October 15, 2013 • No 315 | Archives | Search QL | Subscribe



Amazon: The Bad, the Ugly, and the Good
by Larry Deck

Quebec booksellers, publishers, writers and (for shame) librarians are pushing for regulations to limit deep discounts on books. This move is aimed primarily at the putative scourge of the book trade worldwide: Amazon.com.

Animus against Amazon in some circles is so intense, it borders (pun intended) on pathology. Employees of competing chain bookstores, independent sellers of new releases, and smaller publishers all feel threatened by the detested online retailer. To them, Amazon has come with the sword, to destroy their traditionally quiet and comfortable marketplace and replace it with a malevolent monopoly.

The deep discounts Amazon offers on many titles, in violation of the time-honoured practice of the industry, lure unsuspecting consumers away from legitimate local sellers. Amazon's shareholders only seem to be complacent about the fact that Amazon loses money by this predatory practice because they're playing a long game. Once its last competitor has been driven out of business, Amazon will roll out the sinister Phase Two of its Master Plan, jacking up prices on the now-captive market and cackling fiendishly as book-buyers everywhere cough up the cash.

Yet evidence to the contrary does pop up from time to time. The decline of independent bookstores (the expression is usually taken in the trade to refer to sellers of new books, not used bookstores) since the mid-nineties seems to have had more to do with competition from the big chains, and with their demise it has slowed. But many people find it hard or impossible to imagine any other motive to Amazon's apparent madness.

Of course, even if one is skeptical of the “sinister Phase Two” theory, one might have other reasons to dislike Amazon. The company seems to enjoy unfair advantages over its competitors. Many have objected to its practice of locating its “fulfillment centers” in such a way as to minimize sales taxes and tariffs that apply to local retailers. Whether the people who object to that also lobby for the removal of the taxes and tariffs in question, I don't know.

People have also objected, more legitimately in my opinion, to Amazon's labour practices. The fulfillment centers don't sound all that fulfilling to the people who work in them: no sick leave, even with a note; compulsory 10-hour weekend night-shifts; toilet breaks with permission only, etc. Libertarians are not often sympathetic to complaints about working conditions, either because they have never experienced anything similar or because the workers have, after all, chosen them. But how limited do one's choices have to be before those kinds of conditions look attractive? One suspects that Amazon does not have a lot of competition for workers in some places, and that perhaps Amazon has helped to create or anyway maintain that situation, but maybe not.


Everyone ought to want books to be cheaper, all other things being equal, because the money readers save buying cheaper books will likely go to other purchases.”


Amazon is also the beneficiary of one of the most ridiculous software patents of all time, having successfully asserted its intellectual property rights over the mechanism for placing an order with a single click in your web browser. In addition to this lucrative monopoly (Apple and others pay license fees), it benefits from various government subsidies to transportation, which are not insignificant.

Like any other corporation its size, Amazon spends a lot of money lobbying governments—$4.7 million in 2011-2012 in the US alone, mostly on defensive measures guarding its tax privileges and labour advantages.

All that, I think, should make people more ambivalent about Amazon than they might otherwise be, but none of it adds up to a good case for the sort of hatred one routinely encounters in coverage of the retail giant's commercial actions. Two years ago, for instance, Amazon unveiled a mobile app to help consumers compare the price of books and other commodities in stores with the prices on their site, initially attracting new users with a 5% discount on all sales made through the app, and the bile exploded. “Most of you have no doubt been made aware of Amazon's latest thuggish, brutal—and brilliant—idea to squeeze out its competition,” wrote one observer. Another more calmly remarked, “In essence, the app allows Amazon to turn every retail outlet in America into a showroom, using competitors' own stores to drive business to its web site.” Many people (including at least one Republican senator) wasted no time calling the Price Check app “anti-competitive” and “vaguely monopolistic.”

“Vaguely” is right. Looked at another way, the same technology that lets Amazon use brick-and-mortar retailers as showrooms lets you use the Amazon website to find books in your local library. The truth of the matter is that the Internet is lowering transaction costs (like the cost of comparing prices) across the board, and the idea that we can turn that feature off without incalculable damage to the economy is real madness.

And all the talk of “monopoly,” as usual, serves to exonerate the actual source of all monopoly privilege: the state. Where Amazon enjoys an actual monopoly, like over its silly 1-click patent, people may grumble, but after all, we need to encourage innovation so “intellectual property” must be honoured, right? Where it has no monopoly and never will—where, in fact, the technology that it uses to create its remarkable disruptive business model makes it impossible for it to be the only seller—people point and darkly mutter “watch out for Phase Two!”

Don't believe it. The day Amazon drives up its prices and starts cackling is the day venture capital rains down like manna on the company that undercuts it.

Last month, in discussing the proposed Quebec law to eliminate deep discounts, I remarked that anyone who really wants to encourage people to read more and buy more books ought to want books to be cheaper, but I could have gone further. Everyone ought to want books to be cheaper, all other things being equal, because the money readers save buying cheaper books will likely go to other purchases.

Book lovers of the world: Stop worrying and learn to love Amazon.


Larry Deck is a librarian who lives in Montreal.


From the same author

The Booksellers' Petition
(no 314 – Sept. 15, 2013)

The Revolution Will Be Printed
(no 313 – August 15, 2013)

Seeking Permission to Rent What's Yours: Airbnb vs. Entrenched Interests
(no 312 – June 15, 2013)

Indecision 2012, Quebec Version: Is Cleaner Government Possible?
(no 302 – August 15, 2012)

The Housing Hustle: A Review of Matthew Yglesias's The Rent Is Too Damn High
(no 301 – June 15, 2012)



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