Krugman: Amazon 'has too much power, and it uses that power in ways that hurt America'

[Newsjock]

Source: New York Times
By Paul Krugman

Amazon.com, the giant online retailer, has too much power, and it uses that power in ways that hurt America. O.K., I know that was kind of abrupt. But I wanted to get the central point out there right away, because discussions of Amazon tend, all too often, to get lost in side issues.

... Does Amazon really have robber-baron-type market power? When it comes to books, definitely. Amazon overwhelmingly dominates online book sales, with a market share comparable to Standard Oil’s share of the refined oil market when it was broken up in 1911. Even if you look at total book sales, Amazon is by far the largest player.

So far Amazon has not tried to exploit consumers. In fact, it has systematically kept prices low, to reinforce its dominance. What it has done, instead, is use its market power to put a squeeze on publishers, in effect driving down the prices it pays for books — hence the fight with Hachette. In economics jargon, Amazon is not, at least so far, acting like a monopolist, a dominant seller with the power to raise prices. Instead, it is acting as a monopsonist, a dominant buyer with the power to push prices down.

... Last month the Times’s Bits blog documented the case of two Hachette books receiving very different treatment. One is Daniel Schulman’s “Sons of Wichita,” a profile of the Koch brothers; the other is “The Way Forward,” by Paul Ryan, who was Mitt Romney’s running mate and is chairman of the House Budget Committee. Both are listed as eligible for Amazon Prime, and for Mr. Ryan’s book Amazon offers the usual free two-day delivery. What about “Sons of Wichita”? As of Sunday, it “usually ships in 2 to 3 weeks.” Uh-huh.

Read more: http://www.nytimes.com/2014/10/20/opinion/paul-krugman-amazons-monopsony-is-not-ok.html

[Dawson Leery]

1. k/r

[Stargleamer]

2. if it puts the squeeze on publishers. . .

i can only wonder how Amazon workers fare, in Amazon's quest to put the bottom line above conscience.

[kysrsoze]

3. I'm not sure how I feel about the squeeze on certain publishers. College textbooks are ridiculous.

I bought one of my daughter's college textbooks on Amazon, and it was one of the cheapest outlets, but the book still cost over $300 new, and nearly that used. It wasn't any greater in terms of content or number of pages, than the othertextbooks which have cost us $150 or $200. Of course, the prior 3rd edition was about $75, but you know how teachers are about using ONLY the most recent version. They all seem to support pumping only the latest, slightly different version.

[marions ghost]

17. Seems to me that's a different argument

about the cost of textbooks which are expensive to produce and have always been outrageously priced. Need some subsidy for students. Not the teachers fault.

[kentauros]

25. I have read of professors creating textbooks on PDF

and then selling those online for a tiny fraction of the cost of printed textbooks. I'd like to see them all do that

[marions ghost]

27. Sure and it helps esp when it's new material but

in many cases the professor can't do that. You have to make some money from writing and publishing books. It's just that the current system is gouging those who often can least afford it. The problem is inherent in the whole way that education is run for profit.

We agree

[kentauros]

28. Then maybe that's a task for the assistant professors.

And just like ebooks on Amazon, when you have a thousand students (some professors do, or even more) and you're selling that PDF/ebook textbook for 9.99, that's ten thousand dollars. Per semester. Seems like that would be incentive alone for everyone (except the textbook publishers, of course.)

[marions ghost]

29. You can't expect

professors and asst professors to have the time or resources to write all their textbooks. Often they are publishing other books or articles. Some do manage to write or co-write various teaching materials, but there is still a big publishing industry around textbooks. It takes a lot of research and manpower. (I have no dog in this particular fight but just an outsider interest in the publishing industry)...

[kentauros]

30. To be honest, I've never agreed with "publish or perish."

That just isn't the primary point of being a professor. It's supposed to be about teaching people their knowledge. Not that they shouldn't continue to add to their own knowledge, but it shouldn't be the primary point of being a professor. And I do still see professors and assistants that manage their time well enough to put out textbooks regularly (for example, textbooks for Autodesk's various engineering software products.)

