What is the welfare cost of Amazon supply restrictions on books?

Maybe that welfare cost is not very high at all.   After all, if Amazon does not carry a book you can sign up at the Barnes & Noble website and that takes a few minutes at most.

There is a tension in most criticisms of Amazon.  On one hand, the critic wishes to argue that a “not carry” decision by Amazon has a big impact on how a book does.  On the other hand, the critic wishes to argue that the loss of access to particular titles is a big deal.  You cannot easily have it both ways.  If readers won’t switch to B&N.com, they must not care very much about particular titles, in which case the Amazon refusal to carry (or delay in shipping) is small even relative to the size of the (small) trade in books.

Krugman’s column today, which covers Amazon vs. Hachette, appears terrible at first glance, but in fact he presents a new and original argument.  Get past the mood affiliation and you come to this:

…what Amazon possesses is the power to kill the buzz. It’s definitely possible, with some extra effort, to buy a book you’ve heard about even if Amazon doesn’t carry it — but if Amazon doesn’t carry that book, you’re much less likely to hear about it in the first place.

If I may fill in some blanks, one possible version of the hypothesis — to pull an idea from Gary Becker and Steve Erfle — is that readers consume both “books” and “buzz around books” as complements.  The marginal gains from books can be low but the marginal gains from the bundled package may be much higher and those higher gains will not be measured by the (high) price elasticity of book purchases.

In the early stages of this war, Amazon boycotts have often increased the buzz for a book, such as with Beth Macy’s Factory Man.  But if these practices continue, they will cease to be news stories and an Amazon refusal to carry or promote plausibly will damage how books will do, without much potential for upside.

How much of the value in a book/buzz package is due to the buzz?  65 percent?  That would explain the concentration of reading interest among bestsellers and books your peers are reading.  But if Amazon won’t carry or promote a book, does the total supply of buzz fall?  Or does the buzz simply transfer to other titles?  In the latter case we are again back to small welfare costs from an Amazon refusal to carry.  Krugman’s idea is fun, but I am still inclined to think the welfare cost of Amazon supply restrictions on individual books likely is small, again even relative to the size of the book sector, much less relative to gdp.

It is fine to argue that Amazon is being unfair to some authors and to object on ethical grounds.  The economist also should add that readers don’t seem to mind very much.  Most of the objections I am seeing are coming from authors and publishers, who of course in this sector are much less diversified in their interests than are readers.

Comments

I'm pretty skeptical that Amazon plays a huge role in marketing books. They suggest other titles, but if you're buying a book from them you've usually heard about it elsewhere (I've bought a couple books due to your recommendations, including the excellent Joe Studwell book).

In any case, it's hard to take complaints from the publishers seriously when they could end Amazon's market share in e-books by removing the DRM and selling them directly. But they don't do that.

I'll also add that I'm pretty skeptical of any "monopoly" claims unless you've proven a price rise or supply constriction. The mere fact that they have very high market share doesn't make them a monopoly, especially when there are and can be new entrants into Amazon's business. For example,

1. Amazon is constantly challenged on the "tablet"/device front
2. Constantly challenged on the "cloud hosting" front
3. Constantly challenged on anything retail related
4. Constantly challenged on shipping, especially with Google now rolling out a rival service.

The only thing they really dominate in is e-books, and as I pointed out, the publishers could end that really quickly.

Krugman explicitly didn't call Amazon a monopoly, but rather a monopsony. His evidence is the Hachette case.

I have a feeling Amazon might have gotten less flak for this had they outright refused to sell Hachette than doing the shipping delay tactic.

Absolutely - one is just a routine and legal business business, whereas the other one provides a clear insight to what is actually motivating Amazon's decision making in a way that no one can reasonably dispute.

Intentionally delaying shipment of one supplier's products while not delaying any other supplier's products demonstrates that the company doing it is intentionally attempting to harm a supplier.

