New America Event Focuses on Amazon Book Monopoly

Amazon’s overwhelming power and sway in the book market qualifies it as a book monopoly, and it is now time for the government to investigate the online giant’s business model and practices. That was the general consensus among many of the panelists who spoke at a New America event on January 27 in Washington, D.C. New America is a nonprofit civic enterprise and think tank that is “dedicated to the renewal of American politics, prosperity, and purpose in the digital age,” according to its website.

The event “Amazon’s Book Monopoly: A Threat to Freedom of Expression?” featured, among others: Scott Turow, author, lawyer, and former head of the Authors Guild; Douglas Preston, founder of Authors United, journalist, and author; Susan Cheever, memoirist and historian; Mark Coker, founder and CEO of Smashwords and pioneering self-published author; and Frank Foer, author and former editor of The New Republic (Foer is now working on a book on Amazon and other online monopolists).

The event was hosted by Barry Lynn, director of Open Markets and a senior fellow at New America. Lynn opened the event by pointing out how, in recent years, two technological revolutions have entirely transformed how books are produced and sold in America: the Internet, which has made it easier for readers to buy any physical book they want, no matter how obscure, and the e-book, which has reduced the cost of producing and distributing books.

“On the surface, these two revolutions are great news for both the reader and the author,” he said, explaining that these revolutions provide more information, greater access to books, and additional ways for authors and readers to interact. “Yet behind this heartening evolution, we see something very different entirely,” Lynn said. “What we see is an extreme and growing concentration of power in the American market for books.”

A generation ago, the four largest retailers together held less than 12 percent of book sales in the U.S, he added. And among publishers, the top 75 percent of book sales were distributed among 50 different independent companies. “Today, a single company dominates retailing entirely,” he said, noting that this was something the U.S. has never seen before. Amazon, Lynn concluded, should not be allowed in the publishing business.

In his remarks, Preston discussed the Amazon-Hachette dispute and how that resulted in the formation of Authors United. He said that while the dispute between Hachette and Amazon had been settled, the problem with Amazon has not gone away. “Right now, Amazon, according to Paul Krugman, the economist, has as large a market share in the entire book business as Standard Oil did in 1911, right before it was broken up into 34 companies,” said Preston. “Now this would be concerning even if the company in question were benign, but we all know that Amazon is not a benign company.”

Preston reported that Amazon now controls 75 percent of online sales of physical books, 65 percent of e-book sales, more than 40 percent of new book sales, and about 85 percent of self-published e-book authors.

“I personally don’t think that you get very far in this country by objecting to the outcomes that the free market produces,” said Turow. But he emphasized that what is important to him about what Amazon has done is whether its conduct is consistent with a free market. “If someone from the Department of Justice was here today, they would not deny that Amazon is a monopoly. And, as Doug [Preston] said, the idea that you would tolerate a monopoly in the marketplace for books is, by itself, controversial. Books and authors have a special place in this democracy, which is enshrined in the Constitution.”

Foer, who wrote a widely read article on Amazon for The New Republic in October 2014, noted that Amazon’s dominance in the book market has a chilling effect and added that he knows of some authors who were afraid to participate on the panel because it could hurt their careers. 

Overall, the panelists agreed that one remedy would be for the Department of Justice to simply enforce the antitrust laws that are already on the books. Right now, the government is not even addressing the issue.

A video of the discussion can be viewed in two parts on the New America website.