Amazon’s competitors in the eBook distribution business are few. Most self-published authors recognize only four. Barnes and Noble, Kobo, Google Play, and Apple. There are others but they are small compared to these four.

But even these four are driving many of the authors out there to go all in with Amazon, in effect handing them a monopoly over their books.

Take Google, for example. They have the deep pockets, they have the top-notch people, they even have a leg up as far as search and I’d say pretty good data to use as far as targeting/matching customers to books, yet their interface is the worst one of the bunch, their sales reporting is terrible, it takes a cheat-sheet and half a day to load a file and then you have to go to the store itself to see if it worked. They discount without warning and screw you when others price-match. Customer support expects everyone to be a programmer. It’s a cluster. It’s so bad that many authors I know just give up and refuse to use them, and that’s giving up a world-wide market.

Then it’s a cascade effect, the numbers start telling you that if you’re not using Google Play its now much harder to justify staying with B&N, Kobo and Apple. This is why people go all in with Amazon, it’s not always that Amazon is so great (they are) but it’s also that the others are just bad.

But the competition can’t seem to replicate the tiny part that is the author interface well.

I would think that if a competitor didn’t have the ability to replicate the Amazon store in its entirety they would at least do their best to copy things that both work well and that the authors want. Things like the author interface, sales reporting, look inside, also bought, etc.

These are the things that those very authors are telling them repeatedly that they need from Amazons competition. Yet, they haven’t made much progress, and I am having a hard time figuring out why. Some are trying. Kobo has a nice dashboard. B&N isn’t too bad. Both need better search. As I mentioned before, Google is a nightmare. Smashwords looks ten years behind. Apple still has walls around everywhere you look.

Their collected failures work to drive authors into the arms of Amazon Select. So while Amazon may not have a monopoly on the publishing world, they have several million tiny monopoly’s in the form of authors being exclusive to them and them alone.

I would wager that number increases every day. Is it the authors fault or the competitors? I would say a bit of both, but it’s not hard to see where it is heading.

Which leads to the big question, one that all self-published authors should be asking themselves.

Do I go wide on all platforms and possibly make a bit less for a few years, or do I go all in with Amazon and hope they play nice when it’s no longer to their benefit to do so?

Amazons investors have been eternally patient. They’ve been pouring money into the company for years expecting the profits to come. Amazon has favored rapid growth over profit for those same years, reinvesting with an eye focused sharply on long-term growth. Only recently has Amazon stopped putting nearly every dollar it made back into the company. It’s worked: Amazon is now the No. 1 retailer in all the major markets. But now the investors are beginning to complain. This has prompted the company to show a profit for the last few quarters. This last quarter they reported their best earnings ever.

But it was not good enough for Wall Street.  Shares of Amazon plunged up to 15% in after-hours trading, loosing more than $30 billion in market value. This despite a profit that was more than doubled to $482 million in the holiday period.

This will no doubt place even more pressure on Amazon to show a profit every quarter. Where that profit comes from is known only to Amazon, but it has to come from somewhere and I would not be surprised if a bean counter soon started taking a look at Amazons bookstore in their search for it.

Where do you want to be when that happens?

About author

Randall

Randall Wood is the author of the popular Jack Randall series of thrillers as well as several short stories surrounding the main characters.

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There is 1 comment

  • Susanne Morlang says:

    Thank you for your comments re: Amazon vs The Big 5
    I am a new author, not yet published. (I have 2 final drafts that I am still editing at this point. I need to make some decisions about my path to publishing)
    I am very pleased to see that you are now successful enough that you have hired an assistant. I hope this works out better and better for you.
    Best Wishes.