Not having a company be a supplier may also be an attempt to harm that company, but unlike the first example, companies are always picking and choosing their suppliers, in a process which is considered routine. See Apple and Samsung, and how that plays out after the results of their little legal spats, for example - 'Being the “frenemies” they are, Apple and Samsung are in a pretty complex, multi-level relationship with each other. Although they have been competing for the lion's share of the smartphone market for the past few years and have met one another in a court of law for quite a few times, they are also business partners, as Apple has used a number of Samsung-made silicon components in its iPhone devices over the years. Cupertino has tried to divorce its South Korea-based adversary, but this has proved to be a pretty hard task.

One of the latest iPhone 6-related rumors, for example, claims that Apple has once turned to Samsung for hardware parts – this time, Sammy is said to be providing a great portion of the RAM chips for Cupertino's next flagship, which might or might not come with 1GB of random-access memory aboard.

It will be filling the gap that SK Hynix and Elpida Memory, two of Apple's major RAM suppliers, left after they did not agree to increase the RAM production, which will provide a steady supply of memory for the iPhone 6. The reason for SK Hynix' and Elpida Memory's alleged reluctance to do so was due to the low and unsatisfactory buyout prices that Apple's been offering for the RAM chips. So, Samsung reportedly had to intervene and get involved in the RAM supplement.' http://www.phonearena.com/news/Samsung-allegedly-back-in-Apples-supplier-list-tipped-to-provide-RAM-for-the-iPhone-6_id59674

As far as I can tell, Amazon is picking which products to stock in their own warehouses from their suppliers, just like the second example.

'unless you’ve proven a price rise'

Talk to Baen about it.

They have provided some details about their dealings with Amazon on their web site. To their credít, they did pass on much of the price rise to the authors, but raising their prices, removing pretty much all of their Free Library offerings, and no longer offering CDs containing 20 or 30 books in mulltiple formats with selected hardcovers appear to be part of Amazon's terms.

Of course, Baen was free to refuse, just as Amazon was free to refuse to carry any of Baen offerings - print, audio, or electronic.

Of course, that is just business as usual, right?

Yeah, but if you've heard about it, aren't you also more likely to check out reviews on Amazon, see if it's as good as you heard in passing at a coffee shop? If it's not on Amazon, it's much harder to see reviews beyond the typical publisher advertising.

The question for publishers becomes, how do they add value to the process?

Precisely. The greatest value a publisher once added was marketing power for a select group of titles and the ability to mass produce those titles to meet demand. With self publishing and self promotion combined with services like Amazon and Lulu, those services have less and less value.

At a minimum, isn't it reasonable to say they provide capital to finance marketing and production costs, as well as authors' advances?

They also manage marketing, including distribution to bookstores. Amazon doesn't need much help with distribution, but other aspects of marketing - promotion, book tours, getting reviews published, are still important.

The authors advances & other finance requirements of book publishing seem quite modest. If Amazon (or any other online retailer) wanted to, I bet it could do a decent job subsuming these functions of publishers.

True. The publishing business is in existential crisis. It concentrates enormous efforts on proven authors and does little if anything to develop new writers or worthy books. When self-published books turn out to find audiences, then the agents and publishers offer to promote the product, all for a hefty percentage of the take. At that point, who needs them? Over time, a publisher's imprimatur will be of less and less value. (I'd also note that the publishing houses seem to have divested themselves of competent editors, allowing for the release of a lot of sloppy books.)

Publisher, as publishers, provide quality printing. My brother got a Lord Peter novel from Amazon that was printed, I think, by Amazon's printing group and the fonts and margins change significantly from page to page.

The large publishers also provide editors and editors routinely improve the books the help edit. One of the authors I follow online doesn't have an editor. His stories are longer than they need to be and regularly include scenes that don't contribute to the plot and don't add anything new to the world building.

A third thing publishers do is help with the advertising. They routinely send advance copies to the important critics in the genre, who can tell many people whether they should buy the book.

All of these services can be acquired without going to a large publisher if the author is willing to put in the time and energy. However, going to a big publisher is quicker and easier than doing the quality control work for normal works.

While some talk as if the only thing publishers do is serve as gatekeepers, but that has never been their most important contribution.

