Tyson Adams

Putting the 'ill' back in thriller

More anti-Amazon nonsense

This morning I was browsing my various news feeds when I noticed someone had written an article about the arrival of the Amazon Kindle store in Australia. Clearly this article was going to feed my confirmation bias on how awesome it was to have an Aussie version of Amazon available, just like Canada, the UK, India, Germany, Spain, etc. No longer being locked out of some editions of books because of our region, an Aussie store is one step closer to Aussie writers not having all the publishing issues that currently exist, a .au suffix making us feel special: all good! Right?

Well, not according to the article Amazon’s Australian Kindle store: an unhappy ending for the book industry? by Ben Eltham. Rather than stream bile right here, I’ll dissect Ben’s opinion piece about the demise of the protected Aussie book market, and hopefully inject some much needed reality.

Amazon has been prising open the wallets of Australian consumers for years – but what will its local push on Kindle mean for readers, writers and publishers?

It is always good to start an article by using emotive language and by poisoning the well. The use of a logical fallacy so early in the article does not bode well for Ben’s opinion piece.

The local book industry is threatened by Kindle’s entry into the Australian market. When Amazon opened its Australian Kindle store last month, it was to feisty reaction from independent bookshops. Charismatic Sydney bookseller Jon Page of Pages & Pages Booksellers even relaunched his “Kindle amnesty” – a scheme that allows conscientious local readers to swap their Kindle for the Australian book sector’s preferred e-reader, the Kobo, and receive a $50 book voucher for their trouble.

This opening reference to a stand by one independent bookshop being representative of all bookshops is another example of polarizing the argument before raising any actual evidence, essentially further poisoning the well. You see we are set up to believe that the Kobo e-reader is somehow better for Australian bookshops, despite Kobo also being in direct competition with stores in the same way the Kindle is, as well as to love the “feisty” response to the big bully Amazon arriving.

“We’re calling it Kindle Amnesty 2.0,” jokes Page, who is spruiking for the Kobo Aura HD, which he argues is “equal to or better than the Kindle Paperwhite”. Those who read via tablets such as the iPad or Galaxy have access to Kobo reader apps. “We want to take the fight to Amazon because they are so dominant in this market, particularly with the Kindle device,” argues Page. Pointing to the Commonwealth’s 2011 Book Industry Strategy Group report, he claims that Kindle represents about 70% of dedicated e-reading devices. (This figure does not include tablets, phones or laptops). “That’s a problem, because the Kindle locks competition out and locks customers in.”

My idea of a joke is a thing that someone says to cause amusement or laughter, especially a story with a funny punchline. “We’re calling it Kindle Amnesty 2.0″ doesn’t really make the grade as a joke, but this is all about, again, poisoning the well and polarizing the reader to the author’s opinion without needing to state facts or evidence.

The next point about the Kobo being as good or better than the Kindle is neither here nor there, it just doesn’t matter. I agree that the Kobo is a great e-reader, but most e-readers are pretty good, you are really choosing an e-reader based upon the stores and catalogue they offer access to. I’ve written before about hearing Kobo Australia’s chief seeming to have a very good idea of what is needed in the market place for readers and authors. But ultimately the raising of Kobo vs. Kindle in a discussion about Aussie bookstores is like raising a conversation about which is the tastier bacon at a vegetarian food store.

Finally we do get some actual data, showing that the Kindle is the biggest e-reading device. Well, d’uh. Amazon have the biggest store and have expanded into the most markets, have invested in technology early, have created new markets themselves, and have….. Okay, let’s not get ahead of ourselves here. The point is that the argument raised is that Amazon and the Kindle have a monopoly. Which is true. What is false about this assertion is the idea that the monopoly isn’t one that can be supplanted by the next generation of technology, or better business models arriving, or the competition preying on Amazon’s weaknesses.

You see, the key weakness for Kindle is also it’s strength. If you lock readers into one store you allow the competition to usurp the market by doing the deals with many stores and libraries (hang on, that’s what Kobo is doing in Australia and Canada!). You also have to remember that the Kindle or any other e-reader is only really for avid readers. Tablets and phones are for the more casual readers, thus they aren’t locked into one device or one store. So we are only another generation of technology away from e-readers losing their advantage over tablets and phones, and the entire Kindle argument becomes moot.

