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How I learned to stop worrying and love Amazon

The online retailer has reshaped bookselling since it entered the trade in 1995. But Amazon’s aggressive and “anti-competitive” tactics, especially for selling ebooks, are raising hackles in an industry under stress. What is the future of the book busines

Photo: Ralph D Fresco / Reuters

I have a confession. I like buying books online. From Amazon. Such an admission may seem unremarkable, indeed banal, to many book buyers, but offering it in the presence of book industry folk would be the equivalent of informing New Statesman readers that one admires Donald Rumsfeld or Rupert Murdoch. One cannot exaggerate the fear and loathing that Amazon inspires among publishers and rival booksellers. “I hate them,” one publisher who deals with Amazon regularly told me the other day, and many others have offered similar views – off the record, of course.

The story of contemporary publishing is largely that of what Amazon has done to it and of what it threatens – in publishers’ and booksellers’ nightmares – to do. It is the story of a huge contrast between the perceptions of readers, authors and Wall Street, and those of publishers and booksellers.

At first, in the 1990s, Amazon seemed cool – no doubt it still does to a good many people. There was romance in the company’s founder, Jeff Bezos, typing a business plan while his wife drove him in a Chevy from Texas to Seattle, and in his setting up a web retailer in a garage where the computers were powered by extension leads from the house. He was a geeky guy, with a weird, explosive, humourless laugh, but nevertheless came across as more personable than most executives.

In the book world, which Bezos had selected as the ideal entry point for his planned giant operation, Amazon’s cool image lasted only until the first of his company executives took the floor at an industry conference and spouted what was to become a familiar litany of unilluminating corporate jargon. Amazon, we realised, was remote and secretive. In a friendly industry, it had no interest in being collegiate. It played hardball. Fail to grant it the discounts it wanted, and it launched a battery of unpleasant correctives, chillingly outlined in Brad Stone’s recent book The Everything Store: Jeff Bezos and the Age of Amazon (Bantam Press). And, as we also learned, it was a tax avoider. (Amazon.co.uk accounts for its sales in Luxembourg.)

Worse, it appears to have ravaged the industry’s ecosystem. Because Bezos has so successfully trained investors to wait for returns, he has been able to offer loss-leading discounts beyond the scope of companies with the conventional imperatives of making profits. When Amazon arrived in the UK in October 1998, the leading specialist booksellers included the newly merged Waterstone’s (as it was then known) and Dillons (with 500 branches), Borders and Books Etc, Hammicks, James Thin and Ottakar’s. Now the only one left is Waterstones, with fewer than 300 branches – and recently it laid off 200 of its managers. There were 1,535 independent bookshops in the UK in 2008 and now there are 1,028. The rate of attrition in the United States has been similar.

The digital reading revolution, which Amazon kick-started by introducing the Kindle, has accelerated this process. Ebooks now account for a third of fiction sales in the UK, and by the end of 2014 the proportion will go up to half. These sales have mostly left terrestrial bookshops and gone to Amazon, whose Kindle has become the generic term for all e-reading devices. Furthermore, customers who have migrated to Amazon to buy ebooks there have bought more print books on the site, too. Amazon has at least 90 per cent of ebook sales in the UK. Overall, its UK book sales are worth roughly the same as the value of sales through all terrestrial bookshops put together.

Booksellers are crying foul. Tim Godfray, the chief executive of the Booksellers Association, has called for the Office of Fair Trading to re-examine Amazon’s dominance of the ebook market. Quoted in the Bookseller, he argued: “Booksellers are finding it impossible to compete against such a huge player that has such a stranglehold on the book market . . . Consumers are being left with a reduced choice of book suppliers and communities are losing their bookshops.”

To adapt the words of the sports commentator Chick Hearn, Godfray has two chances of getting what he wants: slim and none, and slim just left the building. It left when regulatory authorities on both sides of the Atlantic ruled against leading publishers in disputes over pricing policies that they had adopted, seemingly in an effort to curb Amazon’s discounting, following the opening of Apple’s iBookstore. All the evidence we have is that the authorities look benevolently on Amazon and its aggressive competitiveness over prices, and treat with hostility most attempts to blunt the retailer’s edge.

