This trivializes everything interesting about this case. Because this argument was previously had with Microsoft & Netscape. And Comcast and Netflix. And Amazon has a huge stake in two major policy issues upon which this touches:
> And Amazon has a huge stake in two major policy issues upon which this touches:
> (1) Monopolistic collusion in e-books; and
Pray tell who is Amazon colluding with?
> (2) Net neutrality
Amazon doesn't offer last mile internet service as far as I'm aware. Are you alluding to some neutrality violation in their role as ISP for AWS customers or ...?
To play the devil's advocate... couldn't Hatchet just pull out of selling ebooks through Amazon and roll their own and/or start an distribution platform for ebooks structured like Hulu? If the rest of the big 6 publishers got on board that would be pretty catastrophic for Amazon and they wouldn't be able effectively retaliate without crippling themselves.
The (only) issue is the Kindle (which I love, and own four of). Amazon sold e-books at what some called "predatory pricing", using their large profits in other parts of their business, to allow them to sell below cost on their DRM-encumbered reading device. I would guess that close to 90% of e-book reader who purchase books, do so on a Kindle capable device (iPad, iPhone, or E-Ink reader).
These people (and I am one of them) - only purchase e-books from Amazon. Because it's DRM encumbered, we need to make sure we purchase content from a supplier who is going to be around 10-20 years from now.
Only Amazon (and possibly Apple) has any strong probability of being in that category right now.
This gives Amazon an outsized ability to negotiate with vendors - Amazon is close to being a Monopoly for both the ebook purchasers, and Monopsony for the ebook sellers.
There was a small chance to correct this back when Apple attempted to negotiate agency and MFN rights for their book selling business, but they did it in heavy handed and clumsy way that appeared to the DOJ to be collusion. Some have argued that what Apple did with the book publishers was not that different than what Apple did with the Music publishers - the key difference, of course, is that there was no "Amazon" to complain about their market position being disrupted by a new business model.
I'll still continue to purchase books from Amazon, as distasteful as I find their current negotiating strategy, but I would be (very) happy to see the book publishers decided that DRM encumbered books will ultimately be their downfall because of the negotiating leverage it gives the DRM platform owner.
I'm one of these Kindle-owners. I want to correct a misconception: it's not inherently DRM-encumbered.
Books you buy from Amazon can have DRM or not, depending on the publisher[1].
Books you buy from other stores will work fine on Kindle so long as said other stores aren't using DRM themselves.
Admittedly, if you buy a book in EPUB format from another store you'll have to convert it to one of the formats Kindle supports. Amazon provides a program to do so, and independent stores like Baen[2] tend to give you a choice of formats anyway.
(Kindle not supporting EPUB natively seems pretty blatantly designed to avoid competition, since it's the non-Amazon industry standard at this point. No argument there.)
Thanks - I had no idea that I could purchase books from Amazon.com that did not have DRM. This even more strengthens the responsibility for DRM to be on the publishers hands - simply by eliminating the DRM from their books, I could purchase their books from any publisher, and read them on any device - which would eliminate my need to go to Amazon for a new book.
I wonder how much discussion has gone on with the publishers about eliminating DRM on their content. The music publishers certainly went that way...
To the best of my knowledge (I'd love a pointer to details if I'm wrong), the reason Kindle has DRM at all is entirely due to publisher demands for it.
Yep. DRM is totally optional. I sell ebooks on Kindle Store which are based on OpenStreetMap data. CC licence (at the time) meant that I couldn't use DRM. Not a problem.
And not only that, but you can email them directly to your Kindle. So a third-party store could just ask for your Kindle email, have you add it to the whitelist and "then" provide a fairly streamlined experience.
I own several Kindles. I load my own content onto them, including ebooks I make myself. Owning a Kindle simply does not lock you into buying books from Amazon.
> couldn't Hatchet just pull out of selling ebooks through Amazon and roll their own and/or start an distribution platform for ebooks structured like Hulu?
Sure, just like, any one of the computer manufacturers that Microsoft was pressuring in the 1990s could have just pulled out of selling computers with Windows and rolled their own OS.
> If the rest of the big 6 publishers got on board that would be pretty catastrophic for Amazon
OTOH, if the rest of the big 6 didn't, it would be catastrophic for Hachette.
"Sure, just like, any one of the computer manufacturers that Microsoft was pressuring in the 1990s could have just pulled out of selling computers with Windows and rolled their own OS."
Setting up an independent ebook sales portal isn't as hard as writing a new operating system and getting it adopted. Not by many orders of magnitude.
> Setting up an independent ebook sales portal isn't as hard as writing a new operating system
I'm sure some PC vendors like HP could probably have figured out how to put together an OS -- because many of them did. effectively marketing a consumer OS in the market Microsfot had dominated, and where all the app development was focussed on windows, OTOH...
No. Getting a user to adopt a new OS requires convincing him to format the drive (or create a partition), download a gig of data, then go through an hour or two of installation and configuration, then go through weeks to months of learning how to use the new OS.
Getting a user to set up his Kindle to read books from your indy store requires that he enter the Kindle's email address on your site, and your site's email address on the Kindle.
Can you force Walmart to put your products on shelves? How is it OK for Hachette to force Amazon.com to put the physical books on shelves?
One easy way to fight Amazon would be to include a DRM-free digital copy download for free with every physical book purchase. Of course, the scummy publishers won't do that.
Retailer's like wal-mart commonly extract rents for product placement. Comcast thinks this is a great business model. Paying such rents to comcast for "product placement" in the last mile? Not so clear cut for Amazon.
This whole discussion turns on whether Amazon is a monopoly. That's the reason it's such a problem for Comcast to do it -- they have a hard monopoly on access to Comcast subscribers. You can't gain access to any Comcast subscribers by peering with Sonic, because the number of customers who simultaneously subscribe to multiple residential ISPs is effectively zero. Whereas you can sell your product to "Amazon customers" without selling through Amazon, because the percentage of customers who patronize more than one retailer is substantially all of them.
> Whereas you can sell your product to "Amazon customers" without selling through Amazon, because the percentage of customers who patronize more than one retailer is substantially all of them.
For online purchase of books? Not even close to "substantially all of them".
The market is that because the numbers say that's where the market is. What's wrong with selling your book at Wal-Mart is that the numbers say you will not sell enough to make a living.
As for "what barrier," well, consider a website that is visible on Bing but not on Google. Go ahead and tell them "but visitors have no switching cost!" The cost of not being visible where customers are actually looking for you is very high indeed.
> As for "what barrier," well, consider a website that is visible on Bing but not on Google. Go ahead and tell them "but visitors have no switching cost!" The cost of not being visible where customers are actually looking for you is very high indeed.
That isn't a cost to the customer, it's a loss to the supplier. The problem suppliers have is that customers have lots of competition to choose from. A customer might have equal preference for two books that each cost about the same amount and therefore choose the one which is easier to find. That choice makes all the difference in the world to the publisher but negligible difference to the customer.
That's why the customer places such little value on searching for alternatives. Because there is negligible harm to the customer. If there would be customer harm, the customer could instead exercise the option to spend only the few seconds necessary to find the book at another retailer. Unfortunately for the supplier, there isn't, so the customer doesn't.
> The cost of not being visible where customers are actually looking for you is very high indeed.
Does it constitute a monopoly though? I doubt the folks at Google love Amazon.com but if this became the sufficient to declare Amazon.com a monopoly, then the obvious next step is to immediately declare Google web search a monopoly. With over sixty percent of the eye balls (the last time I read any stats), Google would be in the cross hairs.
Amazon: "Well, yeah."