Industry sentiment is divided over the impact of the entry of the tech giant into Australian online retailing. Some have been forecasting impending doom. Others are merely apprehensive about Jeff Bezos’ juggernaut. Amazon’s thin margins terrify competitors. Despite vast revenues, the parent company makes no profit. Amazon raked in US$17bn in net sales last quarter, for an operating loss of US$25m. Analysts and brokers are starting to wonder whether, eventually, Amazon’s gravity-defying stock price will tumble to earth.

This part is a doozy. Ben has framed a false dichotomy in how the industry perceives Amazon. Where is the mention of the people who love their Kindle and the Amazon store? Where is the mention of the people who like their Kindle and Amazon but want to be able to use other formats and borrow e-books from their local library? This is a common false dilemma fallacy used in arguments.

Next the argument goes to Amazon’s business model, providing some facts but leaving out others. Why? Why not mention what the “thin margins” are that terrify competitors? I’d sure like to know. The next point is about how Amazon makes heaps of money, yet doesn’t profit….. Remember above how I mentioned that Amazon had stayed ahead of the competition by expanding and investing? Well that’s where all that revenue is going, straight back into making their business better.

What I’ve always wondered was why an online bookstore was the first one to grab hold of the e-reader concept. E-books are not new, nor are e-readers. They have been waiting in the wings for a decade or more, waiting for a company to invest and make things happen. Why wasn’t this investor a publishing house? Why not a major bookstore chain? Surely they are meant to be knowledgable about their industry and future trends, so why weren’t they the ones creating the new digital marketplace instead of Amazon? The answer is obvious. Amazon had the balls to do it and had an eye on the future, instead of a protectionist view of old and antiquated business and media models. To the victor go the spoils.

But other industry observers have argued that an Australian Amazon presence will be good for consumers and readers. As Kobo’s Malcolm Neil told Melbourne’s Independent Publishing Conference recently: “Amazon is good because the customer likes them … We’re not going to win the argument by telling people they’re wrong.”

Didn’t I say above about Kobo’s boss being a bright guy that knew what the industry wanted? If you’ve heard Malcolm talk about the publishing industry before you know that he has a lot of good points that have been left out, can’t think why. Malcolm’s points are the first example in this article of a different viewpoint being offered. But we’ve already been setup to either disagree with it or ignore it.

Martin Shaw, books division manager at independent retailer Readings, argues that Amazon’s Australia venture may not be such big a deal. “It is only ebooks,” he says. “That market has got so many players in it now, who knows what sort of impact it will have? We will just have to see how the dust settles.” Shaw foresees a coming war of devices in which competitors try to lock customers into competing ecosystems. “I think there will be a lot of devices flooding the market trying to get people to enter the walled garden,” he says. “That will force other e-tailers like Kobo to become more aggressive.”

This speaks to my points above about Amazon and Kindle only being one technology change away from losing market share. I used the example of tablets and phones, but there are other examples in the online stores themselves. Both Kobo and Amazon have exclusive author deals happening. We’ll probably see more of this, which starts to sound like publishing houses and their favoured deals with stores.

Of course the irony is that, in our globalised world, Amazon is not really “starting up” in Australia at all. The retail behemoth has long been prising open the wallets of Australian consumers, who have been buying books and all manner of other things from Amazon in the US for years – estimates of how much that market is worth vary enormously. The move by Amazon to begin an “.au” store that trades in Australian dollars and sells Australian ebooks through Kindle merely makes that custom one step easier. “All that’s changed now is that it’s an Australian-facing site,” Page argues.

I think the irony with this paragraph is the use of the term irony when there appears to be none. But it does give the article a chance to move away from the viewpoints the author disagrees with and move back to more Amazon hate.

There are upsides for consumers. The Gordian knot of digital copyrights, based around various national boundaries, has meant that some US and Australian titles were not available as ebooks in Australia. The new Amazon.com.au store can now stock a much wider range of titles that have Australian-only digital licences.

Lower prices for consumers: Yay!

And prices will be forced lower. Shaw says that we may see “a race to the bottom”. Amazon’s deep pockets, he says, means “they can go there [to low prices] and stay there for as long as they want”. Australian book prices are still much higher than comparable titles internationally. In Amazon’s view, that margin can be returned to consumers in the form of lower prices.