Digital publishing threatens to undermine their power. The first sign of danger, or confirmation of it, came when Amazon promoted its new Kindle device by pricing New York Times bestsellers at $9.99 – less, in most cases, than it was paying the publishers for each sale. Sure, Amazon was taking the hit; but what if it gained the power in the future to get publishers to lower their wholesale prices? At the same time, Amazon introduced Kindle Direct Publishing, encouraging many thousands of aspiring authors, by no means all of them talentless, to self-publish their work. Many did so at very low prices and some, trying to build an audience, gave their ebooks away.

It was horribly apparent to publishers that readers expected ebooks to be cheap. When the US publisher of a novel by Ken Follett tried to give the ebook roughly the same price as the hardback, readers bombarded Amazon with one-star reviews. Ebooks cost nothing to print and distribute, readers reckoned. Publishers would reply that most of their other costs remained the same, and that they had many additional costs, too: digitisation in various formats, software and hardware updates, constant monitoring of the internet for copyright infringements. Plus, they were still bringing out print editions. But this argument has not found a sympathetic audience.

The arrival of Apple as a seller of ebooks, following the launch of the iPad, seemed to offer a chance of alleviating the problem. Under the “wholesale model” by which publishers sold to Amazon, the US publisher of a potential New York Times bestseller put a price on the ebook of $25, sold it to Amazon for $12.50, and allowed Amazon to sell it for whatever price it liked.

However, Apple had sold everything on iTunes through an “agency model”: the manufacturer set the price, from which Apple took a 30 per cent cut. So now the publisher could ensure that the book sold at, say, $14.99, from which Apple took 30 per cent. Yes, the publisher, and the author – whom we shall discuss later – earned less (the publisher got $10.50), but it was worth taking the hit in order to preserve the perceived value of ebooks. Otherwise, Amazon would keep slashing prices until there was no publishing industry left. Publishers negotiated agency deals with Apple, and then some of them went to Amazon and insisted that Amazon switch to the agency model, too.

These deals looked highly suspicious to the US department of justice, which in 2012 sued five of the six biggest publishers in the country for collusion. The European Commission, too, investigated agency pricing in the European Economic Area. Offices were raided and computers seized. Unfortunately, the late Apple boss Steve Jobs aided the regulators’ case, telling his biographer Walter Isaacson in an unguarded moment: “We told the publishers, ‘We’ll go to the agency model, where you set the price, and we get our 30 per cent, and yes, the customer pays a little more, but that’s what you want anyway . . .’ They went to Amazon and said, ‘You’re going to sign an agency contract or we’re not going to give you the books.’”

This did not look good. In both the UK and the US, the big publishers – while furiously denying that they had done anything wrong – nevertheless reached settlements with the authorities, agreeing to renegotiate contracts; in the US, publishers have paid more than $160m (£98m) to consumers to make up for the higher prices charged while agency deals were in place. But Apple fought on, and lost. Passing judgment in July, Judge Denise Cote of the federal district court in Manhattan was scathing: “With Apple’s active encouragement and assistance, the Publisher Defendants agreed to work together to eliminate retail price competition and raise ebook prices, and again with Apple’s knowing and active participation, they brought their scheme to fruition . . . Through their conspiracy they forced Amazon (and other resellers) to relinquish retail pricing authority and then they raised retail ebook prices. Those higher prices were not the result of regular market forces but of a scheme in which Apple was a full participant.” Apple has lodged an appeal, bringing to mind again the phrase concerning slim and none.

Amazon, above the fray, was the victor in these cases, though in negotiating new contracts with publishers it does find itself landed with some restrictions on its ability to discount. While governments may amend the rules that allow Amazon to pay only minimal corporation tax, no authority is going to curb competitive aggression. The authorities are unconcerned about what share Amazon takes of the book market, provided book buyers continue to have choices. Those choices include bookstores at Apple and Google, which are unlikely to persuade anyone that they require protection from a predatory rival.

Of course, Tim Godfray was talking about protection not for the likes of Apple and Google, but for businesses that may achieve not even a six-figure turnover in a year. Independent bookshops were struggling before Amazon came along, however, in part because of their inability to compete with chains such as Waterstones, and in part because of trends – superstores, rates and rents, parking restrictions, and so on – which have been hostile to so many high-street businesses, and which prompted the government to call in the retail expert Mary Portas to see if she could conceive a plan to revitalise them. Chain booksellers were growing, but largely by opening branches and merging with each other. It was a bubble, and Amazon’s market share was still relatively modest when Waterstones and the book/stationery/enter­tainment retailer WHSmith became the only chains left standing.