Maybe that's one of the reasons colleges and universities cost so much.

[marions ghost]

31. Agree partly

but a lot of the really valuable professors are doing their own research, writing or publishing, and bring the best of that to their teaching.

I agree that the insane pressure to 'publish or perish' has moved it too far the other way where some get by without teaching very well at all. I would like to see more better paid highly qualified adjunct teachers whose job it is to teach only. Right now they are being exploited. That would elevate teaching as a priority.

I'm all for teachers putting out textbooks if they can. it works best in technical fields.

There is no reason why higher education cannot be subsidized so that students pay far less. If Germany can do it, we could. Except oh yeah, corporate greed.

[tabbycat31]

32. You can get away wtih the older version

My recommendation would be to talk to the prof first and ask what the difference between the newer edition and older one is. Depending on the subject (easier for say a history book than a science book) the content won't change much beyond page numbers.

I saved a shitload of $$$ in college this way.

[lunasun]

4. His end conclusion is most likely correct - good read thanks

We have a two good indie stores but have I used Amazon ? Sure
So maybe I need to be vigilant with using the indies in town

[Nye Bevan]

5. You can buy Krugman's book "The Conscience of a Liberal" on Amazon Kindle:

here:

http://www.amazon.com/gp/aw/d/B000WJS9RA/ref=mp_s_a_1_3?qid=1413783007&sr=1-3&pi=SY200_QL40

And Krugman is selling his international economics textbook on Amazon Kindle for a mere $122.90!

http://www.amazon.com/gp/aw/d/B006Y10A54/ref=mp_s_a_1_2?qid=1413783007&sr=1-2&pi=SY200_QL40

[CincyDem]

12. Is Krugman selling it or is it his publisher ?

I suspect that's the price that the publisher can get for a textbook by a Nobel Laureate. The book I saw was $197 and it was a second edition published in 2010, 2 years after he received the Nobel Prize. The first edition was published in 2007 which implies that the contracts for his royalties from the book were probably negotiated in 2003-2004.

Given that he had little star power in 2003/4, his royalties probably don't amount to much and even though the publisher rushed a second edition (3 years is pretty tight, even in economics), he didn't see any change in his deal. One you sign with a publisher, they own the material rights pretty much forever.

I point this out so we don't get confused about the source of price gouging in the textbook market. It ain't the authors. It's the publishers who have a "captive market" of buyers that have no choice in the matter. Just another hidden cost of college that keeps going up and up simply because it can.

[marions ghost]

18. Right

the profiteers are in the middle. Even though textbooks are expensive to produce--there is really no excuse for the gouging of students this way. We make it so hard for people to go to college now.

[SamKnause]

6. Too much power, too many monopolies, not enough regulations;

Wall Street

Too big to fail banks

WalMart

Oil and gas corporations

Phone, Internet, TV cable and satellites

Media conglomerates

The 'Supreme' Court

The Penal System

The Justice System

The Pentagon

The NSA

The DEA

and on and on and on.

Corruption and greed has infested every nook and cranny in the U.S.

Their actions are not hurting America.

Their actions are destroying America !!!!!!!!!!!!!!!

[marions ghost]

19. So true

[yourpicturehere]

7. I need Amazon

I know we are supposed to hate Amazon, but Amazon is the only way to get things around here.

I live in a very, very RED little town in Western KY. ( To the why-don't-you-move crowd... because the dogs can raise hell and bother no one and it is like being the only person on Earth at times.) If you want something that the local stores or Walmart doesn't carry, you are either going to have to drive 150 miles or do without. Course, I am a Southern, hillbilly knuckledragger so I probably don't need anything except a gun and a Bible...

Example...we live very close to two major lakes...ya think they'd have every boat known to man, right? WRONG. My hubbie wanted a canoe for his b'day. I called every sporting goods/boat shop for miles and asked about canoes. NO ONE had one. No one had any helpful suggestions. You know what kind of reply I did get? "We AIN'T GOT THAT!" Hostile as hell.

