The Trouble With Amazon
The loss of serendipity that comes with not knowing exactly what one is looking for is lamented by ex-Amazon editor James Marcus: "Personalization strikes me as a mixed blessing. While it gives people what they want—or what they think they want—it also engineers spontaneity out of the picture. The happy accident, the freakish discovery, ceases to exist. And that's a problem."
That sentiment is underscored by Charlie Winton, CEO of Counterpoint Press: "Shopping on Amazon is a directed experience—it works best when you know what you're looking for. But how does that help with, for instance, a first novel? When independent bookstores were in a healthier state, staff picks and hand selling could bring attention to great books people didn't know they wanted. Now that's much harder."
The shrinking of that market share has certainly been severe. The number of independent bookstores in America has more than halved in the past two decades. The pleasure of browsing shelves stocked with care and intelligence by independent owners of stores like Midnight Special in Santa Monica, Cody's in Berkeley and the Coliseum in Manhattan is only a memory. Their collapse is the byproduct of another tenet of Amazon's business philosophy: low prices are always good for customers.
In addition to regularly offering bestsellers at more than 50 percent off, Amazon offers a wide range of titles for around a third off the recommended price. Such low prices have forced its competitors to follow suit. Last October Wal-Mart declared a price war on the online retailer. As part of the offensive, the big box store announced that it would sell Stephen King's 1,074-page Under the Dome at just $10. Amazon promptly matched Wal-Mart's discount; the two competitors then lowered the price by another dollar, selling at nearly 75 percent off the publisher's $35 recommended retail price.
Of course, everyone loves low prices, but as with breadth of choice, the matter is more complex than it first appears. To achieve such low prices retailers must seek ever deeper discounts from publishers. A decade ago the average wholesale discount for a book was in the region of 40 percent. Today it's more like 50 percent, and for many of the large outlets it can be 60 percent or more. Amazon clearly anticipates that the trend of deeper discounts and lower prices will continue. One prominent British publisher told me his sales director returned from a visit with Amazon at which he had been forced to grant better terms. "The good news," he reported back, "is they said I don't have to go in and see them again for eighteen months."
Another London publisher, head of a well-known transatlantic university press, complained about the way Amazon undermined his company's efforts to sell its titles direct. "They told us, in no uncertain terms, that if we tried to match the reduced price at which they were selling our titles they would take the lower price as the basis for calculating their discount, allowing them to price-cut still further."
Blocked at every turn in their attempts to escape this relentless race to the bottom, publishers have seen their revenues fall, forcing many to make cutbacks and concentrate more on lead titles, the blockbusters that, accountants tell them, are the most profitable component of their business. Fewer staff and falling promotion budgets mean that books by less established authors—the "mid-list"—receive ever shorter shrift.
The mid-list is the place where new talent has traditionally been nurtured, where publishers can take chances on less predictable titles. "Look at books like Amitav Ghosh's Sea of Poppies or Roberto Bolaño's Savage Detectives," says Paul Yamazaki, chief buyer at City Lights in San Francisco. "These are serious, sophisticated books that began life with modest expectations, but after dedicated work by the publisher and independent booksellers, they went on to reach wider audiences. This sort of publishing is under threat today."
The accumulated effect of Amazon's pricing policy, its massive volume and its metric-based recommendations system is, in fact, to diminish real choice for the consumer. Though the overall number of titles published each year has risen sharply, the under-resourcing of mid-list books is producing a pattern that joins an enormously attenuated tail (a tiny number of customers buying from a huge range of titles) to a Brobdingnagian head (an increasing number of purchasers buying the same few lead titles), with less and less in between. Responding to the effects of price wars last fall the American Booksellers Association warned, "If left unchecked...predatory pricing policies will devastate not only the book industry, but our collective ability to maintain a society where the widest range of ideas are always made available to the public."
Authors, too, can be added to the list of price-cutting's victims. In the fall of 2008, as the crisis of publishing began, a boss at Scribner, where I was a senior editor for two and a half years, announced at an editorial meeting that when it came to advances, "$50,000 is the new $100,000." Speaking with agents at this spring's London Book Fair, I found widespread corroboration that advances had indeed dropped precipitously.
This is partly a reflection of the overall dismal state of the market. US book sales fell by nearly 2 percent in 2009, after a drop of more than 2.8 percent the previous year. It is also related, however, to a clause in many publishers' contracts that reduces royalties paid to authors if sales are made to booksellers at a high discount, in some cases reducing the royalty by half. In this respect publisher, bookstore and customer appear to benefit from the lower price at the expense of the author. But lower advances and royalties make for less-well-researched books and an author pool increasingly populated by hobbyists rather than those whose primary qualification is the ability to write.
It's hard to see how the allure of infinite choice and rock-bottom prices conjured up by Amazon can be dispelled, but there are slivers of hope. Independent bookstores, especially those hosting regular live events, may be making a comeback. Last year, membership in the American Booksellers Association rose for the first time, after two decades of decline. And 37 percent of 18- to 34-year-olds told a recent survey they preferred to buy their books from independents. At the other end of the business, the emergence of Apple as a competitor to Amazon, and Google's recent announcement that it will set up its own online bookstore, may allow publishers wiggle room in negotiating terms.
At the Book Expo in New York City, Jonathan Galassi, head of Farrar, Straus and Giroux, spoke for many in the business when he said there is something "radically wrong" with the way market determinations have caused the value of books to plummet. He's right: a healthy publishing industry would ensure that skilled authors are recompensed fairly for their work, that selection by trusted and well-resourced editors reduces endless variety to meaningful choice and that ideas and artistry are as important as algorithms and price points in deciding what is sold. Jeff Bezos and his beloved numbers are anathema to such an arrangement; the best things to number would be the days of his company's dominance.