Welfare cost to the representative agent is indeed likely to be in the range very low to non-existent. However the welfare loss to a particular author can be very high. It's a producer loss/intellectual freedom point that you need to make to sustain the argument that Amazon's behaviour is problematic - and to be fair Krugman never says that it's consumer welfare that is suffering from current behaviour.

Good point. Krugman isn't typically concerned about consumer welfare.

I'm an Amazon Prime customer, mostly for the two-day shipping. I read my book on a Kindle e-reader. I have a high amount of lock-in to Amazon's supply chain. If they decide not to carry a book, it's not as simple as signing up for the website that does. I also have to weigh if I mind paying for shipping or not being able to (easily) get the book on my e-reader.

Of course, I would also have to know that the reason Amazon isn't carrying the book in the first place. I might assume that if Amazon doesn't have the book no one does. If Amazon is my first and only stop, that book has lost a sale.

You locked yourself in with the kindle.

With android I can access amazon, google books or b&n.

Apple doesn lock you in either.

There's a cost in having books in multiple reading apps. Think of it like having books randomly placed in bookcases around your house. If you want to read Song of Ice and Fire it's in the office, if you decide to read Ringworld, it's in the master bedroom and The Moon is a Harsh Mistress is in the kids' room. You can manage this for a bit, but after a few time of having to search through all the rooms with books to find the one you want (or only to realize you never bought it, but it's on your wish list), you start to realize the hassle is too much.

* Rather than by subject matter or some other logical organization method

Opening a second app doesn't seem like a big deal to me.

"You locked yourself in with the kindle."

Kindle's reads pdf and mobi just fine.

That's fine, but they make it a pain to get google play and b&n app

'Apple doesn lock you in either.'

iTunes for Linux/Android? Any day now, right?

Nobody wants iTunes.

You must have missed the last 10 years of apples quarterly fillings.

iTunes generates more revenue than all streaming music competitors combined.

In addition, it's still the largest music store in the world.

You locked yourself in with the kindle.

Which demonstrates how powerful Amazon's strategy is.

I have an iPad and sometimes use iBooks, but mostly use the Kindle app. Technically I have a choice when it comes to books, but there's less friction simply to use Amazon.

Lock-in? Are there still people with e-readers that don't use Calibre?

Tims point is that it isn't simple. Having to use calibre and sideload apps makes it a pain for people

John T Reed does everything he can to keep his books off of Amazon.

What I would like to find: a list of books that are on B&N but not on Amazon. Does such a list exist?

In my mind that page is a credit to Amazon. His complaints are "they don't make any money" and "they understand copyright law better than I do" basically.

Along with Apple and Facebook, Amazon is another favorite target of the left's war on success

+1 . Too bad this site doesn't have "like" buttons.

Well, only +0.98 . You left out Google.

-dk

And Walmart. And McDonalds.

It's nice that the left gets to fight a war on things and still have those same companies turn around and shower the left with money. Now maybe Amazon and Google are stupid, but more likely that war on success silicon valley edition is shadow boxing. War on sucess energy corridor is fought tooth and nail however. Strange.

I'd add Walmart.

To quote Louis CK:

"neeeh I hate Verizon." Really? Make your own then.

Lefties use Amazon. Conservatives use eBay.

Beats me. I never buy a book because of "buzz".

But, the fact of best-seller lists and the way they concentrate readers and push sales demonstrates that many, many people do.

"On one hand, the critic wishes to argue that a “not carry” decision by Amazon has a big impact on how a book does. On the other hand, the critic wishes to argue that the loss of access to particular titles is a big deal. You cannot easily have it both ways."

I'm missing something; don't the first two sentences say the same thing, not contrary things?

If readers are so easily dissuaded from buying a particular book that they won't go to the minimal trouble of looking anywhere but Amazon for it, then obviously, that book was not very important to them (if it was, they'd take the 30 seconds necessary to point their browsers to B&N, Apple iBooks, Google Play books, etc, etc -- to get it).