So there are one or two places locally that I shop where people still believe in customer service. One is run by a pair of brothers with decidedly New York accents. Do I otherwise shop locally? NO! After 21 years in this place, I am still an outsider cos they haven't known me since I was "knee-high" to some small woodland creature, AND I am a LIBERAL. Oh , and I don't go to church.

I NEED Amazon.

[marions ghost]

20. I hear ya but

nobody's saying Amazon should not exist. So how do you address their control over books in particular (never mind canoes)? You have to question the gatekeepers sometimes...

Here's a tip--ask the NY brothers how they get along in Redville. Instead of accepting being
an outsider and different, can you get to know some of them and try to cross the invisible boundary? I have done it and it can work. Ignore the stereotypes and reach out on a human level. Don't be lofty and distant. Try it. The rewards can be great.

[Egnever]

26. hmm there are other options online besides amazon

https://www.google.com/webhp?sourceid=chrome-instant&rlz=1CAACAG_enUS605US605&ion=1&espv=2&es_th=1&ie=UTF-8#q=canoe&tbm=shop&spd=18217967402568365147

Amazon uses ups/fedex/usps just like everyone else.

Just saying.

[TBF]

8. It's about time someone

put the squeeze on publishers. Any premier book coming out on Kindle costs as much as hard-copy. Why is that necessary when you are completely getting rid of the publishing costs? No wonder author Krugman is upset - he wants more profit. I guess he gives Walmart's predatory tactics a pass because they sell hard-copy ...

[Blue_Adept]

9. The printing costs are a meager part of what actually constitutes the cost overall

More of it is tied up in other areas. And while you used to have to just set a book for a single "printing" press, now you have to work books through multiple formats, distributors and so forth for digital distribution. It's simply exchanged a lot of costs. Most people think the lack of physical means the costs drop substantially. But it's not true.

[kentauros]

10. You know, it's too bad we're required to hate Amazon around here,

because if more people realized just how horrible the Big-6 legacy publishers were, there probably would never be any threads supporting them, like this one

For further reading by educated individuals: http://jakonrath.blogspot.com/

[TBF]

11. Amazon has gotten called to the carpet

for labor practices and state taxes (in areas where they have warehouses). I think we should continue to call them out when necessary, but I refuse to join the hate wagon when Walmart has gotten away with monopolizing the country (and in fact is personally responsible for shutting down so many small businesses) for decades now. At least Amazon has given them some much needed competition.

[kentauros]

13. I don't know if you read Konrath's blog or not,

but he and others that guest-blog there do a fantastic job of excoriating the supporters of the legacy publishers. Those same publishers really aren't in support of authors, whereas Amazon is. And the big guys don't like that kind of competition.

[TBF]

14. I'll do a search for that -

I haven't read it but that sounds like good info. I know Amazon does self publishing which at least gives folks a chance.

[kentauros]

15. I linked it in my first post to you.

But, here is it again

http://jakonrath.blogspot.com/

I hope to self-publish through Amazon as well (once I finish my books.) Amazon offers the best method as far as I'm concerned.

[TBF]

16. Thank you -

I obviously need more coffee!

Patterson is such a hack. I saw the spread of his Palm Beach mansion in Architectural Digest ... at this point the number of books he puts out makes me wonder if he's just licensing his name as opposed to actually writing anything.

[Dr. Strange]

21. Why does it not surprise me that you read J. A. Konrath?

[kentauros]

22. Because I'm a rebel?

[Dr. Strange]

23. I've got two of his books sitting on my Kindle.

Shapeshifters Anonymous and Haunted House

All I have to do is find the time to read them.

[kentauros]

24. I remember a post of his where he was complaining

(shocking!) that his blog-readers weren't his book-readers, and vice versa. And he's right! I've never read any of his books because I'd rather be writing anyway