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Comment by incision | Hacker News Reader

Honest questions here...

What is supposed to happen here? This article and each of the others linked don't offer much beyond jabs at Amazon.

As far as I can tell, publishers are unhappy with Amazon - period. Two years ago the hot news was about Amazon pricing books too low [1]. Now at least part of the complaint is that Amazon isn't discounting enough and allowing prices to approach list price - which I assume is set by the publisher. Isn't that a publisher problem?

Also, this all reminds me of what we used to hear in the music industry - creators hurting because the label (publisher) they're contracted with is feuding and refusing to eat whatever compromise rather than pass it on directly or indirectly.

Would it be a terrible thing if Amazon pressured books into changing the same way iTunes changed music?

1: http://www.cnn.com/2012/04/11/tech/web/apple-lawsuit-cheaper...

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> Now at least part of the complaint is that Amazon isn't discounting enough and allowing prices to approach list price

No, the claim is that they are doing that selectively, along with other things like directing people searching for a book to other publishers books, and extending the shipping time for the targeted publisher's physical books -- as means of discouraging purchases of the targeted publisher's physical books to create leverage on contract terms related to e-books.

Right.

Is there something specifically wrong with that sort of leveraging?

Businesses in the online and physical world negotiate all sorts of things selectively for their own benefit. Amazon doesn't give every publisher the same deal just like I'm sure publishers don't give every author the same deal.

There are multiple ways to get books published and multiple ways to sell them.

Amazon is big, and as one of the linked NYT articles says 'controls about a third of the book business', but that is a far cry from the modern-classic example monopoly of Microsoft on the desktop (90% share) in the 90s or perhaps Comcast (Sole option) in some places today.

Amazon and Hachette are doing what big businesses do and authors, who have a direct relationship with Hachette, not Amazon are apparently suffereing.

I'm not seeing how Amazon becomes the villain here.

Exactly. Look at big box retailers -- Target and Walmart all give preferential treatment to manufacturers willing to sell at a discount or give special benefits to the retailer.

Better shelf placement, positioning near the front of the store, checkout placement ... All assets that retailers can exploit to woo vendors. Amazon is doing the same thing. Their assets are less tangible but offer just the same incentive to cooperate and play by their rules.

If you don't, you get pushed to the back of the store, placement out of eye level, etc.

> I'm not seeing is how Amazon becomes the villain here.

The articles don't go into detail, but from what I've seen of the relationship between Amazon and the publishers, I'm inclined to think that Amazon is probably trying to push for very unreasonable terms. Which is to say, Amazon is used to pretty much dictating whatever terms they want to the publishers, because they are in such a dominant position, and I expect that this is just more of the same.

What about Book-Seller-Neutrality? Shouldn't bookshops just be conduits for dead tree and electronic bits?

Why? If I ran a hometown bookstore and was required to carry crap I knew wouldn't sell and that ate up valuable shelf space that would be bad for business. I'm not sure why amazon should be required to do something like this either. They are free to carry / not carry whatever they like, per the contracts they sign etc. There is no "everyone is equal" treatment, nor should there be.

It's only a problem if you have a market controlling position. The bigger Amazon's market share, the more responsibility they have to behave neutrally as the primary conduit between their suppliers and their customers. If there were a dozen other viable options for buying books online who all had similar market power and thus similar price-setting power, then Amazon could behave as bone-headedly as they wanted to.

Yes, it does seem like publishers want two contradictory things from Amazon:

1. Don't you dare discount our ebooks!

2. Don't you dare stop discounting our paper books!

However, these positions are perfectly consistent. They're just consistent in a way that I suspect wouldn't occur to most HN readers.

What publishers really want from Amazon is simple: "Reverse, stop, or at least slow down this damn ebook transition!"

They don't say it that way for obvious reasons, but it is the common thread underneath their apparent insanity.

You are absolutely correct.

They're like the entrenched interests at Kodak that tried to stop the development of digital cameras (which Kodak actually invented) to support film sales.

All they managed to do was ensure that the digital cameras were developed by companies other than Kodak, and now Kodak is bankrupt.

The same thing is happening with ebooks. In many genres, 50% or more of the best-selling ebooks are either indy or small press.

This doesn't end well for the big publishers, I'm afraid. It sure as hell didn't end well for Kodak.

I have to ask: In what way did Kodak try to stop digital cameras? They failed to remain relevant in digital photography, but I don't remember them trying to stop it.

I think the OP meant they stopped to development of digital cameras inside Kodak.

Exactly. Managerial elements within Kodak did their best to strangle digital photography at birth.

If your little corporate fiefdom is based on film sales, you're going to try to stop digital even if that's not in the long-term interests of the company, or so the story has it.

>What is supposed to happen here?

Amazon and their suppliers are supposed to work out their contract negotiations before it gets to the point where mommy and daddy are fighting in public, using the NYTimes to take shots at each other.

The analogy with the music industry is not good:

The core point of the article is to claim that Amazon is abusing his dominant position; which is a real problem, and in some countries illegal, regardless of the nature of the company.

to be clear, the lawsuit was against apple and the publishers, who were accused of price fixing by refusing to participate in under-pricing books, but also refusing to price ebooks as high as ~$25.

it was a really odd application of antitrust law at the time, since Amazon is the one with monopoly power, and price fixing typically means competitors agreeing to price things higher than the market would otherwise bear.

antitrust has never been reasonably applied to tech, going as far back as DOJ going after microsoft for bundling IE, not for leveraging the Office team's relationship with the Windows team to push out competitors like Corel.

now you're seeing amazon flex that monopoly power - hey buddy, you had to pay a fine to the DOJ for refusing to participate in our monopoly, and we were able to hurt apple's book-selling business, and now we're shutting you off entirely unless you agree to our terms.

I have the different view: that the Apple/publisher case is a pretty straightforward case of a price fixing conspiracy.

Publishers are certainly allowed to, as you put it, "refuse to participate in under-pricing books". The problem occurs when they decide to act in concert.

I agree with your points about DOJ and the tech industry, and maybe there's something that needs to be done about Amazon right now. I'm not sure. But definitely the wrong thing to do would be to allow a cartel of publishers have any influence over the price structure of the market.

"it was a really odd application of antitrust law at the time, since Amazon is the one with monopoly power"

The lawsuit was about price-fixing and collusion. It had nothing to do with "monopoly power" (which Amazon does not have now and did not have then).

eBooks are agency model - that is, the publisher sets the selling price, the retailer takes a cut like 30% on sale (like the appstore)

Physical books are wholesale model. The retailer sets the selling price, and the publisher always gets the negotiated wholesale price, usually around 50% of list.

So they are two different things. The publishers are mad at Amazon fro hating on agency pricing. Agency pricing takes away Amazon's ability to compete on price - that's why Amazon doesn't like it.

The concern seems to be that publishers aren't being treated equally. Supposedly Amazon is only applying these price and shipping delay penalties to publishers it doesn't like.

It would be nice of Amazon removed DRM the same way Apple did for music.

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