I get that was TC's counterargument (i.e., that "not carry" does not equate with "loss of access," contrary to what the critics are arguing). I had thought that, as a matter of logic, that "not carry" could lead to a "loss of access," which is why I was trying to figure out how the crtics are internally inconsistent on this point (as opposed to wrong).

I took it more to mean the critic argues a "not carry" hurts both the specific book and the consumer of books. But if the consumer can't be bothered to go elsewhere to find a specific book, he must not be bothered *much* by the loss of these specific books from Amazon's books.

...otoh, if the consumer is bothered much by Amazon's, he should logically open up an account with a bookstore that does carry those books, in which the sales of specific books shouldn't be hurt *much* by a "not carry" decision by Amazon. You can't logically have it that specific book sales and consumers are hurt by an Amazon "not carry" much.

typing by stupid smart phone. Fill in missing words above for it to make sense and win valuable prizes.

Yeah, I didn't understand that supposed contradiction either.

The sentences assume frictionless markets. Amazon and Hachette know that this is not a frictionless market.

Is Amazon's refusal to carry a book that doesn't fit it's business model worse than the NYT's refusal to cover a story that doesn't fit its political narrative, particularly when the former is unabashedly a business while the latter at least pretends to be an objective purveyor of news?

Does Amazon seek special dispensations from the law because of its status as bookseller, as the NYT seeks immunity from prosecution over national security leaks?

As such, if the Times gets privileged legal treatment, is there a stronger argument for it and not Amazon should to be forced to supply information that does not comsistently support one political party?

Sorry, are you arguing that the New York Times has anything like the market power in the news business that Amazon has in the book sales business?

Yes

To be specific The New York Times carries a share of the nations mental space far greater than it's actual paid readership. And while it's name recognition may not be as high as Amazon's among the entire population, it is just as high among the decision makers in this country. Does POTUS care what Amazon is doing on any given day, week or month? Not likely. But, I suspect POTUS, every Supreme Court Justice and the majority of Congress and Governors in this country view a NYT article at least once a month, and many every day.

Is the same thing true of Fox News? And if not, why not?

That's a rather scary, slippery slope kind of anti-trust argument. Is the accused a monopolist? No, it has many competitors and the cost of switching to competitors is low. Ah, BUT its actions may result in reduced 'buzz' for a product, which means customers will be less likely to hear about the product, which means they won't buy as much from competitors (even though it is very easy to do).

As for mood affiliation, does anybody think there's any chance at all that Krugman would have constructed this 'new and original argument' anti-Amazon argument if his blue tribe had not already cast Amazon as the villain in the story?

What's the market share needed to be labelled a monopsonist? Amazon seems to command ~50% of the buy side revenue.

Why wasn't this an issue back in the brick & mortar bookstore days? Barnes & Noble had a much narrower selection than Borders (or your local literary bookstore) and trafficked more in "buzz" books, yet I don't recall any controversy. Consumers tended to understand that different stores had different niches.

Is this true? It's certainly not true of the Barnes and Nobles on college campuses. I think to the extent that this was true it reflected B and N's more suburban and mall oriented focus.

Maybe the difference between Barnes & Noble and Borders wasn't much, but there was a difference. At a quick glance the shelves looked about the same but Barnes & Noble was a discount store and had deals with (Distributers? Publishers?) to discount bestsellers and (I think) other books that were better selling. As a result, the selection wasn't as deep as at Borders. Nor did Barnes & Noble carry books till a few months after release, because publishers didn't want to discount books immediately.

If you were to look for authors like Sebald, Musil or Broch at Borders, you'd likely find them on the shelf; at B&N, likely not. The way I used to buy books was to first see if B&N had it, to save money, but, if not, head to Borders (a few blocks away) and pay list price. Which sounds a lot to me like what TC is suggesting a customer might do today between Amazon and B&N.com.

Maybe I am wrong about B&N having had a different deal with distributers/publishers. Maybe they were just making the tradeoff of doing more volume at a discount vs. less at a higher margin, which could explain why Borders could afford to stock a greater variety: 1)their shelf space was less dear and 2) it was important for them to differentiate themselves on selection rather than price.