The best bookshops have found ways to remain attractive. They stage readings and festivals. They incorporate coffee shops. They recommend distinctive titles that you don’t see on the front tables at Waterstones or Smith’s, or on the Amazon home page. Mr B’s in Bath offers “reading spas”: one-on-one chats in its “bibliotherapy room”. It has also commissioned bespoke editions of books. Daunt Books has its own small publishing operation, which has brought back into print the kinds of literature that a chain of shops in well-heeled areas of London can sell. In September, the Booksellers Association launched an initiative called Books Are My Bag, which consists of only a slogan and a supply of canvas bags, but which the BA hopes will gain enough currency – as “Go to work on an egg” once did – to promote the joys of browsing and buying in real bookshops.

That Amazon has taken business away from these shops – well, that’s competition, and, as we’ve seen, we are going to have to live with it. The other day, I decided I wanted to read John Mullan’s What Matters in Jane Austen?. I looked on Amazon and I looked on the rival ebookseller Kobo; Amazon’s price was £4.63 and Kobo’s was £7.07. I bought the Amazon Kindle edition, with a single click; when I switched on my tablet, my book was there. My nearest bookshop, a Waterstones, is a 20-minute bus ride away, and it is not always guaranteed to have the book I want. If it does, it may be selling it at the recommended retail price – £8.99, in this case.

Price and convenience point me towards Amazon. I enjoy reading ebooks, and if the print equivalents are bulky and have small type, I prefer to read them on a lightweight device with adjustable fonts. I love browsing in bookshops, but I love browsing online, too, and get a small thrill every time I make an order that enables an instant download or a posted parcel. Furthermore, Amazon’s service is superb. Its website is the best, its Kindle Paperwhite is by reputation the best e-reading device of its kind, and its prices are usually the lowest.

My point is that this is what the overwhelming majority of Amazon’s customers feel about the company. Yes, we disapprove of its tax avoidance, but we have learned that every multinational will behave in this way, given the opportunity. It is for governments to sort out. But giving publishers a hard time? Why should we care about that? And if we felt that Amazon did not deserve to take business from the terrestrial bookshops, we would click on those Buy buttons less frequently.

The consolidation of power in retailing is in part responsible for a consolidation of power in publishing. Penguin and Random House confirmed their merger this summer, creating the largest publisher in the world; industry insiders expect there to be further mergers at the top – Simon & Schuster and HarperCollins are names that are often put together. Penguin Random House, which is home to a significant number of the most celebrated authors in the English language, has clawed back some of the negotiating power that Amazon had assumed. The company also believes that, thanks to “efficiencies” (cost-cutting) in its merged operations, it will have more resources to put into the acquisition and promotion of books and into “discoverability”, a buzzword that has become an obsession as book buyers have moved online. How do you ensure that people see your books? Publishers are desperate to be the facilitators of this process. They do not want Amazon to control it.

In addition to the power of Amazon, they have three significant fears. The first is piracy. Once, pirating a book involved printing it. Now, all you have to do is copy a computer file and you have an edition that is no different from the authorised version. The pirates have created jobs in the book industry: the leading publishers employ people whose sole responsibility is to trawl the internet searching for illegal editions. Fear of piracy is responsible for digital rights management, the annoying code that prevents you from reading an Amazon ebook, say, on anything other than a Kindle-enabled device. It also lies behind publishers’ wariness about allowing their ebooks to be lent through libraries.

The new wave of digital entrepreneurs is, on the whole, sceptical about copyright, in a bedrock of industries ranging from publishing to football (think of the importance to football of TV and image rights income). Google, which no government can ignore, scanned millions of in-copyright books without bothering to ask the rights-holders’ permission. The British government is planning to introduce copyright exceptions following a 2012 report into intellectual property by a panel under the leadership of Professor Ian Hargreaves; its draft proposals have alarmed bodies including the Society of Authors and the Publishers Association. “Fair dealing”, which Google cites in its defence, may be fair to the people who want to use the material, but is less fair to those who created it.

