Timmy elsewhere

Is former No 10 tech guru Rohan Silva right that competition authorities should investigate Amazon’s book market dominance?

Tim Worstall, senior fellow of the Adam Smith Institute, says No.

Congratulations to Rohan Silva for finding a way to get his new bookshop into the newspapers. But other than that there’s nothing to his complaint that Amazon is becoming “too dominant” in the books market. His complaints are about publishers and bookshops. Adam Smith said the sole purpose of production is consumption. Frederic Bastiat added we must look at all economic questions from the point of view of consumption. Thus the only lens we should look at Amazon through is that of readers and buyers. Has the company made book buying cheaper and more convenient? Yes, yes, it has. That is the end of the matter then.

There is a little more though.

21 thoughts on “Timmy elsewhere”

  1. “Man sets up bookshop to compete with Amazon. Man insists bookshops competing with Amazon be given special protection enforced by the state. Man gets in papers”

  2. So Much For Subtlety

    I assume that this “former Number 10 tech guru” is simply doing what everyone else is doing these days – trying to turn a populist cause and a rolodex of phone numbers into a endless stream of government grants.

    That way he doesn’t have to build anything that works. He can still collect money for trying. Or pretending to.

  3. While I don’t support the “we need special protection” message, I do disagree that Amazon’s dominance is a good thing. It may well be that **some** books are cheaper and more easily available – but that does not translate to **all** books are cheaper and more easily available.
    If a publisher wants their books on Amazon then they have to put them there under Amazon’s terms. Those terms are not friendly to the publisher, and aren’t (IMO) good for the buyer either.
    Disclosure: My mother has written several books, but like the vast majority of authors has never actually made any money from them. They are on Amazon – simply because Amazon put them there when we submitted the details to Nielsens. I think we even had an order once – on which we lost money !
    Basically Amazon sets the selling price, they decide the margin they want, and when a customer orders, they send an order to the publisher for what’s left – in this case, less than it cost to print the book. And having charged the customer for “special order” costs (so not cheaper then !)
    We were selling the books at their cover price, and including UK postage in that, and covering costs which was about all that Mum was bothered about.
    And if Amazon decide to stock a book because it’s actually selling ? Well the publisher pays shipping to get them to Amazon, Amazon only pay for books that are sold, charges storage fees, and when they decide they aren’t worth stocking any more then the publisher pays to either ship them back or to have them pulped. Of course Amazon have low prices – they don’t carry any of the costs that they’ve shifted onto the publishers. And the publishers can’t do anything like, err that free market thing of charging different prices in different markets to allow for different costs, because if they do then Amazon will dump them.
    Of course, the listings on Amazon contain errors – but when I looked into trying to get them fixed I either hit dead ends in their byzantine maze of options designed to avoid ever having to get a human involved, or had to agree to giving Amazon full rights (and I mean full rights) to do anything whatsoever for whatever reason with anything we uploaded. So, for example (and this one is real) they omit the cover image or get it wrong – the only way I could see to fix that would be to upload the real cover image, granting Amazon rights to reuse it for anything they want, which we can’t do if we’ve a limited use licence from the person who’s photograph we used !
    We would have been happy for them not to have been on Amazon at all !
    And worst of all, just like eBay, they shift buyer expectations such that good honest alternative sources struggle to survive – not least is the “not on eBay/Amazon, doesn’t exist” mentality that more or less forces most publishers to trade through them.
    Amazon are a leach on society. Short term good, long term bad.

  4. So Much For Subtlety

    simon – “they don’t carry any of the costs that they’ve shifted onto the publishers. …. Amazon are a leach on society. Short term good, long term bad.”

    I could care less about publishers. They have been ripping us off for years. Why should I care? The purpose of the entire industry is to get good books written and into my hands. So what has Amazon done? It has made rare and out of print books available to me. It has reduced costs. It allows self-published authors to sell their works.

    We can tell what a slap up job the publishers have done – the independent authors are out selling the traditional publishers. That is, the big publishers cannot reliably tell what sort of book will sell. They are out of touch with their market.

    As far as I can see the publishing companies perform no useful service whatsoever. All they do is pay authors a pittance for books they sell to us for £25. The sooner they all die, the less I could care. I do not buy books to subsidise their coke habits.

  5. Basically Amazon sets the selling price, they decide the margin they want, and when a customer orders, they send an order to the publisher for what’s left – in this case, less than it cost to print the book. And having charged the customer for “special order” costs (so not cheaper then !)

    If you don’t actually want to sell any through Amazon, can’t you set the reported stock level to ‘0’?