This is why I'm convinced that most commenters are in elementary school and view the world through their very narrow experience.

Amazon opened the world of publishing to me. For most of my life I couldn't know what was published, let alone order them and get them in a day or two. What is the problem? Someone got a rejection letter for some crappy book? Did they try to get something published before Amazon, in the old publishing and distribution system?

No, it is someone losing to a better distribution and marketing system. Sour grapes.

It was an issue. Way back 15 years ago the sky was falling because of the terrible market power of Borders and B&N:
http://reclaimdemocracy.org/book-chains-first-amendment-media/

@dirk:

Did anyone have a 50% market share in those brick-n-mortar days?

Probably not. My guess would be both B&N and Borders both had something near 40%.

As someone else here points out, Amazon's market share is not a good way to judge whether it is anti-competitive, for the reason that it mainly competes on price (price of delivery, time is money, etc.) To the extent it stops stocking an item, raises its price, slows its delivery, it gives up its market share on that item, unless that item was fungible in the first place, in which case, who cares?

A better example of a monopoly that has cost consumers big bucks for decades is Ticketmaster. Where's the post on those assholes?

That's the core confusion, I think. The accusations aren't of being a monopolist but a monopsonist. A firm can be entirely angelic to its consumers while being an asshole to its suppliers.

FYI, I like Amazon and I think Krugman is wrong in this case.

Yeah, I guess I did miss that core point. But what's so bad about monopsony? Does it reduce supply? I'm not an economist obviously but I don't see who gets hurt other than low-quality/unpopular producers.

@Dirk

Monopsony reduces the supply of goods by decreasing the profit any producer can make from the good. Thus lowering the incentive to produce.

Krugman's example was Standard Oil forcing deals on railroad companies. A less pleasant example from the late 1800s is the coal companies and the way they impoverished their workers to support the robber barons at the top.

Back in the day, the big brick-and-mortar buyers like Borders and B&N reduced the publisher's produce surplus a bit (remember the cries from the independents who weren't getting the same terms?). Amazon is saying that another reduction is inevitable because of the lower cost of digital goods and the rise of alternative marketing (e.g. blogs, success of self-publication, print on demand), and they are "merely" accelerating its arrival.

Amazon would have to stop either you or Russ Roberts from reading the book, since that's where I get 90% of my recommendations.

I find a substantial fraction of the books I read on history, economics, and politics from blog posts, book reviews in mags, and other recommenders who are in edited publications. That's especially the case on public policy where there are big discussions across sites on topics that people debate issues.

However, for science fiction and other fiction I tend to just browse Amazon.

"Get past the mood affiliation "
is a strategy for reading any Krugman

As soon as I got to the last paragraph and it was something about the Koch brothers I basically discounted everything I had previously read. I think any reference to Koch brothers is a pretty sure sign that the author is mood affiliating (But then, that's my own mood affiliation leaking out; mood affiliation about mood affiliation.)

I feel the same way about the phrase "mood affiliation" as you do about "something about the Koch brothers."

Turtles all the way down.

A substantial part of the blue teams problem with Amazon is its awful treatment of its work force.

Not many workers involved in downloading an eBook.

Team blue and team red just need to fuck already.

The blue team could not possibly care less about how workers are treated. All they care about is whether the workers are unionized, and therefore making forced donations to the Democrat party.

The welfare costs of a murder are typically insignificant compared with local GDP, much less national or global GDP. Indeed, if the victim is homeless and friendless, the perpetrator really loves killing, and the body is well hidden, social welfare has likely improved.

Nevertheless the law against murder is welfare-improving, as is rigorous enforcement, even if in this case the murder was beneficial

It could be made more welfare-improving through more gradations. For instance, I should probably be immune from prosecution for murder.

Really I just wanted to say that it's meaningless, and likely a rhetorical trick, to bring GDP into the analysis, as Tyler did.

No, because the welfare benefits do not come primarily (or close to solely) from the direct effects of murders. People would be more scared, the law would lose legitimacy in many people's eyes etc. Also it would be a bad deal for you.

