THE BLOG

Amazon Unhinged

08/10/2014 07:06 pm ET | Updated Oct 10, 2014
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Amazon's e-book pricing dispute with Hachette raises a myriad of fascinating issues. These include important questions, such as, "Should retailers be able to dictate suicidal business terms to their suppliers?" and "Now that Amazon is retaliating against Hachette by threatening authors' livelihoods, how is it any different from a crime syndicate?"

The dispute illustrates that Amazon, which made books the centerpiece of its gargantuan retail business, doesn't actually care about them. Amazon's ruthless business practices, which seem designed to drive commercial publishers out of business, raise the dystopian horror of a world in which all of literature will be replaced by the self-published novels of wingnut bloggers.

(For the record, I have nothing against the self-published novels of wingnut bloggers. I am only saying that we should be able to enjoy the self-published novels of wingnut bloggers along with other forms of creative writing, including the high-concept, well designed literary treasures regularly turned out by the big five publishing houses.)

But one aspect of the dispute is particularly fascinating: The crazy tone and content of Amazon's public statements.

Amazon doesn't like to open its mouth. Back in May, it removed pre-order buttons from Hachette titles, and slowed delivery of Hachette books, without telling anyone. After the New York Times reported the story, Amazon still refused to comment. "We talk when we have something to say," Jeff Bezos told Times reporter David Streitfeld at the company's annual meeting.

Four days later, Amazon published a message on its website about the dispute, and the world learned why Amazon is so reticent to speak in public. It is because when it does, it sounds like your drunk crazy uncle, the one who waves a loaded shotgun around the living room on Thanksgiving.

(Again, nothing against drunk crazy uncles waving loaded shotguns, etc.)

Amazon's May 27 press release began by disingenuously characterizing its refusal to timely ship Hachette titles as having to do with some sort of change in inventory management policies. The authorial tone of the release was basically, "We'll send your Hachette titles when we get around to it." Amazon had apparently decided that the best tone for its publicity campaign would be that of the surly cashier who can't be troubled to ring up your pack of gum so you can leave the store. The press release also made Amazon's dispute with Hachette sound pedestrian, when Amazon was demanding terms so one-sided they would make Hachette's business unsustainable.

This past weekend, Amazon released its second public statement about its dispute with Hachette. The essay appears on a website called "Readers United." In its latest statement, Amazon goes full-on crazy. The new press release makes the first one look like the Gettysburg Address.

The most embarrassing aspect of the "Readers United" statement is that, as the New York Times noted, it misquotes George Orwell. Amazon quotes Orwell to say, in 1936, that if publishers had any sense they would combine to block the sales of cheap paperbacks. What he really said was that the books were so splendid that if publishers had any sense they would combine against them. Orwell wasn't raising his voice against paperbacks, he was celebrating them.

Orwell went on to make a point that is fatal to Amazon's case: Cheap books are great for readers, but bad for everyone else in the book business. Bad for writers, editors, publishers, and booksellers. It's the same point Hachette is making.

If you are a cartel trying to pass for a book person, you can't do much worse than misquote George Orwell, especially when what he actually said eviscerates your case.

But there may be an even greater historical mistake in Amazon's claim that publishers fought the introduction of paperbacks: It doesn't seem to be true.

I searched Google to find any mention of opposition to paperback books when they were introduced in London by Allen Lane under the Penguin imprint in 1936, or when they were introduced in the U.S. in 1939. I couldn't find any references to this fact. Smithsonian Magazine's historical piece on the introduction of the paperback tells only a glowing tale of Allen Lane rescuing the book industry from the depression by producing an inexpensive product that consumers loved. It notes that he had to start the Penguin imprint with his own capital, but that hardly counts as the publishing establishment "circling the wagons" as Amazon claims. The Smithsonian article goes on to note that paperbacks were proudly carried by British and U.S. soldiers in World War II.

A similar article on Mental Floss says only that some American publishers were "skeptical," and that the publisher employing Robert De Graf, who introduced pocket books in the U.S., made him moderate his hyperbole in initial advertisements for them. An article on the history of the paperback on the website for the Independent Online Booksellers Association tells a similar story. Again, nothing about anyone circling any wagons.

I'm not a historian. If there is a source for Amazon's claim, I welcome comments pointing it out. But it appears to be made up. Like the twisted words Amazon put in George Orwell's mouth, it is most likely a piece of corporate propaganda.

Amazon's statement is full of other head scratchers. It makes a nonsense comparison between e-books and paperbacks, for example. This will take only a little bit of explaining, so bear with me. Paperbacks, we are told, sold for 25 cents when they were first introduced. Hardbacks, on the other hand, sold for $2.50. Movie tickets were 10 or 20 cents. Publishers, Amazon tells us, opposed the new and cheaper paperbacks. Cue out-of-context George Orwell quote, and that's pretty much where Amazon's argument ends. Once upon a time, a cheaper alternative to hardbacks arrived on the scene, and publishers fought them.

It's hard to see where Amazon thinks this logic is supposed to lead. Forget that the facts upon which it is based may be contrived, and that the analogy isn't perfect, because no one needed to invest the 1939 equivalent of $70 ($4.08) to read a paperback. Instead, keep in mind that the pocket books introduced in the United States in 1939 were the equivalent of today's mass-market paperbacks. The 1939 price, adjusted for inflation, would be $4.29 today. Today, however, mass market paperbacks sell for between $5 and $10. In other words, their price has outpaced inflation. Not only that, publishers now market higher quality trade paperbacks, which sell for between $15 and $19, or two to four times as much as mass market paperbacks.

If the story of the paperback proves anything, it's that publishers may introduce new and less expensive formats at lower prices to gain market share, but they eventually have to increase prices (above and beyond inflation) to make their business sustainable. This is exactly what Hachette and its competitors want to do with e-books: raise the price from $10 to around $15 so they can collect enough profit to say afloat.

You can reach the same conclusion by updating the comparison to movie prices. In 1939, paperback prices (25 cents) were 25 percent higher than the price of a movie ticket (20 cents). Today, a movie ticket costs $12. Twenty-five percent more than that would be $15, again, what Hachette wants to charge for e-books.

This adventure in math begs an obvious question: Who is Amazon to dictate to Hachette and other publishers how much they should charge? How could Amazon know Hachette's business better than Hachette? What right does it have to burden Hachette with its ignorance or its greed?

There are other ridiculous claims in Amazon's "Readers United" statement. It recites a line -- "History doesn't repeat itself, but it does rhyme" -- that is often mis-attributed to Mark Twain and that doesn't actually make any sense. What does it even mean to say that history often uses two words at the end of a line that have different meaning but sound alike? It repeats its mistaken Orwell quote, and even scolds the great writer for his suggestion that book publishers monopolize to quash the paperback.

Yes, this is how Amazon thinks about literary history. It imagines George Orwell in a silk suit leaning into the ear of one of Penguin's competitors and saying, "I say, old boy. Here's what you should do: form an illegal monopoly to stamp out these frightful pocket books. Soldiers are even carrying them into battle. The situation is right out of hand."

There are a score of arguments to be made against Amazon's stand in its dispute with Hachette, but I think the strongest one may be this: Amazon and Hachette are fighting to stand at the gates of literary culture. One of them is a prestigious publisher with a long history of issuing popular titles that, over time, become literary classics.

The other one, apparently, can't write its way out of a paper bag.