So, a few days ago on the New York Times, opinion columnist David Leonhardt posted a jeremiad against Amazon, whose superlative efficiency is slowly but surely killing off Barnes & Noble. It checks off all the usual complaints, just like it was filling the row on an “Amazon Derangement Syndrome” bingo card: Amazon never running into antitrust scrutiny, Amazon pricing its books below market value, the number of professional authors declining as publishers shed their midlist, and so on.
It’s almost not even worth rebutting the complaints, they’re so hoary and trodden into the ground by now. Nonetheless, Amazon has faced at least some antitrust scrutiny—back during the whole agency pricing legal battle, the Justice Department did look into Amazon’s ebook pricing practices. After all, it needed to build a case against the publishers and Apple from all angles, which necessitated fully understanding why the publishers did it and whether they might have had a valid reason. Justice wrote in its antitrust complaint against the publishers and Apple that Amazon was using a lot of loss leaders but overall its ebook business was “consistently profitable” and always had been. In other words, it wasn’t just throwing away money to force competitors out of the market.
And that also means the complaint about Amazon pricing books below market value is all wet. Granted, Leonhardt may have been talking about print books, not ebooks; since the advent of legal agency pricing, Amazon has shifted its discounting strategies to the still-not-price-controlled paper books, leading to the odd spectacle of paper books often being cheaper than the price-controlled ebooks. But I’m doubtful that Amazon is losing money there either, any more than it was on the discounted ebooks.
Why would Amazon leave itself open to legal antitrust action when it doesn’t have to? It doesn’t need to lose money to sell more cheaply than its competitors. It just has to trim back its overall margins and turn more profits on cheaper backlist titles, so it’s not losing anything but not making much either—while competitors still sell everything at or near full price. As the old joke goes, Amazon doesn’t have to run faster than the bear, it just has to run faster than the next guy.
As for the number of professional authors declining, that depends on your definition of “professional.” If you use the fairly loose definition of “earns money from their writing,” well, just look at Author Earnings. The number of self-publishing authors has skyrocketed since Amazon launched self-publishing for the Kindle, to the point where these new writers are gobbling up the market share that used to belong exclusively to the traditional publishers. Sure, they might not have the same cachet as traditionally published authors—but if it means more people can making a living writing, is that really such a bad thing?
I do think that Leonhardt may have a point about the changed nature of antitrust enforcement in the modern era. As I noted last year, the emphasis has changed away from keeping companies from getting “too big.” Now the focus of antitrust law is on making sure the consumers get low prices—and Amazon’s pretty darned good at that. This has given Amazon added leeway to go right on getting bigger.
Is Amazon’s massive size harming its competitors? Perhaps—but the bright spot here is that if the emphasis of antitrust enforcement has changed in one direction, it can always change back the other way at some future time. So, you never know—perhaps sooner or later we’ll come back around to the idea of companies being able to be too big again.
Even with that being said, I have a hard time seeing how you can blame Amazon for Barnes & Noble’s pattern of rampant mismanagement over the last few years. Amazon certainly didn’t force B&N to choose a string of ineffective CEOs, or lay off hundreds of experienced employees, or fail to develop and market its Nook ereader and tablet line effectively, or dump much of its book selection in favor of selling toys and games and other non-book things. Is it Amazon’s fault if Barnes & Noble repeatedly shot itself in both its feet with its own gun?
And the crowning irony is, of course, that it wasn’t so long ago that it was Barnes & Noble who was the evil behemoth, driving mom-and-pop independent bookstores out of business. (Remember You’ve Got Mail? It’s 20 years old this year.) Now Barnes & Noble is the poor beleaguered underdog? Well, that’s certainly quite a change.
What Everyone Else Thinks
In the days since it came out, that op-ed just seems to be the gift that keeps on giving. It’s got everybody talking, and it seems nobody can resist having their say. But what is everybody saying?
Probably about what you’d expect, really. The discussion is all over Twitter, for one thing. And though some articles take particularly odd slants (such as TechCrunch, which holds that it doesn’t matter all that much in the end because visual and virtual media are going to make books obsolete anyway), most of the pieces I’ve seen seem to range from ambivalent to fairly skeptical.
