Amazon-Hachette Is Not About the Little Guy

Paul KrugmanPaul Krugman wrote an interesting column today, Amazon’s Monopsony Is Not OK. I don’t disagree with his overall conclusion: Amazon has way too much power. But when it comes to the specific issue of eBook prices, the situation is far from clear. Yes, Amazon is abusing its power. But the publishers are also abusing the public and their writers.

When CDs replaced albums, the music industry used the change to make a whole lot more money. At that time, vinyl records cost more to make and distribute than CDs. But vinyl records had cost about $10 at that time and the industry charged $15 or more for CDs. Whatever the market will bear, right? CDs were the new whizbang technology and even though the sound quality was worse than vinyl, CDs never wore out — at least in theory. So even though on the supply side, there was no reason for the record companies to make this extra money, consumers were getting something they thought was better.

Pretty much the same thing has happened with eBooks. When they first came out, publishers wanted to sell them for $15 a piece. But it turns out that publishers would be making the same amount for a $10 eBook as they made for a $26 physical book. So why exactly should the publishers get a huge boost in profits for doing less? Note also that publishers generally give a smaller royalty to writers. This is because the publisher get a higher percentage of the retail price. So the publishers think the new technology should enrich them, but not their writers. Nice!

But this all might be okay if consumers were getting something more from eBooks than they get from printed books. As a user of both, I think they pretty much are. For research purposes, eBooks are better. But for simple reading, it is at best a wash. I still prefer to read printed books. But I’ll admit that I am (1) more tactile than most people and (2) old. But there are ways that printed books are better. To start, I can sell them. They can theoretically last for thousands of years. And perhaps most important: I don’t need a device to read them. With records, one needed a record player already, so needing to own a CD player wasn’t a big deal. Someone entering the market had to buy a device just like always. That isn’t true of books.

Which brings us back to Amazon. It really is a problem. Right now, Amazon is behaving itself reasonably well. And its pricing policies really have done a favor for readers. But the whole dispute between Amazon and publishers just highlights the fact that capitalism only works well when real limits are placed on it. For over two decades, neither of the two major American political parties is at all interested policing the excesses of capitalism. And that, to me, is the bigger problem.

The fact that Amazon is abusing a huge publishing conglomerate like Hachette isn’t really on my radar of Really Important Things. But this whole issue has gotten a lot of play exactly because Hachette is a big company with lots of power. I was appalled recently when the company went whining onto The Colbert Report. And then, instead of being honest, they were allowed to present it as a great threat to writers as if publishing companies themselves hadn’t long been the greatest threat to writers.

A much more important issue is that Amazon pays its employees really badly. They pay their associates really badly. They totally ripoff sellers. But these are not likely to get the high profile treatment in The New York Times because, you know, they’re the little people. Of course, Krugman’s focus is on the ultimate effects on the little people. But that isn’t why anyone is paying attention to the Amazon-Hachette battle.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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