Okay, Yay and Bullshit. Currently Australian e-book prices are ridiculously high. You cannot justify the high cost of an e-book when there are no distribution or printing costs. I have been meaning to post some figures taken from a few publishing houses and their presentation to the shareholder meetings, figures that show just how profitable e-books are for them thanks to the lower costs associated. There is actual irony here, because those same publishing houses are using e-books lower price to justify lower advances and smaller royalty percentages to authors. So Amazon making prices more competitive is a good thing, for readers and authors.

A quick look around the various sites for Australian ebooks revealed some savings. An ebook of Ross Garnaut’s Dog Days worth $9.99 on Kobo, was $9.49 on Amazon. Eleanor Catton’s Booker-winner The Luminaries was $10.68 on Kobo; on Amazon it was $9.35. (As a comparison, a paperback of Dog Days costs $15.29 from Bookworld, while The Luminaries costs $22.49). For other titles, owing to so-called “agency pricing”, Kobo and Amazon’s prices have converged: Christos Tsiolkas’ Barracuda was the same price on both.

Notice that this is the only time “agency pricing” is mentioned. It will not be discussed again. Despite the importance it plays in this entire argument about e-books, pricing, readers, authors, the industry and who is screwing whom.

The other potential winners of Amazon’s entry are successful authors and self-publishers. Amazon’s benefits to authors are controversial, but for the top tier they are real. The Australian publishing industry has been rather wary of embracing the digital world and while it’s hard to pinpoint precise figures, there’s a perception that many local authors have lagged well behind their US counterparts in ebook market penetration. Australian self-publishers will now get a 70% royalty for books sold to Amazon.com.au accounts. International experience has shown that a lucky few will reach big new audiences with bestselling self-published titles. Although on the other hand, mid-rank and lower authors may find themselves little better off.

Well, d’uh. Any new bookstore or way to buy books will favour already successful authors (NB: self-publishers are authors too), because, wait for it, people buy books by successful authors. What is not mentioned is that Amazon algorithms are more likely to expose readers/buyers to authors they haven’t heard of because of purchases they have made or books they have liked. I don’t know if Kobo have a similar system, but I do know that most bookstores do not have anything remotely similar to the promotional power of Amazon for new, emerging or midlist authors.

The statement about Australian self-publishers will “now” get 70% royalties is deliberately misleading. They already get a 70% royalty, that has been the policy from day one at Amazon, it is what all the other self-publishing platforms have come to adopt as well (correct me if I’m wrong on this, I haven’t checked them all).

Meanwhile, agents, publishers and booksellers still face real challenges from digital, Amazon or not. Digital is reshaping the industry and still threatens to cut middlemen out of the chain. Online-only retailers like Bookworld may be the most vulnerable, lacking the size and scale to adequately compete. When Amazon bought Book Depository, the UK retailer popular with Australian consumers, there was consternation in the book industry, despite the Australian Competition and Consumer Commission deciding not to oppose the move.

Yeah, who’d have thought an antiquated business model would be under threat by changes in the industry? And didn’t the article make the point that Amazon has already been in Australia to a large extent for years? So doesn’t this kinda negate any points made here?

As books blogger Patrick O’Duffy wrote recently in a long analysis of Amazon’s entry into the Australian market: “By starting this process of moving into Australia, Amazon is going to permanently affect the local writing, reading, publishing and bookselling world.” That much at least seems certain.

Um, no. This final statement and paragraph are about 10 years out of date. E-books and the ability of authors to manage their own careers without ‘gatekeepers’ is what has changed the industry. This has happened for quite a while now. To say that Amazon opening an Aussie store suddenly changes things completely negates the history and many of the points raised in this article.

Now that I’ve addressed the article by Ben Eltham, paragraph by paragraph, I think it is clear that this article is nonsense. It is just another in the long line of e-book, e-publishing, self-publishing, fear-mongering articles that have come to represent “informed” comment on the publishing industry over the last 5 to 10 years. I for one am sick of these articles, in fact I hate them. It isn’t just the continued “fear of change” mantra they all adhere to. The main reason I hate these sorts of articles is that they are trying to pretend that the publishing industry is hurt by changes that benefit readers and writers. Nothing could be further from the truth. Readers and writers are the publishing industry, everyone else is there at their behest. If those middlemen want to stay in the game then they have to offer something to the readers and writers that is beneficial to both. And the success of Amazon (Kobo, etc) and the various publishing houses (agents, editors, designers, etc) that have adopted/adapted to the new paradigms, only illustrates how out of touch these articles are with the industry. Instead of discussing the real issues, like the squeeze on authors, we get another stream of uninformed bile.

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