Live data from Hacker News

Amazon’s Monopsony Is Not O.K.

nytimes.com

91–100 of 208 posts

Re: Amazon’s Monopsony Is Not O.K.

#91

Earlier quoted context omitted.

The standard monopsony effect is on quality. Monopsonies push the price below the cost of production, so producers cut production costs to an unreasonable level. In the case of books, you'd see that by cuts in editing, by authors shortening the amount of time that they spend writing a book, and through authors dropping out and leaving the field to less talented writers with fewer alternative income sources. The textb…

Except Amazon is arguing for a lower price because it will increase sales and make both Amazon and the publisher more money. They aren't asking for more books or less editing. They're trying to make everyone more money. Worse, the argument is over pricing on e-books, not physical stock, so Hachette's stance makes even less sense. As usual, Paul Krugman sees everything through a political lens, so naturally Amazon is…

As another author and Nobel laureate said[1], "everything is politics".

If the lower price really would make more money for everyone, then surely Hachette would readily do it. Since they don't, and since they understand this market as well as anyone, a reasonable person might assume that they would indeed make less money with a lower price.

Even free-market fundamentalists must see that free markets don't function when dominated by monopoly or monopsony. So isn't there a legitimate public policy question about whether the state should limit that market power?

[1] http://en.wikiquote.org/wiki/Thomas_Mann

Re: Amazon’s Monopsony Is Not O.K.

#92
post #54

It looks like Hachette's PR department has stepped up a gear. This subject has been covered several times before and I think this comment [1] did a good job of explaining Hachette and Amazon's positions. To summarise: When Hachette's contract with Amazon expired, Amazon (rightfully) stopped ordering advance inventory for stocking, but continued taking orders for available titles and transmitted those orders to Hachet…

Krugman's point is summed up in another quote from the comment you linked to: "Hachette failed to come to mutually agreeable terms with [Amazon]. That's their most important job as a publisher, and they blew it, to the tune of permanently costing their authors 50-60%+ of sales they'll never recover."

When one buyer represents 50-60% of sales, the "most important job" of any seller is to come to "mutually agreeable terms" with that buyer. Is Amazon's "most important job" to come to terms with Hachette? Not even close. One party to the negotiation can walk away; the other cannot. So "mutually agreeable terms" is kind of a hilarious phrase meaning, "we will state the terms, and then you will agree to them. That is now your most important job."

And Hachette is the largest publisher, with something like 16% market share (2010 numbers). That's why this negotiation is even happening.

When Amazon talks to smaller publishers, this isn't even an issue. They are your boss; they tell you what to do; you do it. Except they're a little different from a normal boss, because they absolutely do not care about you; it is actively in their interest to see your business fail. People who survive in Amazon's buying department have to be OK with that -- the in-house name for Amazon's Small Publishers Negotiation Program was the "Gazelle Project," before the lawyers made them change it.[1]

Support publishers, don't support publishers, whatever. If you think authors will be better off without publishers that's a separate conversation. But if there's any industry you do like, you should be very concerned about Amazon gaining market share in that industry.

[1] http://bits.blogs.nytimes.com/2013/10/22/a-new-book-portrays...

Re: Amazon’s Monopsony Is Not O.K.

#93
post #82
post #57

Earlier quoted context omitted.

Unless you're talking about predatory VCs, comparing them to publishers is an insult. Publishers routinely demand that authors submit their next book (or even everything you write in the same genre for years) to them first and even if they reject it they have the right to match any offer you get later. How many VCs demand rights over your next N years of startups? Or we could talk about high-discount clauses: Where p…

To reverse your point: unless you're talking about predatory publishers, comparing them to VCs is an insult. You can't get anywhere useful by excluding the bad actors in one industry and focusing solely on the bad actors in another industry.

I think its more that the industry standard among publishers is to demand the right of first refusal on additional books.

Re: Amazon’s Monopsony Is Not O.K.

#94
post #12

I normally love Krugman, but it seems like he skipped a step here. Amazon is squeezing publishers to push prices down, which is bad becuase... why? I mean, the apocalyptic end game here is that publishers are forced out of business entirely and Amazon ends up buying content directly from authors, I guess. That doesn't sound so bad to me, nor like something that's going to "hurt America". Maybe then they might squeeze…

what if we replace Amazon with Walmart and publisher with manufacturers? "Walmart is squeezing manufacturers to push prices down, which is bad becuase... why?"

Lower prices are good for consumers. If you manufacture commodities then ideally you will have no profit margin in a free market. If you did, someone could come in and undercut you and take your market share, without losing money doing so. Walmart is just being a rational consumer - if they can get something for cheaper somewhere else, they will.

The only thing I have a problem with is when costs are cut by reducing wages to the point where employees have to take public assistance. This is government subsidization of your business. This should be solved with a mandatory minimum wage set to a value that is a living wage.