Moreover, you would have to enter the contract killing buisness or hole up at some remote location with lots of guns. As the single person exempted from murder laws normal people are going to expend reasonable effort to avoid getting on your radar. For most jobs (unless you do something like write at home) this will render you quite useless. Of course you won't be fired but once you're willing to not work and be paid protection money you might as well just do so in the easiest most lucrative way you can.

Worse, your value to criminal enterprises becomes huge. The cost to kill someone from a rival gang might be small but killing law abiding decently well off US citizens and especially political officials is quite high as you need to pay someone enough to both take the fall for you (or die), not to talk and risk being killed themselves if you fear they will talk. Since you can legally murder people the police can't even fire on you because you approach a target with the intent to kill them. Your ability to kill even high ranking officials will dwarf that of anyone else and the costs you will pay are small but most importantly the police can't twist your arm to make you give up your employer.

So your value as a hitman probably exceeds the cost to kill you or kill your family. The narcotic cartels will demand you sign up with them and assume you are working with a competitor if you won't (so their threats to kill you if you don't will be quite plausible). Also their willingness to target those around you forces your hand on the issue of staying a normal person. You now have to either go into some kind of solitary exile or accept the life of a contract killer from a cartel that can protect you.

I don't know if this applies to Amazon books, but Amazon will actually let you advertise on their website for purchases that will be made off Amazon.

That seems pretty open.

I don't think the impulse to try to stick this into the left/right dichotomy makes sense (though of course it rarely does). Plenty of people on the "Right" are skeptical of large businesses generally. Plenty on the "Left" seemingly love using regulation of large corporations to implement their vision of a utopian society, regulation which the large corporations may not oppose (if it sufficiently enhances barriers to entry and applies evenly to their large competitors).

In reading the latest Amazon discussions I'm most amazed at the way the same class of writers who five years ago were aghast at the lack of support for literary fiction among publishers are now the ones decrying Amazon and supporting the same publishers who were until recently the cravenly commercial forces destroying quality literary fiction.

Tangentially, I'm also amazed that, in rereading the preceding sentence, it seems to make sense and flow nicely without any commas. Perhaps it is the influence of Steven Pinker's The Sense of Style, which I bought naturally from Amazon and which has me thinking about nesting and recursion more than any time since CS 102.

You can still get this overpriced book on Amazon...

http://www.amazon.com/gp/product/1429251638/ref=s9_simh_gw_p14_d3_i1?pf_rd_m=ATVPDKIKX0DER&pf_rd_s=center-2&pf_rd_r=1B8B0AG9GVKE554JTW2V&pf_rd_t=101&pf_rd_p=1688200382&pf_rd_i=507846

Buzz supply vs transfer doesn't matter as much if one is mainly concerned with idea censorship.

True. Such a person should care even less.

I thought the whole Hachette/Amazon thing wasn't that Amazon wouldn't sell their books, but that they wouldn't stock it in their warehouses, leading to longer times to have the book delivered.

I am not sure that book was the best example, as it appears to be available for Amazon Prime shipping, implying they have it in stock..

I'm wondering if this argument changes if Amazon were simply a third party distribution company? In other words if Hachette and Amazon had a distribution relationship and Hachette refused to pay for A level distribution and then as a result got the "B" level service would it be a big deal as Hachette could simply go out and contract with other 3rd party logistics providers. The fact that the other providers are less comprehensive and efficient shouldn't be a relevant issue. Because clearly Amazon isn't trying to censor viewpoints, it's simply trying to make money. As much as it can.

This has parallels with the internet QoS fight, it seem. Even Netflix when it started delaying movie shipments for heavy users got a lot of flak (circa 2008). Firms that try throttling without explicitly advertising it as such get into trouble for it; that seems to have been the trend.

I think we (at least conventionally, and perhaps also legally) hold firms to higher standards when they are so large that the credible alternatives to them are unsatisfactory. Business practices that won't attract any ire when you command 5% market share suddenly do when you command 50%.

