The Amazon Effect

More than a decade ago, a book editor managing her own imprint at one of the big publishing houses gave me some insight into her world that I’ll never forget.  “I have to publish about five diet books,” she told me, “in order to invest in one new novelist.”  It’s important to understand that this is not a comment on the publishing industry but rather a comment on the book-buying market.  Like it or not, the number of people who want to purchase serious literature and non-fiction is considerably smaller than the number of people who want to buy self-help books, diet books, and pulp fiction.  And there’s nothing inherently wrong with suppliers delivering the products people want, but when it comes to products like books (as it is with music and filmed works), the healthiest market overall is one that sustains the greatest diversity of material, which is not necessarily the same thing as the greatest number of works.  This is a distinction I suspect the algorithmically-minded folks at Amazon may not understand, or care to understand; and this leads to the question of what effect the distribution leviathan will continue to have on publishing and literature going forward as well as what the company represents to the overall economy.

This past February, George Packer published a detailed examination of Amazon in The New Yorker under the subtitle Amazon is good for customers.  But is it good for books?  Packer covers so much ground, some of it rather startling, that the article is hard to summarize, and I strongly suggest reading it if you haven’t.  Probably the most striking revelation in the piece is the manner in which Amazon pushed the concept of “co-op marketing” fees, money a publisher would spend at a brick an mortar store like Barnes & Noble for a prominent display of a new book, to something reminiscent of an old-fashioned shakedown with a digital spin.  According to accounts cited in Packer’s article, it was pay the fees to Amazon or watch the “Buy” buttons disappear from your products, meaning browsers literally could not purchase the books on the site.  You can almost imagine the heavy saying something like,  “Youze got a nice collection of novels here. I wouldn’t want to see anything happen to ‘em.”

To my mind, the techo-utopianism exemplified by Amazon — and uniquely by Amazon because of the way the business is both web-based and operates in physical space — is based on two illusions, one that is probably hazardous economically, and another that is probably hazardous culturally.  The economic implications are relatively easy to recognize in that we’re seeing the Wal-Martization of every line of business represented by the things Amazon delivers — and Amazon delivers everything.  The illusion for the consumer is that we get low prices and convenience; but the hidden, long-term cost may well be the jobs that enable us to buy stuff in the first place.  This vicious, downward cycle is very neatly summed up in this 2005 JibJab spoof. It depicts a man enjoying low prices at “BigBox Mart,” losing his job at a supplier due to pricing pressures by “BigBox Mart,” then having no recourse other than to work for “BigBox Mart” well below his qualifications and at some fraction of his previous earnings.

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An economy is an ecosystem, and just as the principle of biodiversity teaches us that a whole species cannot be eradicated without threatening other species, I suspect the same can be said for certain organisms within a free-market economy.  Sure, those who stand to gain will talk about creative destruction and technological progress, but when the products or labors being artificially devalued still have real value (i.e. market demand), that’s not creative destruction; it’s just destruction without creating anything new to replace what’s been lost. Like Wal-Mart, the Amazon model doesn’t create anything; it is merely a distribution system, a contemporary railroad that can dictate the prices charged in every diner along its route.  Except this railroad has thousands of lines spanning in all directions, doling out cheap candy to the passengers and simultaneously reducing the value of labor in so many little towns along the way until eventually nobody can ride the train.  From the Packer article:

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.

Like his Silicon Valley brethren, Amazon CEO Jeff Bezos speaks with the confidence and arrogance of determinism, as though these dominant, even monopolistic, technology companies are manifestations of the only history that could have unfolded in the digital age.  “Amazon is not happening to bookselling. The future is happening to bookselling,” Bezos is quoted as saying in the Packer article.  And while it may be true that the publishing industry does cling to some antiquated practices, it’s a subtle but important sleight of semantics happening there when a wealthy corporation owner tells us that the manner in which his business operates was inevitable, ordained as it were by the natural order of our times.  Does this apply to the entire enterprise?  Are the transitory, non-union “pickers” hired to work in Amazon fulfillment centers in questionable conditions and for low wages an inevitability in this “future?” Because on the subject of antiquated practices, the notion that warehouse workers have to be treated like machines so that I can get a dollar off a luxury item like a book or a CD takes us back at least a century.  Does the future belong to people who make conscious choices, or is it already encoded by seven wizards who dwell in the sacred valley?

