Since Paul Krugman wandered into my field of economics today, I thought this might be an opportune moment to recount various things I have said about Amazon and its dispute with Hachette over the last few months. Krugman’s problem: Amazon has too much power, plain and simple. Well, it isn’t that plain or simple.
First, if Amazon has power in the book market, it is because publishers have handed it that power. The power in eBooks, for example, could end tomorrow if publishers abandoned DRM and offered eBooks to Kindle purchasers in other formats (for free if they have already purchased the book). That would empower consumers to switch if Amazon should, in the future, not act in their interests.
Second, yes, Amazon are trying to reduce the publisher’s cut of eBooks. But at the same time, they are trying to maintain or increase authors’ cut. It is far from obvious to me that that is a bad thing for the book industry.
Paul Krugman sees Amazon’s actions against Hachette — not allowing pre-orders, slipping delivery times and the like — as evidence it cannot be trusted with its power. But his anger is missplaced. The issue is that Amazon has taken these actions in a way that actually harms consumers right now. As Clay Shirky writes:
In the current fight between Amazon and the publisher Hachette over the price of ebooks and print-on-demand rights, Amazon’s tactics are awful, the worst possible in fact: They are denying readers access to books, removing pre-order options and slowing delivery of titles published by Hachette. Amazon’s image as a business committed to connecting readers to books is shredded by this sort of hostage-taking. The obvious goal for readers in should be to punish anyone using us as leverage.
So Amazon’s customers have a reason to be upset about how they have been dragged into this fight.
But it is more than that: doing this harms Amazon’s core identity that it is relentless in its customer focus. These actions are not those of someone who is relentless and that is a real problem for Amazon. It surely wants people to think of it as customer focussed. In that regard, it could, for instance, have fought the publishers by more aggressively promoting its own publication house. It would have pushed publishers to perform better. Instead, it has brought consumers into the fight.
We should be saddened by this. I was this past week when I had an unbelievably positive experience with Amazon. I had order a cheap computer monitor and some air freshner. Both were stolen from our front porch. Well, I suspect they were because they were listed as delivered but were not there. So I contacted Amazon customer service via a web form. Their response:
Hello from Amazon.ca.
I’m sorry to hear that you have not received your order yet though tracking shows delivered.
I completely understand your disappointment. That’s definitely not what we want our customers to experience.
We are aware that our choice of delivery services reflects on our business as a whole, and I have passed your message along to our shipping department, as I know they will want to read about your experience.
At this point, I can only assume that it was lost.
Tracing a package is time-consuming and only occasionally successful. Because we want you to receive your order as soon as possible, we have found it more efficient to simply send a replacement order whenever a package is lost.
Normally, we use to create a replacement order which will be sent as soon as possible. However, at this point, we are unsure if you would like us to send you a replacement order, or if you would like a refund.
Please use the following link to contact us again and indicate which option you prefer.
This happened within minutes of my inquiry. I wrote back saying that I thought it was probably stolen. They didn’t care. Amazon wanted to replace the item. Wow.
I thought about why they did this. The answer was obvious. If customers like myself start to fear losing things that get stolen on a porch, we will stop using Amazon. Moreover, as this hadn’t happened before, they did not think I was pulling one over on them. I certainly hope it isn’t a regular thing. Why? Because I like using Amazon.
My point is this. First, this is not the sort of customer service we get from evil monopolies. Second, it is the sort of customer service we get from a company that always puts its customers first. What a shame, therefore, that in the dispute with Hachette, Amazon has chosen another path — away from relentlessness. That’s why we should be upset not appealing to issues of antitrust concerns.