Re: Amazon’s Monopsony Is Not O.K.

#95
post #92
post #54

It looks like Hachette's PR department has stepped up a gear. This subject has been covered several times before and I think this comment [1] did a good job of explaining Hachette and Amazon's positions. To summarise: When Hachette's contract with Amazon expired, Amazon (rightfully) stopped ordering advance inventory for stocking, but continued taking orders for available titles and transmitted those orders to Hachet…

Krugman's point is summed up in another quote from the comment you linked to: "Hachette failed to come to mutually agreeable terms with [Amazon]. That's their most important job as a publisher, and they blew it, to the tune of permanently costing their authors 50-60%+ of sales they'll never recover." When one buyer represents 50-60% of sales, the "most important job" of any seller is to come to "mutually agreeable te…

They didn't come to terms, that's true, but unless we saw each side's balance sheet it's hard to know where the fault lies. Supposing Hachette gets a better price - how do we know this will get passed on to authors?

Re: Amazon’s Monopsony Is Not O.K.

#96
post #12

I normally love Krugman, but it seems like he skipped a step here. Amazon is squeezing publishers to push prices down, which is bad becuase... why? I mean, the apocalyptic end game here is that publishers are forced out of business entirely and Amazon ends up buying content directly from authors, I guess. That doesn't sound so bad to me, nor like something that's going to "hurt America". Maybe then they might squeeze…

The textbook answer to why monopsony is unhealthy is monopsony suppresses investment in production. In this case, the risk is dissuading authors from writing by suppressing their earnings. Imagine a simplified supply chain: authors distribute through Amazon to reach readers. Amazon exerting pricing pressure on authors benefits readers in the short term by reducing their reading costs. But by reducing authors' profits…

[deleted]

Re: Amazon’s Monopsony Is Not O.K.

#97
post #47

Earlier quoted context omitted.

Disrupting editors does not mean eliminating them. Successful self-publishers pay for, among other things, their own editors. Readers are not stupid. Between descriptions, reviews, free samples and so on assessing quality (both abstractly and personally) isn't hard.

How are self-publishers supposed to pay editors if Amazon keep pushing prices down?

Amazon doesn't want to push prices down for the sake of pushing prices down. They want to push prices to where their data says they'll make more money (and, assuming they get a cut of the total, to where everyone will make more). People make a lot out of Amazon not paying 70% for books priced above $9.99. Far fewer notice that they also don't pay 70% for books priced below $2.99.

Re: Amazon’s Monopsony Is Not O.K.

#98

Earlier quoted context omitted.

Yes he is, and it looks like that to me as well. What's the deal with Paul Krugman being a Nobel Prize winner? [1] [1]: http://en.wikipedia.org/wiki/Appeal_to_accomplishment

As long as we're talking about former Enron adviser Paul Krugman, we can look up a fuller bio. http://en.wikipedia.org/wiki/Paul_Krugman

You mean the Paul Krugman who was chief staffer (international economics) on the Council of Economic Advisors under the Reagan Administration and was hand-picked by Martin Feldstein?

Krugman has a very full bio so you can find all sorts of things there, he hasn't hesitated to work with anyone willing to listen to his opinions and expertise.

Re: Amazon’s Monopsony Is Not O.K.

#99
post #55

Earlier quoted context omitted.

>A part of me welcomes this. I am sick of the noise. Browsing the Amazon (Kindle) bookstore, I wish that 90% of the junk didn't even appear in my search results. >Rather read works by people who are creating for the sake of art, and not money. What does that have to do with the low quality of many self-published works? There is tons of fiction out there written entirely for 'art' and it is nearly all complete trash.…

I can't see this as a problem. Let the market decide. Probably my treasured reading is your rubbish and just possibly, vice versa.

The problem is that nobody has come up with a good way to filter through the self-published dross to find the gold.

Without the publishers filtering you can't just pick a book at random and be ensured it probably won't make you want to claw your eyes out (at least publishers would clean up the major spelling mistakes, grammatical errors, and incoherent plots).

So what is left is popularity, and as already established that doesn't stop shitty authors writing books.

Peer recommendations are a real crap-shoot unless you have vetted your peers thoroughly, which takes time.

Whoever can build out an automated system to rank and recommend self-published books will make a fortune.

Re: Amazon’s Monopsony Is Not O.K.

#100
post #79
post #48

Earlier quoted context omitted.

If they don't matter to you, perhaps you'd be willing to pay mine. I'd gladly buy paper books from http://www.powells.com/ and have them shipped here to Italy, but it's expensive and slow.

Have you tried bookdepository? They are slow, but cheap.

They're also owned by Amazon. I don't have a problem with that, but I imagine someone trying to get away from Amazon would.
Post reply on HN