While the consumer is distracted by cheap commerce, the producers (authors) gaze at a different illusion — one that preaches self-reliance, a chance to connect directly with customers, and bypass the traditional, elitist “gatekeepers.”  This is music to the aspiring writer’s ears, particularly if he’s been turned down for publication by one of those gatekeepers in the publishing world; but more total manuscripts uploaded by more writers does not mean that more great works must inevitably be discovered or that more writers will make a living through digital sales.  “The digital market is awash with millions of barely edited titles, most of it dreck, while readers are being conditioned to think that books are worth as little as a sandwich,” writes Packer.

There’s a reason my editor friend referred to “investing” in an author, and it’s because the best stuff almost always comes from the healthy center of an industry, where experienced professionals have the resources to cultivate something the market doesn’t know it wants yet. The best stuff comes from high-risk bets.  It’s not too hard to sell a slightly scandalous S&M trilogy or mass-market paperbacks or diet books. But stewardship of the next Toni Morrison is hard and takes experience and real risk because that kind of literature just isn’t going to be as popular as 50 Shades of Grey.  And unfortunately, what is threatened by the devaluation of all works by a model like Amazon are the resources available to make those riskier investments.  Some people may call the curators of those bets elitist, but which is the preferable tastemaker — the agent or editor steeped in literature his whole life, or Amazon’s pay-to-play model for promoting a book?  Or worse, how about a bot swarm telling us how great or awful some new ebook is?  I say, bring on the elitists.

The promise says “your work will retail for less, but you have the potential to sell more and pocket a larger percentage of the sales than you would with a traditional publisher.”  This illusion is how the internet industry convinces people that these models are examples of creative destruction — that these new opportunities for authors are what’s being created to replace those jobs in publishing and book retail that are being wiped out. Interestingly enough, though, Packer’s article mentions that even Bezos’s own wife, an author, published her last novel with Knopf and not through Amazon Publishing.  Since it’s a safe bet MacKenzie Bezos knows where her next meal is coming from, why not give Amazon Publishing or even direct sales on its platform a go?  Maybe because book publishing is more complicated than the Amazon model says it is.  From the Packer article:

“Writing is being outsourced, because the only people who can afford to write books make money elsewhere—academics, rich people, celebrities,” Colin Robinson, a veteran publisher, said. “The real talent, the people who are writers because they happen to be really good at writing—they aren’t going to be able to afford to do it.”

It was inevitable that these companies, once they controlled the lines of distribution, would get into the business of production; and while it’s reasonable to expect that Amazon as publisher might partner with some great authors and strike good deals with them, what would Amazon be at that point other than another so-called gatekeeper?  More importantly, everything about the company’s business practices suggests they expect to be the only gatekeeper, which is why all this democratization talk is bullshit; it’s a hypnotic used to blind people to the fact that these companies are designed to devour whole industries and emerge as the only game in town.  That doesn’t sound like the promise of the information age to me.

What does sound like the promise of the information age to me is something akin to my long-time friend and colleague’s venture Bittersweet Editions. Marco North spent over two years developing an artist-centric, all-digital publishing entity. Modeled after a classic small press, Bittersweet and ventures like it are seeking a balance, looking to provide authors a choice between big, corporate publishing and getting lost in a sea of “content” on the Web.  The roles of editing, marketing, and connecting with the right audience are still relevant, still take labor and expertise, and still have value.  Just like any editor/publisher, the small press or small label or small film distributor makes an investment in works and cannot help but impose his own tastes in making selections.  Call this “gatekeeping” if you will, but it seems to me that the better vision for the future is one that fosters more independent gatekeepers rather than one big company with a master key.

© 2014 – 2015, David Newhoff. All rights reserved.

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  • Good piece.

    As you say, the Packer article should be read in full. You rightly draw out the issue of Amazon’s (mal)treatment of its workers, but it’s also worth focusing on the issue of tax avoidance I think.

    Because that actually blows the “other businesses need to adapt” argument out of the water. Amazon are only able to keep their costs down because their size allows them legal avenues simply not open to most businesses.

    • Thanks, Sam. Tax avoidance is absolutely an issue, but I don’t focus on it here because it is neither unique to Amazon nor to the internet industry. You’re right, though, that it is just one more reason why that message is so hypocritical. Reminds me of government contractors who benefit from our inefficiency then complain about government waste.

