Law in the Internet Society

Self-Publishing with Amazon: Instant Gratification, at What Cost?

-- By MiaLee - 20 Oct 2011

ready for editing

Instant Publishing, on Amazon's Terms

Upon first blush, Amazon's pending elimination of middlemen publishers appears to shift power into the hands of creators. Instead of trying, often in vain, to secure an advance investment from publishing houses, authors can check the box on a license agreement and start marketing their works within minutes. Creators can cash in on the whole of their natural property rights, and consumers can browse their way to the latest masterpiece they might have overlooked (were it not for the enthusiastic, single-click testimonials of your thousand closest Facebook friends).

But while statistical models have shown that increasing access to creative works results in the greatest amount of authorship, increasing reader access through Amazon will only strengthen Amazon's burgeoning monopoly on distribution channels. Amazon, in line with the increased profit-mongering surveillance of credit card companies and Facebook's Open Graph, continues to amass purchasing history knowledge and hone its ability to engage in perfect price discrimination against consumers.

Amazon also minces no words in brandishing its arbitrary control over the royalties it offers to self-publishing authors. Self-publishers can either choose a 35% royalty rate or a 70% royalty rate. If an author chooses the 35% rate, there may be times when the author earns zero royalty because Amazon has decided it is "matching a free promotion on another sales channel." If an author chooses the 70% rate, Amazon warns, "you must comply with any other restrictions or requirements we may provide from time to time for the 70% Royalty Option in the Program Policies."

So Much for Legal Redress

Coincidentally, the vague terms that Amazon forces authors to accept mimic the antitrust statute that is supposed to intervene when a company has succeeded in capturing a lion's share of the market, as Amazon probably will, if it hasn't already. If Barnes and Noble or another dwindling competitor were to survive long enough to try and recoup its lost profits through antitrust litigation, Amazon would presumptively breeze through the 3-prong ALCOA test and escape divestiture, receiving at most a slap on the wrist enjoining a few choice business practices. For example, Microsoft was forced to halt its practice of blocking the installation of competitive browsers by licensed manufacturers.

It is impossible for any court proceeding, operating on a years-long discovery timeline, to keep pace with the rate of innovation, the speed of which can invalidate presupposed operating costs and consumer expectations overnight. For instance, the D.C. Circuit in US v. Microsoft considered the burden on software support staff and scarce hard drive space that would occur if PC manufacturers had attempted to bundle an alternate browser that would compete with pre-bundled IE.

Section 2 investigations of single firm conduct rarely occur. Yet imagining a hypothetical case against Amazon, the judicial analysis would proceed as follows:

Prong 1: What's the market? The court would arbitrarily create classes of substitutable products and geographic restrictions. The Government would argue that Amazon has throttled the market for eBooks, Amazon would counter that the market should be defined more broadly, perhaps, as “any good for sale between $.99 and $3.00 through an online distributer of products, both electronic and tangible.” The court would bluntly reapply their calculus used in parsing the market for raw materials manufacturing in the 1940s -- where the marginal cost of supply a good was greater than zero -- to the market for data, where the marginal cost is zero.

Prong 2: Does Amazon have a monopoly on that market? Maybe. Something in the range of 60-90% will do, a percentage based on one of Judge Hand's footnotes in ALCOA.

Prong 3: Did Amazon engage in any pernicious conduct to achieve that market? Procompetitive justifications would be lobbied: if Amanda Hocking can make a living off of volumes of impulse clicks, then so can any other author that's enterprising and lucky enough to go viral. The court would take a cue and decide not to punish Amazon for its success in increasing marketplace efficiency.

Decentralizing as a Personal Choice

Since our judicial system underpins a capitalist society that rewards profit grabs over freedom of information, the inefficiency of creative work distribution through mainstream commerce channels is primed to continue. The strongest recourse against the tide of corporate control, therefore, seems to stem from personal efforts to resist the lure of instant gratification, forgo the benefits of network effects, and spread knowledge through decentralized means. For authors seeking publishing alternatives to Amazon, there are many self-publishing outlets that advise you on competitive pricing but allow you to set the ultimate price on your own. For conscientious readers, stay tuned for the Book Liberator. The Book Liberator will enable individuals to digitize collections in the same manual manner as employees who were tasked with building up Google Books, minus the downsides of allowing Google to scrutinize your reading habits and insert ads at every turn.

Whether such a commitment to resisting data conglomerates will gain traction remains to be seen. Righteous though the cause may be, I have my reservations. The point-and-click mentality has made us complacent. Author Nicholas Carr has reflected on how our reliance on the Web has stunted our capacity for close reading and rewarded lazy surfers with information once reserved for the enterprising. Even James Vasile, creator of the Book Liberator, admitted the challenge underlying his noble project to bloggers at GOOD: “You have to turn the pages yourself.”

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r8 - 01 Nov 2011 - 03:32:34 - MiaLee
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