  6. > I could care less about publishers
    I think you mean “big publishers” – because you then go on to say how well small publishers are doing. And speaking from the other side of the fence, I can tell you that the larger publishers do have a part to play – the small “one person writing at home” publishers you talk of have pretty limited ways of marketing books, essentially word of mouth.

    > can’t you set the reported stock level to ‘0’?
    They were already marked as “special order” which I suspect is Amazon’s code for “we don’t think it’s worth stocking a single copy of this”. TBH I couldn’t be bothered trying to figure out Amazon’s system which appears to be designed to be convoluted.

    Getting back to something in TW’s original post :
    “Has the company made book buying cheaper and more convenient? Yes, yes, it has. That is the end of the matter then.”
    Again I’ll re-iterate that that is only true for “some books”. For others, it’s made book buying less convenient.
    And because of the way they (and TBH, they aren’t the only ones) screw down prices and screw margin out of publishers, it makes some books uneconomic to produce – so hardly “more convenient” buying that book that never came into being is it ?

    I refer TW (and the others here) back to Net Book Agreement. Did abolishing it make books cheaper – absolutely. Did it have any downsides ? Most certainly it did – it’s more or less removed bookshops from the high street, as it was predicted it would. I realise that some people wouldn’t know what their local high street looks like, but for some, the ability to go into a shop, speak to a real person, and be able to get just about any book in print is what they would consider “convenient”.
    Did the cons outweigh the pros ? Probably not – but you certainly cannot say “that’s the end of the matter then”. No more than you could say “did Standard Oil’s practices reduce the cost of oil ? – yes, that’s the end of the matter then”. Or “did IBM’s practices reduce the cost of adding machines ? – yes, that’s the end of the matter then”.
    It’s far more nuanced than that. Yes, competition is good – competition in a free market brings down costs for consumers. Is unfettered “competition” good for consumers ? I think we’ve enough examples from history of where that breaks down – and IMO we are at that stage again, there is so much now that is heavily dominated by a few very big companies that there isn’t really a free market in some areas. As TW has pointed out before, our personal information has a price tag – to those who can commoditise it, and to those who own it. Now I put a reasonably high price on mime – and in a free market I’d be able to, for example, buy a decent mobile phone without having to trade my privacy in for it. That’s virtually impossible in a world where the “free” choice is between A who wants to own my soul (and sell it), G who want to own my soul (and sell it), and M who want to own my soul (and sell it) – so not much option for keeping my soul for myself there then.
    Perhaps there’s something TW could spout forth on ? What happens when a market is effectively owned by 2 or 3 big players – where each one knows they can shaft the “consumer” simply because the consumer doesn’t have an option of not being shafted, only a choice of who does it (and how much lube they use).

  7. “Is unfettered “competition” good for consumers ? I think we’ve enough examples from history of where that breaks down”

    Please, provide some examples.

  8. Amazon sets its own prices. Sell to other retailer and they can set their own prices.
    What about setting prices is wrong?

    If I list a book for sale on amazon I set the price I want in order to make a profit. Don’t bother with what someone else sells at, they aren’t making my profit.
    We buy from a publisher – the publisher decides what they will allow to be sold. Amazon could not care what books I list.

    Sold in excess of 600 books there. Perhaps like a number of retailers I use the sales channels that exist rather than moaning about them limiting choice.
    Whats amazon catalogue size now? 45 million items? More?
    Rather different than limited choice.

  9. Two three big players? Oligopoly. But what matters is whether that is contestable or not, not whether the oiigopoly exists.

  10. “We are now spoon-fed carefully-curated books.”

    And local bookstores didn’t carefully select what they ordered?

    The small town I grew up in had four local bookstores. One each served the Christian, agricultural, scifi/fantasy, and “general interest” markets. The owners sold what they thought their customers would buy. Amazon currently does the same but for all of the markets and with less overhead. None would have carried “The No Breakfast Fallacy” so my options are actually much better even though there are fewer competitors.

  11. Try buying a book in the “High Street” which offends the Borg hive mind of progressive publishers. Good luck. I cannot ever recall seeing Thomas Sowell’s books in Waterstones or any other similar outlet, for example.

    Amazon sell his books. Amazon provides Kindle, so I can buy a cheaper version than a paperback and start reading it about fifteen seconds later. No trip to the High Street and trying to get a bookshop to order a book for a week Thursday, even if they are willing to.

    No doubts about which is the most convenient.

  12. Every retailer selects what it stocks. Small shops tend to have small storage – they can’t deal with 4 pallets delivered to the shop. Moe than 3 boxes can be an issue!