However, publishers could relax a little. People want to get things for free or cheaply, but they are also happy to pay what they see as fair prices. Getting most of my books free when I was young did not dissuade me from becoming a book buyer, and listening to pirated music did not prevent my purchasing records. My daughters, who no doubt consume illegally shared material, spend fortunes through iTunes. When I began reporting on the book industry, Delia Smith featured in ubiquitous ads for book clubs that were offering her Complete Cookery Course for a nugatory sum. Yet the same book, at full price, appeared in the bestseller list week after week. Free or cheap does not necessarily undermine paid-for. Imagining an ideal world in which every consumer would pay a recommended price for every cultural item is futile.

The second significant fear, though, is the lowering of the recommended prices that consumers are prepared to pay. The average price paid for an ebook in the UK is about £3. The average price paid for a bestselling paperback novel is about £4.20, and the average price paid for a bestselling hardback novel is about £11. As ebooks take a larger share of the market, will publishers suffer a decline in revenues, and will they find, as booksellers did in the 1990s, that the only way they can grow is through mergers? Penguin Random may be an early symptom of such a trend.

The third fear is of becoming irrelevant. The rise of the publishing conglomerates has not been as hostile to independent houses as many had feared, partly because distribution has become more egalitarian (smaller houses have more chance of getting their authors discovered now, through Amazon and other sites, than when their only way of selling was by begging booksellers’ support) and partly because there are so many successful titles that the conglomerates miss or never see. But all publishers must be aware that authors have what appears to be the increasingly viable choice of self-publishing. Since internet distribution has vastly reduced the cost and difficulty of getting a manuscript into book form, self-publishing has lost its reputation as exclusively the last resort of the hopeless and deluded. Every week, it seems, one reads a story of an unknown author who has sold tens of thousands of copies of his or her self-published books, particularly through Amazon. Amanda Hocking, an author of paranormal romances, earned $2.5m from Amazon sales in under two years; even more famously, E L James first published online the story that became the Fifty Shades of Grey trilogy.

Publishers hope that the self-publishing world can become a training ground for writers, and last year Penguin’s parent company bought Author Solutions, the world’s largest self-publishing service (which at that point had a mixed reputation). Hocking and James went on to sign conventional publishing deals. Yet some self-publishers have not, while others have signed print book deals but retained their ebook rights. Few authors can have failed to notice that self-publishing offers higher royalties. Kindle Direct Publishing can pay up to 70 per cent of the returns from sales, and offers at least 35 per cent. Until recently, publishers were distributing to authors just 15 per cent of the returns; only under pressure, and not universally, have they raised these royalty rates to 25 per cent.

While publishers may have good arguments to explain why their royalties should remain at this level, they have not succeeded in making their case to authors and agents. At present, most authors crave the imprimatur, the editorial expertise, the marketing and the distribution that established imprints can provide. But publishers’ claims that they “add value” to the publishing process – value that self-publishing services cannot replicate – are not as incontrovertible as they once seemed.

In the ways described, the disruption that Amazon has caused the book industry has been welcome for readers and authors. Culturally, the picture is more confused. Some authors who might never have seen their books in print a few years ago have thrived through self-publishing, but others – who enjoyed a brief period when advances rose, as the big publishers grew bigger and the book chains expanded – are in trouble. They can no longer afford to spend a year or longer writing books, because no one will pay them to do so. Fashions are changing quickly, and many authors who were under contract a few years ago can no longer get their manuscripts accepted.

It is a harsh world, but whether it is barbaric, as some disillusioned authors believe, is debatable. Pitifully low sales of literary fiction are not a new phenomenon: George Orwell’s early novels sold only a few hundred copies each. When one reads of the long exile from print of Barbara Pym in the 1960s and 1970s after Tom Maschler at Jonathan Cape had decided that her novels were hopelessly old-fashioned, one recognises a story with contemporary resonances. It is very hard to determine whether an industry that produces more than 100,000 titles a year is lowering its standards. Regular reading of the literary pages, and scanning of book-prize shortlists, suggests that there remains plenty of quality about. I once heard someone say that Paul McCartney, an acquaintance of his, was “as nice as you’d expect him to be”. Amazon is certainly no nicer than you would expect a Wall Street-quoted giant with a market capitalisation of $135bn to be. But I don’t feel guilty about being its customer.

