Amazon, collective bargaining, and you.

/Amazon, collective bargaining, and you.

(a.k.a. Some thoughts on the Tamblyn Tweets.)

So a couple of days ago, Kobo president Michael Tamblyn has Some Thoughts On Amazon. As usual with these things, I’m a little late, but also as usual with these things, I too had Some Thoughts in response. Because this is my blog and with it I can Do What I Want, I have included both Tamblyn’s original tweets and some of my own blathering in between.

The high-level stuff here is a story about market power and collective bargaining, and how Amazon loves the former and not so much the latter. It’s also somewhat about the reality of authors as atomised producers of undifferentiated content, which I think is a truth none of us who actually make (at least part of) a living writing want to admit out loud.

Anyway. This is a long one, so here goes:

Here is some more info about what Wal-Mart is accused of doing to its suppliers. In particular:

Wal-Mart wields its power for just one purpose: to bring the lowest possible prices to its customers. At Wal-Mart, that goal is never reached. The retailer has a clear policy for suppliers: On basic products that don’t change, the price Wal-Mart will pay, and will charge shoppers, must drop year after year.

(FWIW I’ve heard this number quoted as a 5% reduction annually, but I can’t currently find a source for that so… yeah.)

The point here is that Wal-Mart makes profit by selling a lot of very low-priced things; they are, in effect, an aggregator of… whatever the hell it is Wal-Mart sells (I have NFI because we don’t have them here, thank the vengeful retail gods). This is in direct opposition to, say, the suppliers of any one particular item, which tend to survive on selling a moderate amount of things at a moderate price.

Also notable here is the observation that most of Wal-Mart’s store employees are on food stamps, given the shitty wages the company pays its employees (wages cut into profits, dontchanoe). What this essentially means is that Wal-Mart’s low consumer goods prices are subsidised at the expense of the US taxpayer. That is, your tax dollars1 effectively pad out Wal-Mart’s profits by ensuring that their employees don’t, yanno. Starve to death because they aren’t paid enough to buy the food they need to live on (even at Wal-Mart’s low-low prices).

Moving on…

I disagree with this. I think Amazon makes one huge, whopping distinction, and that’s that indie authors are essentially an un-unionised workforce.

It’s weird in one way to think about publishing houses as a “union” for authors–particularly if you are, in fact, an author–but they are in the sense that they bring the ability for collective bargaining against distributors like Amazon.

It’s been noted before but it’s worth noting again: Amazon has the power to arbitrarily change its contract with selfpubbed authors and said authors can do nothing to counter it. There isn’t a single author in the world with the financial power to take on Amazon. James Patterson, for example–who’s more of a “branded fiction production company” than an “author” per se–is allegedly the highest-earning author in the world. And yet his $94 million pales in comparison to Amazon’s $39 billion.

If individual authors have no chance of taking on Amazon, publishers do… sort of. Penguin Random House, the world’s largest publisher, is valued at something like $2.9 billion. Still at least a significant figure away from Amazon, though several significant figures above Mr. Patterson. This means that publishers have, at least in theory, some ability to negotiate deals–around pricing, profits, and promotion–with Amazon in a way individual authors, indie or not, don’t.

If you’re a self-pubbed author and you don’t like Amazon’s exclusivity requirements in Kindle Select? Tough. If you’re someone like Hugh Howey Amazon might decide to waive those restrictions just for you personally (until they decide not to do so, that is), but for anyone else? Fuck off. I mean, what are you going to do about it? Pull your twelve sub-100,000-ranked books from the Kindle store? Oh noes! Jeff Bezos is shaking in his little booties, for reals.

But if you’re PRH and you don’t like the terms of your contract? Well. Maybe you can threaten to pull all your titles from Amazon’s store. That’s about a quarter of all traditionally published books, for the record, including a good chunk of the bestseller list on any one day. PRH has, in theory, the clout to negotiate at least moderately “fair” deals with Amazon because PRH could, in theory, hurt Amazon if it walked away and pulled all its titles (who’d shop at a bookstore that was missing about a quarter of all published books?).2 And when PRH does this, it does it on behalf of all of its assets (read: books, read: authors), whether they sell a million copies a year or not.

This is what I mean by “collective bargaining”. It’s not actually a union–the publishers look after their own interests, not the interests of their authors per se–but it’s more of a “union” than exists in the selfpub world.

In other words, Amazon can unilaterally dictate contractual terms to self-pubbed authors. It has to at least pretend to bargain with publishers.

And if you don’t think this isn’t a huge deal to Amazon? Then you’re not paying attention.

See above for why.

Incidentally, in the time between Tamblyn posting and me writing, Amazon has, in fact, moved on: to Simon & Schuster, with whom it struck what’s known as an “agency model” deal. Some of you may remember the agency model (as opposed to the wholesale model), was at the heart of the DOJ’s suit against the publishers and Apple a few years back.

Why did Amazon agree to do this with one publisher when it seems to be the heart of its dispute with another? No idea. There’s some speculation it’s got to do with Amazon trying to leverage the decision against Hachette (“S&S settled so what’s Hachette’s goddamn problem?”), but who knows.

Well. Aisdes from Amazon. They know. They have a strategy here, that’s for damn sure.

