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George Packer: Is Amazon Bad for Books? : The New Yorker


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Aha! Insight into what Jeff Bezos REALLY thinks:

Bezos said that Amazon intended to sell books as a way of gathering data on affluent, educated shoppers. The books would be priced close to cost, in order to increase sales volume. After collecting data on millions of customers, Amazon could figure out how to sell everything else dirt cheap on the Internet. (Amazon says that its original business plan “contemplated only books.”)

Afterward, Doeren told his partner at Rainy Day Books, Vivien Jennings, “I just met the world’s biggest snake-oil salesman. It’s going to be really bad for books.”

Before Google, and long before Facebook, Bezos had realized that the greatest value of an online company lay in the consumer data it collected. Two decades later, Amazon sells a bewildering array of products: lawnmowers, iPods, art work, toys, diapers, dildos, shoes, bike racks, gun safes, 3-D printers. Amazon’s code of corporate secrecy is extreme—it won’t confirm how many Seattle employees it has, or how many Kindle e-readers have been sold—so it’s impossible to know for sure, but, according to one publisher’s estimate, book sales in the U.S. now make up no more than seven per cent of the company’s roughly seventy-five billion dollars in annual revenue.

Books were just a customer acquisition strategy.

To Amazon, we are nothing more than a pile of money and a set of purchasing decisions.

For its part, Amazon continues to expend considerable effort both to dominate this small, fragile market and to win the hearts and minds of readers:

To many book professionals, Amazon is a ruthless predator. The company claims to want a more literate world—and it came along when the book world was in distress, offering a vital new source of sales. But then it started asking a lot of personal questions, and it created dependency and harshly exploited its leverage; eventually, the book world realized that Amazon had its house keys and its bank-account number, and wondered if that had been the intention all along.

Recently, Amazon even started creating its own “content”—publishing books. The results have been decidedly mixed. A monopoly is dangerous because it concentrates so much economic power, but in the book business the prospect of a single owner of both the means of production and the modes of distribution is especially worrisome: it would give Amazon more control over the exchange of ideas than any company in U.S. history. Even in the iPhone age, books remain central to American intellectual life, and perhaps to democracy. And so the big question is not just whether Amazon is bad for the book industry; it’s whether Amazon is bad for books.

By the time we answer that question, it might be too late to do anything about it!

The culture of Amazon is homogeneous:

At Amazon, original writing wasn’t even called “content.” It was known as “verbiage,” simplified to “verbage.” Amazon’s writers and editors formed a counterculture that never fit easily in a company ruled by computer engineers and M.B.A.s, who valued data most and believed only in measurable truths. “The key to understanding Amazon is the hiring process,” one former employee said. “You’re not hired to do a particular job—you’re hired to be an Amazonian. Lots of managers had to take the Myers-Briggs personality tests. Eighty per cent of them came in two or three similar categories, and Bezos is the same: introverted, detail-oriented, engineer-type personality. Not musicians, designers, salesmen. The vast majority fall within the same personality type—people who graduate at the top of their class at M.I.T. and have no idea what to say to a woman in a bar.”

Despite that, they hired some humanist writers and editors because it was useful to Amazon, as a business strategy, to convey the feeling of your beloved indie bookstore, full of hip, book-loving people.

In 1999, a group called the “personalization team,” or P13N, started to replace editorial suggestions for readers with algorithms that used customers’ history to make recommendations for future purchases:

At Amazon, “personalization” meant data analytics and statistical probability. Author interviews became less frequent, and in-house essays were subsumed by customer reviews, which cost the company nothing. Tim Appelo, the entertainment editor at the time, said, “You could be the Platonic ideal of the reviewer, and you would not beat even those rather crude early algorithms.” Amazon’s departments competed with one another almost as fiercely as they did with other companies. According to Brad Stone, a trash-talking sign was hung on a wall in the P13N office: “people forget that john henry died in the end.” Machines defeated human beings.

Thus curation gave way to automated recommendations.

Nearly a decade later Amazon was bigger than the book industry, and announced its intention to disrupt everything:

The fact that Amazon once devoted significant space on its site to editorial judgments—to thinking and writing—would be an obscure footnote if not for certain turns in the company’s more recent history. According to one insider, around 2008—when the company was selling far more than books, and was making twenty billion dollars a year in revenue, more than the combined sales of all other American bookstores—Amazon began thinking of content as central to its business. Authors started to be considered among the company’s most important customers. By then, Amazon had lost much of the market in selling music and videos to Apple and Netflix, and its relations with publishers were deteriorating. These difficulties offended Bezos’s ideal of “seamless” commerce. “The company despises friction in the marketplace,” the Amazon insider said. “It’s easier for us to sell books and make books happen if we do it our way and not deal with others. It’s a tech-industry thing: ‘We think we can do it better.’ ” If you could control the content, you controlled everything.

