"Cheap Words. Amazon is good for consumers but is it good for books?" : History of Information

On February 10, 2014 I read an article in NewYorker.com by George Packer entitled "Cheap Words. Amazon is good for consumers but is it good for books?" The article was dated February 17, 2014. In my opinion the whole article was very much worth reading, but since I could not quote all of it, selections are quoted below:

"The combination of ceaseless innovation and low-wage drudgery makes Amazon the epitome of a successful New Economy company. It’s hiring as fast as it can—nearly thirty thousand employees last year. But its brand of creative destruction might be killing more jobs than it makes. According to a recent study of U.S. Census data by the Institute for Local Self-Reliance, in Washington, brick-and-mortar retailers employ forty-seven people for every ten million dollars in revenue earned; Amazon employs fourteen.

"In the book industry, many of those formerly employed people staffed independent stores. Two decades ago, there were some four thousand in America, and many of them functioned as cultural centers where people browsed and exchanged ideas. Today, there are fewer than two thousand—although, with Borders dead and Barnes & Noble ailing, the indies are making a small comeback. Vivien Jennings, of Rainy Day Books, has been in business for thirty-eight years. “We know our customers, and the other independents are the same,” she said. “We know what they read better than any recommendation engine.”

After Amazon’s legal triumph, some publishing people were driven to the wild surmise that the company had colluded with the Justice Department, if not micromanaged the entire case. They grasped at the fact that Jamie Gorelick, a deputy attorney general in the Clinton Administration, and a friend of Attorney General Eric Holder, serves on Amazon’s board, and that three weeks after Judge Cote’s decision President Barack Obama appeared at an Amazon warehouse in Chattanooga—where workers earn, on average, eleven dollars an hour—to praise the company’s creation of good jobs. The coup de grâce came last November, when the cash-strapped U.S. Postal Service announced a special partnership to deliver Amazon—and only Amazon—packages on Sundays, with the terms kept under official seal. To some people in the book world, Obama’s embrace of their nemesis felt like a betrayal. One literary agent said, “It’s strange that a President who’s an author, and whose primary income has come from being an author, was siding with a monopoly that wants to undercut publishers.”

Since the arrival of the Kindle, the tension between Amazon and the publishers has become an open battle. The conflict reflects not only business antagonism amid technological change but a division between the two coasts, with different cultural styles and a philosophical disagreement about what techies call “disruption.”

“Book publishing always has a rhetoric of the fallen age,” a senior editor at a major house told me. “It was always better before you got here. The tech guys—it’s always better if you just get out of my way and give me what I want. It’s always future-perfect.” He went on, “Their whole thing is ‘Let’s take somebody’s face and innovate on it. There’s an old lady—we don’t know we’re innovating unless she’s screaming.’ A lot of it is thoughtless innovation.” . . . .

"Book publishers’ dependence on Amazon, however unwilling, keeps growing. Amazon constitutes a third of one major house’s retail sales on a given week, with the growth chart pointing toward fifty per cent. By contrast, independents represent under ten per cent, and one New York editor said that only a third of the three thousand brick-and-mortar bookstores still in existence would remain financially healthy if publishers didn’t waive certain terms of payment. Jane Friedman, the former Random House and HarperCollins executive, who now runs a digital publisher called Open Road Integrated Media, told me, “If there wasn’t an Amazon today, there probably wouldn’t be a book business.” The senior editor who met Grandinetti said, “They’re our biggest customer, we want them to succeed. As I recover from being punched in the face by Amazon, I also worry: What if they are a bubble? What if the stock market suddenly says, ‘We want a profit’? You don’t want your father who abuses you physically to lose his job.”

"In 2009, after a career at publishers large and small, Robinson was laid off by Scribner, amid downsizing. Faced with his own professional extinction, and perhaps the industry’s, he co-founded a new company, OR Books, with a different business model. Robinson did research and found that fifty to sixty per cent of the list price of a book goes to Amazon or to another retailer. When he was starting out, in the eighties, that figure was more like thirty or forty per cent. A small-to-midsize publisher has to spend between ten and fifteen per cent on sales, warehousing, and shipping. This leaves little more than twenty-five per cent of the book’s price for editorial counsel, production costs, publicity, paying the author, and whatever profit might be left over. A shared sensibility for a certain kind of fiction or nonfiction writing unites everyone along the way: authors, agents, editors, designers, marketers, reviewers, readers. “The only point at which Bezos enters that chain is to take all the money and the e-mail address of the buyer,” Robinson said. “There’s an entire community of people, and Bezos stands in the middle of it and collects the money.”

"Instead of going through Amazon, OR Books sells directly to customers, using printers in Minnesota and the U.K. It pays about fifteen per cent to the printer and keeps the rest. “After four years, we’re just profitable,” Robinson told me. “It works.”

"To the Big Five, locked in a death struggle with Amazon and the distracted American reader, this kind of experimentation might seem unrealistic. To survive, they are trying to broaden their distribution channels, not narrow them. But Andrew Wylie thinks that it’s exactly what a giant like Penguin Random House should do. “If they did, in my opinion they would save the industry. They’d lose thirty per cent of their sales, but they would have an additional thirty per cent for every copy they sold, because they’d be selling directly to consumers. The industry thinks of itself as Proctor & Gamble. What gave publishers the idea that this was some big goddam business? It’s not—it’s a tiny little business, selling to a bunch of odd people who read."

"Cheap Words. Amazon is good for consumers but is it good for books?"

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