  13. Bloke in Costa Rica

    “the ability to go into a shop, speak to a real person, and be able to get just about any book in print”

    I can’t think of anywhere you’ve ever been able to do that. The closest was Foyle’s, and their shelving principles were so mental, good luck to you if you marched in there thinking, “right, I want to buy book X.” It was like Borges’s Library of Babel. Two hours later you’d have spotted a dozen books you’d love to read and not the one you were looking for, but woe betide you if you dared ask one of the laughingly-described ‘assistants’. Snooty bunch, they were.

  14. Bloke in North Dorset

    If the big publishers don’t like Amazon why don’t they get together and build their own on-line book store? As far as I can tell there’s nothing stopping them.

  15. As far as I can tell there’s nothing stopping them.

    Apart from it being easier to whine to their chums in the government machine about how unfair it all is and “there ought to be laws against that sort of thing”, rather than, you know, getting off their collective arses and having to actually work for a living.

  16. Amazon aren’t a bookshop now. They are a logistics and data collection company with a website.
    The publishers cannot from a standing start try and compete unless willing to invest tens of millions of dollars or even 10 times that.
    And to take amazon as a contender they would have to become amazon.

  17. So Much For Subtlety

    simon – “I think you mean “big publishers” – because you then go on to say how well small publishers are doing.”

    Small publishers as in individuals who are publishing all by themselves. But if Amazon is helping smaller publishers, good. All the better.

    “the small “one person writing at home” publishers you talk of have pretty limited ways of marketing books, essentially word of mouth.”

    So what you mean is that the larger publishers spend all that money that I have to give them on payola? Having stitched up the bookstores and literary magazines so no one gets promoted except their own? I am not sure this is such a good selling point for you.

    “For others, it’s made book buying less convenient.”

    For whom and for which books has book buying become less convenient? Because there is this thing call reality which would seem to disagree with you.

    “it makes some books uneconomic to produce – so hardly “more convenient” buying that book that never came into being is it ?”

    It does not make it uneconomic for the writers. They can self publish on Amazon. If it makes it uneconomic for some people to keep themselves in cocaine and hookers, why would I care?

    “I realise that some people wouldn’t know what their local high street looks like, but for some, the ability to go into a shop, speak to a real person, and be able to get just about any book in print is what they would consider “convenient”.”

    Book stores on the High Street were and are great. But you could not get just about any book in print. In fact you could not get many books at all. Amazon on the other hand gives you that without having to leave your home. Vastly more. I shall miss book shops. But Amazon wins because it is providing a better service.

    “It’s far more nuanced than that.”

    If you think the purpose of publishing is to provide a good living for useless English Lit graduates.

    The problem with publishers is their PC. As we have seen this week:

    http://www.nickcolebooks.com/2016/02/09/banned-by-the-publisher/

  18. Bloke in North Dorset

    “Amazon aren’t a bookshop now. They are a logistics and data collection company with a website.”

    Yes, and quite an innovative one having ploughed $Bns in to their business.

    “The publishers cannot from a standing start try and compete unless willing to invest tens of millions of dollars or even 10 times that.”

    As a 2nd/3rd/nth mover a lot of the problems have been solved so it won’t be as expensive as Amazon. The main one being the supportive logistics chain that delivers cheaply through the last mile, and they’ll deliver anyone’s books. I often get my specialist books through other publisher’s websites and they arrive OK and in reasonable time.

    But if they want to profit, or even stay alive, they have to invest. Instead, like all large bloated organisations they want Govt to create a protective monopoly for them. History is littered with dead companies that refused to or were incapable of investing and innovating and we shed few tears for them, big publishers wont even appear as a footnote if the don’t try.

    They should look to estate agents who are at least giving it a go against the online players with Agents Mutual.

    “And to take amazon as a contender they would have to become amazon.”

    Not necessarily. All they want to do is create a market for their own books which tempts us to go there rather than Amazon to buy our books.

  19. And to match amazon in pricing they’d have to buy from publishers at full price? Same price and terms as amazon?
    Thats what I mean by becoming amazon.

    History is littered with situations where an organiation has had to change, adapt, react to deal with a perceived threat. Becoming something different and closer to what they faced.

  20. SMFS – the bookshops can pretty much get any book in print. They order it via amazon or an amazon owned company from someone who has it and is selling. Can be other bookshops.

  21. They order it via amazon or an amazon owned company from someone who has it and is selling. Can be other bookshops.

    So explain again why going through another middleman is easier and cheaper for the consumer than just buying direct from the Amazon marketplace?

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