Perhaps the most surprising defender of Amazon, or at least semi-defender, is publishing industry veteran Mike Shatzkin. Shatzkin holds that Amazon isn’t solely to blame for its dominance of the industry—it’s the result of a lot of other people and businesses making bad decisions along the last couple of decades, and Amazon being there to pick up the pieces. He points out that even loss-leading on cheap bestsellers isn’t Amazon’s invention—bookstore chain Crown Books was doing something similar all the way back in the 1980s. He does still think Amazon should be regulated, though.
In blogger Passive Guy’s discussion of Shatzkin’s post, he points out that, depending on their royalty rates, authors may actually be making less money on their works than if they were cashiers at convenience stores—and suggests that the publishers’ habit of paying only every six months might fool authors into thinking they’re earning more than they actually are.
So exactly why should the federal government take action to protect the traditional book publishing and selling industry at the expense of Amazon if that industry consistently fails to pay authors a living wage? Why penalize Amazon when it consistently pays authors more than traditional book publishing does?
Quartz Media is fairly lukewarm on Barnes & Noble, as the headline of its piece, “Support your local corporate behemoth bookstore,” might suggest—though it does point out that it will be a bad thing for the publishing industry if Barnes & Noble should close.
In any case, is this sudden flurry of opinion prompted by a New York Times article really going to change anything? I doubt it. But it’s another reminder that Barnes & Noble may not be long for this world—and what is the publishing industry going to look like if and when it goes under?
If you found this post worth reading and want to kick in a buck or two to the author, click here.
Good analysis, and I basically agree. BN has never really been a realistic alternative to Amazon in the book/ebook market. Google could be that alternative in the ebook market because they have strong device support and the market clout in some areas. So could Apple. But neither really view book selling as their core competency, and Amazon does it really really well. (I also think Smashwords and Baen and Oreilly do it very very well — I’m buying more and more indie titles from Smashwords these days).
I wanted to mention that the ebook deal newsletters are very powerful in the ebook niche. Bookbub, and now it seems Early Bird Books are effective promoting tools. I wonder how many ebook sales are the results of Early Bird Books these days? Publishers in cahoots with Open Road Media (which delivers Early Bird Books) could just as easily favor a non-Amazon alternative.
I buy books from StoryBundle.
I’ll say one thing. if people are running around screaming “Save Barnes & Noble!”, then something must be going on somewhere. Where there is smoke…
Jeff will just sit back and relax. His company did nothing illegal. Yes! It’s an active market-player who plays with its power, so do other big (not always great) corporations allover the world. Maybe just a smart angle of approach to swallowing B&N, firing the existing board in favour of keeping the good-ones (book-sellers in the stores) who save their jobs and work in AMAZON Bookstores helping the company to become bigger due to broaden its distribution additionally to “largest off-line” book-selling store-chain……
Here is the missing grain of salt with which (IMHO) you have to take David Leonhardt’s piece:
Leonhardt lived on the Upper West Side of Manhattan during the heyday of the B&N Superstore around the corner from him at 82nd & Broadway. Although this store had forced the closure of the great indie bookstore Shakespeare & Co. two blocks away, I believe Leonhardt came to the neighborhood after that happened. At that time, the B&N was a beloved social mecca for Upper West Siders — a hot pickup scene on weekend nights and a popular place to park your stroller and read with your child.
Leonhardt then got a promotion at the NY Times and moved to Washington. After that, metastasis and decay began to set in at the UWS B&N. It’s now a shadow of its former self, plagued not only by the mismanagement that others (like Mike Shatzkin) have gone into in detail but also by the lack of local focus that a national chain just can’t bring.
So in other words, David Leonhardt got to experience B&N at its best (social and intellectual anchor for a city neighborhood) and not at its worst (indie killer, decaying carcass). I believe that experience colored his judgment.
BTW how do I know this? He lived next door to us before moving to DC. I don’t claim to know him well, but his movements track with the above.
P.S. Shakespeare & Co. is returning to the Upper West Side later this year. We’re psyched.
The woes of Barnes & Noble are almost entire self-inflicted. And it didn’t even have to be that way. The separately run education division (which was spun off as a separate company in 2015) was doing a much better job of running the stores it controlled than the main B&N company was. It wasn’t only because of having the textbook cash cow; it’s because they were doing a better job of choosing and displaying books. The fact that local managers were given much more control over what the stores stock didn’t hurt.
If the mainstream Barnes & Noble stores had taken the lessons from their college counterparts to heart, they would be far more successful now.