Amazon the Monopoly?

If you haven’t heard yet, Amazon is being sued by a collection of publishing folks, including booksellers. The suit is anti-trust in nature, calling it a monopoly that’s squeezing competition out of the ebook biz. When I pick up my Kindle, a proprietary format ereader, it’s sometimes weird to realize that ebooks have been a viable way to publish written works for less than a decade. Dedicated eReaders have only been around since 1998, and they only began to actually sell after the adoption of e-ink with the Sony Reader in 2004. The first Kindle hit the market in 2007.

In 2010, Amazon accused Apple and the major traditional publishing houses of price collusion and won a settlement. Now the shoe, as they say, is on the other foot. While I doubt this suit will actually have much impact on Amazon, it’s interesting to consider the potential implications from the author/publisher POV.

Things that could happen:

1. Nothing. It’s entirely possible that a judge will rule for Amazon. They’re able to sell books at a loss? Good for them. After all, Amazon doesn’t set the prices you pay for books. With ebooks, I decide how much I’m going to charge, and Amazon takes a percentage of that as payment for providing the platform. As far as paper books are concerned, CreateSpace (which is owned by Amazon) tells me the minimum I can charge based on the cost of the materials + their percentage. How much I add to that price is entirely up to me.

2. Amazon is ruled a monopoly and forced to break apart into smaller companies that each offer some segment of their current merchandise categories, perhaps with the ability to contract with the mothership for shared shipping and/or warehousing. This is more or less what happened to Ma Bell (AT&T) back in 1982. The impact of this decision would be immense for multiple sectors, including the Seattle economy. As far as publishing is concerned, the main issue would be that the new, independent unit would have to turn a profit instead of being a loss leader. It’s unclear how exactly this would play out. Presumably, they’d stop discounting print books, at the least. They may also choose to disincentivize authors from offering free or very cheap books. They’d certainly restructure or eliminate Kindle Unlimited, which has been hemorrhaging money since they started it.

3. Some partial or minor change is mandated. I could see a judge ruling that the exclusivity clause available for authors to opt into in exchange for extra tools and promotional opportunities has to be altered or eliminated. Another possibility: a judge could rule that no one is allowed to discount print books below the retail price during the first x weeks of release, which would completely even the playing field for all types of booksellers (never being able to discount books is not feasible, but a time limit certainly is). Though it’s rather far-fetched, a judge could also theoretically rule that a standard format for ebooks must be adopted and everyone has to use it. That would be a huge, nightmarish problem for whoever isn’t using the one that becomes standard, but a serious boon for readers.

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