Yes, this. But see above: selfpubbed authors are already inherently more (potentially) profitable because they have no ability to reject Amazon’s terms. If Amazon suddenly decides it wants to cut KDP royalties to 1%, who’s going to stop them? Literally no one, that’s who.

Oh, and to all you “but then indie pubs just won’t publish with Amazon” types. First of all, who remembers that Amazon controls something like 65% of all ebook sales, which indie authors rely on? (Print, you say? Except POD is expensive, hard to get into physical bookstores, and so on and blah blah blah.) Oh, and Amazon also owns the main book discoverability platform (its own website), and makes up the majority of most indie author sales. (Again, I can’t find a direct source for this claim, but it’s very heavily conventional wisdom so if anyone wants to contract it, go ahead.)

“But if all indie authors pull out of Amazon, then Amazon’s business will suffer!”

Maybe. But also remember Amazon became huge without indie authors, by selling only traditionally published works. If you think the mass book reading market cares that much about indie authors that they’d scour non-Amazon sources to track down new titles from authors they’ve never heard of… well. I’ll just point out that history, i.e. the relative non-existence of indie publishing prior to circa 2007, would seem not to be on your side.3

Oh. Wait. Wasn’t I just talking about this?

Yes, this is true: KDP 70% ebook royalties cap out at $9.99 (not coincidentally the price Amazon has decreed is the “ideal” price for ebooks), and 35% royalties at $200.

Take notes, kids. Oh, and this is Amazon’s profit, not the profit of the author/publisher.

Again, what was I just saying?

And, zing! That’s the kicker; the thing everything has been leading up to. In essence, Amazon can survive (easily) without any one single selfpubbed author. But any one single selfpubbed author very likely can’t survive without Amazon. Most traditional publishers, on the other hand (and, by extension, authors published with traditional publishers), could, albeit painfully.

(After this Tamblyn then goes on to do one of those “first they came for the” paraphrases to make up the rest of his “32 points”, which I’ll omit because… yeah. Can we please not do those? Thx.)

Look. My argument here isn’t that Amazon is bad for indie authors; obviously it’s not, given it essentially invented the entire category. But that’s also the point; Amazon invented the category of “viable self-publishing”  because, in fostering it, Amazon has created for itself an entire class of easily exploitable suppliers. Because remember that Amazon’s shtick has always been that it sees books as interchangeable commodities. That means, to Amazon–and with very, very few exceptions–any one author is no more valuable than any other. One author leaves Amazon because she doesn’t like the KDP contract? Amazon has two options: one is, of course, to try and court the author back with special terms written for her and her alone (which they’re then under no obligation to extend to anyone else). More likely, however, is that the company won’t even fucking notice, because why would they?

And this is the thing about authors; the thing Amazon ruthlessly and cynically exploits. We all like to think we’re special snowflakes. Alis Franklin likes to think that, when people buy her books, it’s because they want to buy an Alis Franklin book.

But that’s bullshit. Not just for me,4 but for every author on the planet.

At some point, all authors become interchangeable commodities. If all George R. R. Martin books suddenly ceased to exist tomorrow, people might complain for a while but would, very quickly, move on to one of the myriad of other medieval European epic fantasy series that are available. The itch is ultimately scratched by the genre, not by the author. Amazon gets this.

(There is an argument-for-individual-authors in here, FWIW, but it’s got to do more with academic literary, cultural, and historical analysis stuff. This is specifically not what I’m talking about when I talk about sales and markets. If Shakespeare had never written plays, a huge number of cultural touchstones–not to mention decades of English essays–would be different. But the world would still turn, and plays would still be A Thing That Exists; we’d all just be going to see different ones. Being able to understand this difference–separating the Art from the Business–is the most important skill you can ever develop to understand any of the inside baseball debates about publishing. And, just between you and me? Authors in particular are spectacularly bad at it.)

Fundamentally, Amazon is an aggregator. It makes a lot of money selling small amounts of a lot of undifferentiated things at very small prices (e.g. 100 sales of 1,000,000 items for $1 each). It operates on a level no single author can ever hope to achieve though, interestingly, a lot of its biggest advocates emulate, in their own way (ref. Joe Konrath and his vast and sprawling backlist).

Traditional publishers, meanwhile, are sort of the Apples of publishing; they’re more about leveraging product recognition (individual author brands) to sell a large number of smaller set of things at higher prices (e.g. 100,000 sales of 100 things at $10 each).

That’s all very depressing and it’s especially depressing because there is, I think, not much any individual can do about it other than recognise the reality of what’s going on. Indie authors are profitable for Amazon but it’s a relationship Amazon has all the power in.

The arrow is smiling today, sure.

But there’s no guarantee it’ll still be smiling tomorrow, when the Ghost of Increased Profits comes a’ callin’.

  1. And mine! I’m neither a citizen nor a resident, but I do pay US taxes on my US-based income. ^
  2. That’s not a rhetorical question, by the way; you can find plenty of examples for it in small-end and specialist retailers. Key words “small” and “specialist”. they may do well on their own terms, but those terms are $39 billion worth of terms. ^
  3. Yes, I know it “existed”. But don’t try telling me it was anything like it is now with a straight face, because seriously. ^
  4. Though probably especially just for me, LBR. ^
2018-04-27T13:48:49+00:00 23rd October, 2014|Tags: amazon, business, publishing, self-publishing, xp|Comments Off on Amazon, collective bargaining, and you.