And yet, a half dozen years later most Amazon customers don't realize this shift has happened.

Amazon is willing to slice its margins to nothing to dominate:

By 2010, Amazon controlled ninety per cent of the market in digital books—a dominance that almost no company, in any industry, could claim. Its prohibitively low prices warded off competition. The literary agent Andrew Wylie (whose firm represents me) says, “What Bezos wants is to drag the retail price down as low as he can get it—a dollar-ninety-nine, even ninety-nine cents. That’s the Apple play—‘What we want is traffic through our device, and we’ll do anything to get there.’ ” If customers grew used to paying just a few dollars for an e-book, how long before publishers would have to slash the cover price of all their titles?

This is how industries get destroyed -- when all players but one can no longer afford to compete.

Even its bitterest critics reluctantly admit to using Amazon, unable to resist its unparalleled selection, price, and convenience:

When Bezos talks about serving the customer, it’s as if he were articulating his purpose in life. “The customer is almost theological,” James Marcus said. “Any sacrifice is suitable for the customer.”

“Jeff is trying to create a machine that assumes the shape of public demand,” Tim Appelo, the former entertainment editor, said. “He resembles a very, very smart shmoo—he only wants to serve, to make you happy.” Appelo was referring to Al Capp’s smiling blob of a cartoon character, which happily provides people with whatever they need: milk, eggs, butter, even its own tasty self. With Amazon’s patented 1-Click shopping, which already knows your address and credit-card information, there’s just you and the buy button; transactions are as quick and thoughtless as scratching an itch. “It’s sort of a masturbatory culture,” the marketing executive said. If you pay seventy-nine dollars annually to become an Amazon Prime member, a box with the Amazon smile appears at your door two days after you click, with free shipping. Amazon’s next frontier is same-day delivery: first in certain American cities, then throughout the U.S., then the world. In December, the company patented “anticipatory shipping,” which will use your shopping data to put items that you don’t yet know you want to buy, but will soon enough, on a truck or in a warehouse near you.

Until recently, even taxes were airbrushed away. For years, Amazon fought furiously against paying sales taxes in states where it had no warehouses (and even where it did). California and other states, under pressure from retailers complaining about Amazon’s unfair advantage, passed online-sales-tax laws. Amazon, with fulfillment centers across the country, favors a national online-sales-tax policy, perhaps because smaller online rivals would find it overwhelming to navigate all the tax jurisdictions across the country.

Every step of the way, Amazon has used its advantages to create more advantages for itself.

After the Kindle came out, the company established Amazon Publishing, which is now a profitable empire of digital works:

In addition to Kindle Singles, it has mystery, thriller, romance, and Christian lines; it publishes translations and reprints; it has a self-service fan-fiction platform; and it offers an extremely popular self-publishing platform. Authors become Amazon partners, earning up to seventy per cent in royalties, as opposed to the fifteen per cent that authors typically make on hardcovers. Bezos touts the biggest successes, such as Theresa Ragan, whose self-published thrillers and romances have been downloaded hundreds of thousands of times. But one survey found that half of all self-published authors make less than five hundred dollars a year.

Good for Amazon, okay for some authors, and terrible for the book industry.

There’s an entire community of people, and Bezos stands in the middle of it and collects the money:

To the Big Five, locked in a death struggle with Amazon and the distracted American reader, this kind of experimentation might seem unrealistic. To survive, they are trying to broaden their distribution channels, not narrow them. But Andrew Wylie thinks that it’s exactly what a giant like Penguin Random House should do. “If they did, in my opinion they would save the industry. They’d lose thirty per cent of their sales, but they would have an additional thirty per cent for every copy they sold, because they’d be selling directly to consumers. The industry thinks of itself as Procter & Gamble*. What gave publishers the idea that this was some big goddam business? It’s not — it’s a tiny little business, selling to a bunch of odd people who read.”

At the moment, those people are obsessed with how they read books — whether it’s on a Kindle or an iPad or on printed pages. This conversation, though important, takes place in the shallows and misses the deeper currents that, in the digital age, are pushing American culture under the control of ever fewer and more powerful corporations. Bezos is right: gatekeepers are inherently élitist, and some of them have been weakened, in no small part, because of their complacency and short-term thinking. But gatekeepers are also barriers against the complete commercialization of ideas, allowing new talent the time to develop and learn to tell difficult truths. When the last gatekeeper but one is gone, will Amazon care whether a book is any good?

The answer to that question is no.

Amazon doesn't determine taste. They cater to what people want.

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