More on Amazon, ebooks, and monopolies

Yesterday, Brad wrote a wonderful piece blasting away at accusations that Amazon has a monopoly on the ebook. As an indie author who making most of his income via ebook sales, I thought it might be worth getting another take on the same issue.

Brad makes excellent points, but there are some points that I figure he missed. First, let’s look at the definition of the term “monopoly“.

1. exclusive control of a commodity or service in a particular market, or a control that makes possible the manipulation of prices.

2. an exclusive privilege to carry on a business, traffic, or service, granted by a government.
3. the exclusive possession or control of something.
4. something that is the subject of such control, as a commodity or service.
5. a company or group that has such control.
6. the market condition that exists when there is only one seller.

[I did leave out one possible definition, but that was because it involved the board game, hence irrelevant]

So, the implication is that there is no competition in the realm of ebooks. Amazon controls the whole shebang. Now, Brad points out how myopic that thinking is in his post yesterday.

Now, I know marketing dweebs always love to slice-and-dice marketing data, torturing it until it shows that they’re the market leader in the critical “males age 24-27 in the Pacific Northwest who own cats” segment. It’s a way to claim that you’re a winner. As long as you cast the net narrowly enough.

But you can’t do this with monopolies. The Kindle doesn’t compete in the eBook market. It competes in the book market.

Trying to suss out a monopoly in only a single segment of the market reminds me of a debate I had with an old neighbor about the XM/Sirius merger several years ago. He said it should be blocked as it would create a monopoly. I said that it’s not a monopoly, because the market for mobile entertainment is much wider than just satellite radio:

What’s wrong with a monopoly in satellite radio? After all, look back a mere 6 years, when there was no such thing as satellite radio. At the time, people functioned. The world wasn’t falling apart because there were no blues stations in BFE. People lived without satellite radio, and yet people didn’t even know they were missing it.

…snip…

Thus, for a satellite radio provider, they cannot be a true monopoly. First, they’re offering a product that didn’t even exist 6 years ago, and currently has such a tiny number of subscribers that it’s not in any way a necessity. Second, they’re competing not only against other satellite radio companies, but against terrestrial radio, internet radio, CD’s, and portable music players. If they don’t offer a product worth paying for, people won’t pay for it.

Brad goes on to point out that there were other ebook readers prior to the Kindle, but they lacked the distribution platform that Amazon had. This is true. However, is that true today?

Kindle’s two biggest competitors – one a true ereader and the other a tablet – both have platforms and name recognition that should negate at least some of that advantage. Barnes & Noble’s Nook, a true ereader, came about in an attempt to compete with the Kindle. Some readers love them, though Kindle readers are still the majority of the market. However, Barnes & Noble had sufficient infrastructure to compete with Amazon on the ereader format, yet they haven’t.

The other competitor is Apple, and their iBook service. This permits books to be read on iPads and iPhones (not really sure about iPods, however). If anyone can compete with Amazon, it’s Apple. iPads are the default tablet. Hell, even after Microsoft paid a lot of money to get the NFL to use their tablets, the announcers called them iPads. The truth is, iPad is what people think of when you mention a tablet computer. Their iTunes service is a perfect model for books, since it completely revolutionized how music was sold. Books should be a small matter, right?

The truth is, they haven’t. Not really. However, their existence does prove that there is no monopoly on ebooks, right?

So, what people mean to say is that Amazon might as well have a monopoly. They boast a 60 percent market share in ebooks, and there’s zero reason to figure that there will be any change in the near future, and that’s enough to make some people very nervous. The question is, why do they have that large a percentage of the market?

In part, it may be that Amazon does something that its competitors fail to do. They actually seek out exclusivity from the indie community. There are various perks offered to people who opt to go exclusive with Amazon on a given title (the perks are there for any book you put exclusive, and it doesn’t matter if you have other books that aren’t). This gives Amazon a much larger library with which to market.

However, there is nothing that would stop their competitors from doing the same, or even offering these tools to people who aren’t exclusive, thereby undercutting Amazon’s ability to keep authors exclusive to their platform.

Rather than compete, however, many publishers and competitors alike scream “monopoly”, hoping for a white knight named Uncle Sam to ride and and rid the world of this scourge. Heaven forbid that they not only have to compete for customers, but for suppliers as well. Luckily for many indie authors, Amazon doesn’t mind doing just that.

Any monopolistic look to Amazon comes about because of one simple fact. They meet the customers needs while not screwing over their suppliers. They keep small and indie publishers happy, keeping those books in their warehouses (digitally, at least), and still keep their customers happy. Where’s the problem with this?

Now, I’m not saying that Amazon should be the only game in town. The fact that they’re not is why they treat indie authors so well. Most of us aren’t deluded enough to not acknowledge that absent other competition, Amazon would have little incentive to continue to be so giving to indie authors. However, Amazon isn’t doing anything that their competitors couldn’t do. In fact, I’d love to see Apple, Barnes & Noble, Kobo, and all the others step up and realize that they have to compete on all levels.

The end result would be magnificent. Unfortunately, too many people would rather scream “Monopoly!” than see these competitors actually have to fight to make sure there isn’t one.

 

 

First, I’d like to take a moment to mention how great it is to be posting something to The Liberty Papers. In 2009, I joined with a friend in a project he had started where we blogged about area politics. I’d blogged a little bit here and there before about whatever random things, but my libertarian streak had never really gotten a chance to fly.

Suddenly, I had a platform. To say it changed my life was…well, a significant understatement. It lead to me getting to know some pretty cool people, many of whom are here at The Liberty Papers. It gave me the opportunity to first write for a local newspaper, and then eventually buy it. While that didn’t necessarily work out, it was yet another example of me being able to write a lot of words in a fairly short amount of time. So, I did like a lot of people and decided to write a book. Bloody Eden came out in August and is available at Amazon (or your favorite book website for that matter).

Now that we’ve gotten the history out of the way, a bit about the politics. First, I’m probably best described as a classical liberal. At least, that’s what every “What kind of libertarian are you?” quiz has told me, and they’re probably right. I’m a constitutional libertarian, for the most part. If the Constitution says they can do it, it doesn’t mean they should, but if the Constitution says they can’t, then they can’t. It just doesn’t get any simpler than that.

I look forward to contributing here at The Liberty Papers.

  • Brad Warbiany

    Great piece, and as an author you’ve clearly got a much closer perspective on it than I do…

    I know who I’m coming to for advice when I finish my book!