Nicholas Clee, a former editor of the Bookseller magazine, is the joint editor of BookBrunch, a book industry news service

Nicholas Clee, the NS food columnist, is the author of Don’t Sweat the Aubergine: What Works in the Kitchen and Why (Short Books). He is a former editor of The Bookseller, and writes about books for papers including the Times, Guardian, and Times Literary Supplement.
Ralph Steadman for the New Statesman.
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Tim Farron: Theresa May is "the prisoner of the Ukip wing of her party"

The Liberal Democrat leader on his faith, Blairism and his plan to replace Labour as the opposition. 

This is Tim Farron’s seventh general election. His first was in 1992, when his Tory opponent was a 36-year-old called Ther­esa May. He was just 21 and they were both unsuccessful candidates in the Labour fortress of North-West Durham. He recalls talking “to a bunch of ex-miners who weren’t best pleased to see either of us, some kid Liberal and some Tory”. Now he sees his former and current opponent as “the prisoner of the Ukip wing of her party . . . I think it has rendered Ukip almost pointless – she is Ukip now.”

May was elected to parliament in 1997, but it took Farron until 2005 to join her. She leads the dominant Conservatives while he heads a party of only nine Liberal Democrat MPs. Still, their reversal of fortunes gives him hope. “After the 1992 election, every­one said there’s no way for a non-Tory government, and it turned out there was. So let’s not assume it’s a given there’s a Tory government [for ever].”

In April, I accompanied Farron to Manchester Gorton, in the lead-up to a by-election that was cancelled by May’s decision to call a snap election on 8 June. Still, the 46-year-old’s party has been in campaign mode for months; Lib Dems spoke of using last December’s Richmond Park by-election to test their messaging. It clearly had an effect: the incumbent Conservative, Zac Goldsmith, lost to their candidate, Sarah Olney.

Brexit, to which the Liberal Democrats are vehemently opposed, will be a dominant theme of the election. Their party membership has just exceeded 100,000, close to an all-time high, and they have enjoyed much success in council by-elections, with more to come in the local elections of 4 May.

However, any feel-good factor swiftly evaporated when Farron appeared on Channel 4 News on 18 April. He was asked by the co-presenter Cathy Newman whether or not he believes that homosexuality is a sin, a question that he answered obliquely in 2015 by saying that Christianity started with acknowledging that “we’re all sinners”.

This time, he told Newman, he was “not in the position to make theological announcements over the next six weeks . . . as a Liberal, I’m passionate about equality”.

The Channel 4 interview divided opinion. One Liberal politician told me that Farron’s stance was “completely intolerable”. Stephen Pollard, the influential editor of the Jewish Chronicle, described it as
“a very liberal position: he holds certain personal views but does not wish to legislate around them”. Jennie Rigg, the acting chair of LGBT+ Liberal Democrats, said it was “as plain as the nose on my face that Tim Farron is no homophobe”.

Farron declined the chance to clarify his views with us in a follow-up phone call, but told the BBC on 25 April: “I don’t believe that gay sex is a sin,” adding, “On reflection, it makes sense to actually answer this direct question since it’s become an issue.”

For his critics, Farron’s faith and politics are intertwined. He sees it differently, as he told Christian Today in 2015: “. . . the danger is sometimes that as a Christian in politics you think your job is to impose your morality on other people. It absolutely isn’t.”

Tim Farron joined the then Liberal Party at the age of 16 but didn’t become a Christian until he was 18. Between completing his A-levels in Lancashire and going to Newcastle University to read politics, he read the apologetics, a body of Christian writing that provides reasoned arguments for the gospel story. “I came to the conclusion that it was true,” he told me. “It wasn’t just a feel-good story.”

In speeches, Farron now takes on the mannerisms of a preacher, but he had a largely non-religious upbringing in Preston, Lancashire. “I don’t think I’d been to church once other than Christmas or the odd wedding,” he says. “I went once with my dad when I was 11, for all the good that did me.”

When we meet, it is Theresa May’s religion that is in the spotlight. She has condemned the National Trust for scrubbing the word “Easter” from its Easter egg hunt, a row it later emerged had been largely invented by the right-wing press in response to a press release from a religious-themed chocolate company.