In what way are the alternatives to Amazon unsatisfactory?

I thought Baen was fantastic - until their contract with Amazon gutted much of what made Baen worthwhile.

How would you and Alex react if your books were banned from the site?

QED

Tyler would love it and make hay.

Alex would say something about Ayn Rand and Open Borders.

Let us be less theoretical - how would the owners of this web site view their loss of revenue if Amazon no longer considered them an affiliate? (Don't forget that each book sold that is linked from this web site is revenue for the owners, regardless of who is the author. And due note how often books not available from Amazon are highlighted.)

And cutting off Amazon affiliate revenue would be a single flip of the metaphorical switch, done for whatever reasons Amazon considers valid, and without any need to explain.

To see how this works in practice, Google Adsense and Paypal both provide some interesting examples over the years.

Ever notice that criticism of Amazon, much like criticism of Google, seems oddly subdued on those websites earning revenue from Amazon or Google (the flip side being, ever notice how strident the criticism of Google or Amazon can be on web sites earning revenue from Microsoft or Apple)? Of course, the non-cynic is likely to have all sorts of answers. But then, non-cynics are unlikely to be adherents to the Virginia School, much less people considered to be among its leading lights.

Umm I'm pretty cynical but even I recognize that people don't like think of themselves as hypocritical and people who criticize advertiser X a lot tend to do so because they think they are bad so will show advertisements from elsewhere.

I'm not sure your usage of buzz in this piece is accurate. You're treating buzz as part of the product when it is just a type of advertising.

You know that advertising sometimes provides value by informing potential consumers of the existence and properties of a good provided.

This is a political article not an economic one. Paul Krugman's example of Amazon's purported abuse of power is not a case of Amazon using its power to favor one publisher over another. Rather, it is a quicker delivery date for a left-wing book than for a right-wing book, where both books are coming from the same publisher. Without stating it directly, he's expressing concern that Amazon is slanting the book sales in a political direction.

I don't believe he'd write this article if the delivery times were switched to favor the left-wing book. Do you?

Bah, I meant to write 'a quicker delivery date for a right-wing book than for a left-wing book.' Apologies.

Interesting. In the Anglosphere, one can probably make significant money by writing books - if they are interesting enough.

In the tiny Czech market (10 million speakers, plus possibly some educated Slovaks), most writers receive something between USD 100 and USD 1000 per book, if at all. In such conditions, Amazon publishing would probably be welcome.

And thus is fired the first shot in the epic battle between two sinking battleships- the Post and the Times. If Bezos had never bought the Post, Krugman would never give a shit about how Amazon markets books.

>if Amazon doesn’t carry that book, you’re much less likely to hear about it in the first place.

This is completely, utterly, totally false. Par for the course for Krugman. People go to Amazon to conveniently acquire books they have already heard of.

And I enjoyed the comparison of online book sales to shipping oil by railroad in the 1800s. Jesus Christ on a crutch, man.

But they heard about it because it's on at Amazon.

I don't think there is a tension between those two claims as long as we use a model of buyers who are ignorant of what books are available who are using amazon BOTH as a place to buy products and to inform them when a new book likely to interest them becomes availible. Now, there is not, generally, a very good way to find out if another book you are likely to purchase has been published since your likes and dislikes are hidden in your purchase/rating history but not easily summarized by a few words. It is thus not practical to rely on google and there is a quite large cost in time to select every book you enjoy on goodreads and rate it when amazon already knows your purchase history.

So we can explain the effect simply like this. There is a low cost to entry into the book sale business, a high cost to consumers to switch book recommenders and a substantial reduction in costs to the consumer to get recommendations from somewhere they buy most (or at least many) books from.

Now we have explained this tension. It can be a big deal because consumers really would get a great deal of utility out of the book. It can also really hurt the book because consumers just don't realize it's there. Even if this practice becomes more common consumers face a substantial price to add another recommender for books so it would need to become sufficiently common to overcome amazon's advantage from possessing more purchase history data.

No, I'm not totally convinced by this model but I wanted to put it out there.

Comments for this post are closed