  • I agree with you David. There is an increasing non-viability of the creative sector, increased automation in the manufacturing, logistics and retail. It is affecting both blue and white collar jobs in all areas – although not uniformly, but still profoundly.

    All this is happening right now. It is creating an economy where the average salary is going to go down, unemployment and underemployment will go up, and the net wealth of the rich of the rich will only grow to compensate. Amazon is just one driver of this. It’s technological development as a whole that is doing it.

    Relevent. Claims 47% of all jobs will be lost to technological advances by 2034 (not an entirely controversial claim, by the way).

    Obviously something needs to be done about it. Our political leaders could come with creative solutions maybe? Sure. But the issue with that is they are also completely and utterly incompetent. Our political system is ineffectual. So I wouldn’t count on it. Seriously, any time you rely on “the government” or “Congress” to solve a problem, you already are in a bad position.

    So what can we do? I’m thinking the problem is self limiting. The solution has to come from grassroots action driving the government’s hand. You know OWS? It fizzled. But the kind of thing it represented is still latent within large portions of the population, and will only come back 10x stronger if the Economist article is to believed. I know in circles I frequent, futurist/transhumanist circles that is, which aren’t entirely small, there talks of this “basic income” idea. I don’t entirely agree that it is the best way, but I think it’s one approach that may be relevant in the future.

    Another answer: increased government funding of productive efforts. Basically a jobs program. Some fields like scientific research have no real upper limit as far as optimal employment is concerned, by the way. There is no such thing as “too many people doing science”. It can stretch to any percentage of the population if need be.

    Art is more tricky of course. No upper limit is not true for authors or musicians (as you yourself claim, too much authorship is doing bad things to authorship as a whole). As well as the political and social ramifications of the government funding art. Art is I mentioned before and still believe is fundamentally a tool for physiological manipulation and thus can be easily produce a message useful for its overseers if they willed it, a message that may not be in the interests of the general population consuming that art. That makes government funding art especially controversial. It’s not a easy problem.

    Of course, science funding sometimes has political goals, but the scientific method makes it difficult to distort the truth. Because of the scientific method, typically the politicization of science involves limiting funding to science in the investigation of inconvenient truths, that is, not manipulation of the truth but rather trying to hide it under the rug. This merely delays the inevitable, not even the most powerful institutions can stop that, the truth eventually comes out – we see this through the history of science.

    Anyway, maybe a hybrid system between basic income and vastly increased funding of the arts and science is the way forward. Pushing future generations into scientific fields is also essential, as shows like Cosmos and STEM initiatives are helping us along that way.

    Anyway good post.

    • People will tend towards trusted gatekeepers. For example I’ll tend to trust any music CD on the ECM label even though I may not of heard of the artists, I have enough trust in ECM as a gatekeeper brand. For history books I’ll trust Yale, OUP, Cambridge. For computer books, well that is more difficult as Wiley, O’Reilly, and McGraw Hill all produced a whole load of crap during the 2000s, one can no longer take their imprints as denoting a quality product.

  • “.. too much authorship is doing bad things to authorship as a whole”

    I don’t necessarily agree with this, M, and i don’t think it was the point. The point was with a functioning marketplace which re-invests in, for instance, authors, creates an ecosystem that can sustain itself
    … that doesn’t exist with Amazon and the like. I don’t think the accelerated race-to-the-bottom is something to cheer for. I don’t want to be part of the ‘Borg-Collective’.
    You paint a rather grim picture of the future, M, and you actively advocate for it… how about instead of destroying humanity, we all get together and think of how to save it from itself?

    • Neither science or wishful thinking is involved in my study of the future. Just what I see is probable. I don’t advocate for the future, present or past.

      I advocate only for a better society. My dream is a society where the sum of human knowledge and culture is available to the whole world.

      • Right… because people are currently using their internet time for bettering themselves… There’s sooo much info out there right now… Guess what? Sites that educate have like 12 visitors a year.. it’s not a matter of “more” information, it’s a matter of getting people to give a shit!

      • Correction: My dream is a society where the sum of human knowledge and culture is legally available to the whole world. To a major extent it is already available illegally, much perhaps, to your frustration.

      • Of the current situation is neither of us are getting want we want. You want $$$$$, I want post-scarcity in knowledge and culture (legally, which I think is important) but the reality is neither.

      • Well good luck on getting “the sum of human knowledge and culture” in any meaningful or digestible format from the new tech. They are incapable of delivering that,

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