“It’s worth observing there’s no mention of chocolate or bunny rabbits in the Bible,” Farron reminds me. “When people get cross about, in inverted commas, ‘us losing our Christian heritage’ they mean things which are safe and comfortable and nostalgic.” He pauses. “But the Christian message at Easter is shocking, actually, and very radical.”

British politics is tolerant of atheists (such as Ed Miliband and Nick Clegg) alongside those who, like David Cameron, are culturally Christian but whose faith is “a bit like the reception for Magic FM in the Chilterns: it sort of comes and goes”. But the reaction to Farron’s equivocation on homosexuality prompted many to wonder if a politician who talks openly about his faith is now seen as alarming. Nebulous wishes of peace and love at Christmas, yes; sincere discussions of the literal truth of the Resurrection? Hmm.

Tim Farron’s beliefs matter because he has a mission: to replace not only Jeremy Corbyn as leader of the opposition but Theresa May in Downing Street. Over lassis at the MyLahore curry house in Manchester, he tells me that Britain is facing two calamities. “One is Brexit, indeed hard Brexit . . . and the other is a Tory government for 25 years. We have to present a genuine, progressive alternative that can not only replace Labour as an opposition, it can replace the Tories as a government.” This is ambitious talk for a party with nine MPs. “I understand the ridicule that will be thrown at me for saying those things: but if you don’t want to run the country, why are you in politics?” He pauses. “That’s a question I would ask most people leading the Labour Party at present.”

What does he think of May, his one-time opponent in North-West Durham? “She strikes me as being very professional, very straightforward, somebody who is very conservative in every sense of the word, in her thought processes, her politics, in her style.” He recalls her 2002 conference speech in which she warned Tory activists: “Our base is too narrow and so, occasionally, are our sympathies. You know what some people call us: the nasty party.”

“In many ways, she was the trailblazer for Cameron in being a softer-focused Tory,” he says. “It now looks like she’s been trapped by the very people she was berating as the nasty party all those years ago. I like to think that isn’t really her. But that means she isn’t really in control of the Conservative Party.”

Voters, however, seem to disagree. In recent polls, support for the Conservatives has hovered between 40 and 50 per cent. Isn’t a progressive alliance the only way to stop her: Labour, the Liberal Democrats, the Greens, the SNP and Plaid Cymru all working together to beat the Tories?

“Let’s be really blunt,” he says. “Had Jeremy Corbyn stood down for us in Richmond Park [where Labour stood Christian Wolmar], we would not have won. I could have written Zac Goldsmith’s leaflets for you: Corbyn-backed Liberal Democrats.

“I’m a pluralist,” he adds. “But any progressive alliance has got to be at least equal to the sum of its parts. At the moment, it would be less than the sum of its parts. The only way the Tories are losing their majority is us gaining seats in Hazel Grove –” he ticks them off with his fingers, “– in Cheadle, in the West Country and west London. There’s no chance of us gaining those seats if we have a kind of arrangement with the current Labour Party in its current form.”

What about the SNP? “Most sensible people would look at that SNP manifesto and agree with 99 per cent of it,” Farron says. “But it’s that one thing: they want to wreck the country! How can you do a deal with people who want to wreck the country?”

There’s no other alternative, he says. Someone needs to step up and offer “something that can appeal to progressive younger voters, pro-Europeans and, you know, moderate-thinking Middle England”. He wants to champion a market economy, strong public services, action on climate change, internationalism and free trade.

That sounds like Blairism. “I’m a liberal, and I don’t think Blair was a liberal,” he replies. “But I admire Blair because he was somebody who was able to win elections . . . Iraq aside, my criticisms of Blair are what he didn’t do, rather than what he did do.”

Turning around the Tory tide – let alone with just nine MPs, and from third place – is one hell of a job. But Farron takes heart from the Liberal Party in Canada, where Justin Trudeau did just that. “I’m not Trudeau,” he concedes, “He was better-looking, and his dad was prime minister.”

There is a reason for his optimism. “I use the analogy of being in a maze,” he says, “You can’t see a way out of it, for a progressive party to form a majority against the Tories. But in every maze, there is a way out. We just haven’t found it yet.” 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

This article first appeared in the 27 April 2017 issue of the New Statesman, Cool Britannia 20 Years On

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