The Authors Guild’s Mary Rasenberger on Why Amazon Deserves Antitrust Scrutiny

Two weeks ago, the book industry saw an unprecedented joint action: U.S. booksellers, authors, and literary agents called on the U.S. Department of Justice to investigate the business practices of Amazon.com. On July 13, the group Authors United, led by author Douglas Preston, delivered a letter to the U.S. Department of Justice calling for an investigation of Amazon’s “abuse of its dominance in the world of books.” The Authors United action was supported by the American Booksellers Association, which sent its own letter to the DOJ, and by both the Authors Guild and the Association of Authors’ Representatives.

Here, Mary Rasenberger, executive director of the Authors Guild, talks about the organization’s support for the Authors United letter and why Amazon’s unprecedented dominance of the book retail market is harmful to authors, booksellers, and the reading public.

BTW: Why did the Authors Guild support last week’s Authors United appeal to the Department of Justice and what has been your role in the Authors United letter?

Mary Rasenberger: We at the Authors Guild have been working closely with Doug Preston for the greater part of the past year on both the longer policy memo and the shorter letter that he is asking authors and others to sign. We sent a separate letter to the Department of Justice on this topic last summer and met with them as well. We wholeheartedly believe that Amazon deserves antitrust scrutiny. While Amazon has done a lot that has benefitted the book industry — it created an e-commerce platform that made buying books online very easy and fast; created the first really good e-reader, which dramatically increased access to e-books; and made it very easy for authors to self-publish — in recent years it has ruthlessly used, indeed abused, its unprecedented dominance of the book retail market in ways that harm the book industry as a whole, including authors and the reading public.

The fact is Amazon now virtually controls an important marketplace of information. That is not good for bookstores or for authors, and it is not good for democracy. We now have a single, corporate entity that exerts a dangerous amount of control over the channels of free expression that sustain our democracy. A corporation has never before in American history been allowed to monopolize an information or communications channel. The courts and the government never let that happen before, precisely because democracy relies on the free flow of expression and that requires a broad, diverse array of information sources. When the Associated Press, Turner Broadcasting, or Barnes & Noble threatened to dominate a single marketplace of information, the courts or a government agency intervened. It’s important to see the big picture here, because this situation can easily be trivialized. We’re not just talking about the price of an e-book. We’re talking about interference with the marketplace of information and ideas, which is the engine of any democracy.

So the Authors Guild has taken a keen interest in Amazon. We’ve been following Amazon’s behavior in the book markets for a number of years — as have most other publishing industry observers. But I want to be clear on one thing, even after everything I just said: We’re not anti-Amazon. We don’t oppose everything the company does. We give praise where it’s due. We’ve simply opposed Amazon’s more ruthless tactics and the unhealthiness of its monopoly. Amazon deserves praise for opening up the long tail to readers in the most remote parts of the country, for instance. But did it have to do that at the expense of so many independent bookstores? And we are grateful to Amazon for making it so easy for authors to publish on their own, but it should pay authors decent royalties and allow them to set their own prices without punishment; Amazon should be transparent about what goes into determining its royalty pool.

Last summer, in the midst of Amazon’s dispute with Hachette, when Amazon began deliberately suppressing Hachette authors’ sales in order to drive a wedge between the publisher and its authors, we worked behind the scenes, writing a series of white papers that led to meetings with the DOJ and a number of state attorneys general. Meanwhile, Doug, with his Authors United grassroots group of authors, brought great and well-deserved attention to the Hachette authors’ cause. We’ve been supportive of Authors United from the start. Doug is an Authors Guild council member — we’ve worked hand in hand with him.

BTW: How has Amazon’s abuse of its dominance in the book industry directly affected authors?

MR: Amazon has artificially driven down the price of books and, because of its market dominance, it has been able to force publishers of all sizes, as well as independently published authors, to accept its terms on a “take it or leave it” basis. Since no one can sell books without Amazon, guess what? They take it. Small publishers in particular have been hurt: they have had to accept really unfair terms, and there is nothing they can do to fight back. Amazon could care less if one little publisher refuses to sell through them; that publisher will just go out of business and it won’t affect Amazon one bit.

Low prices hurt authors because their royalties are lower, of course. But it has also devalued books generally. Amazon has commoditized books by offering them all at the same low price, losing money so they can lure readers in as consumers. The result is that readers start thinking books should be that cheap — even though those prices are artificial — and everyone else is forced to lower book prices. Needless to say, advances are way down, as well as royalties, and fewer books are being bought by publishers because there is only so much money to go around. It is one of the reasons we have full-time authors making 30 percent less in absolute dollars (not accounting for inflation) than they did in 2009 when the e-book was first taking off.

Another way Amazon has adversely affected authors is an issue [ABA] members are familiar with — the drastic reduction in discoverability on its service (leading some book buyers to go to stores to browse and then buy on Amazon). Most mid-list books simply get lost on Amazon; it is difficult for the titles of lesser-known authors to be discovered on Amazon, where “discoverability” often means simply being updated about the newest title from famous authors. So, the mid-list authors are badly suffering in sales, and because publishers are not making enough on those books, they are disinclined to offer advances that actually support writing the book. Hence, we see more and more books by celebrities rather than authors. At least there is more work for ghostwriters!

BTW: How have Amazon’s punitive actions against publishers, such as Hachette during their 2014 contract dispute, impacted authors?

MR: To begin with, Amazon’s punitive actions against publishers end up harming individual authors much more than they harm the publishers they’re intended to punish. There’s no way around it. Many publishers are themselves major corporations — some are parts of multinational conglomerates — and they can absorb the losses caused by Amazon in a way that an individual author cannot. Amazon controls more than 40 percent of total book sales in the U.S., 75 percent of online sales of physical books, and 65 percent of the e-book market. When Amazon stands between authors and the reader or potential readers who might want to buy their books — as they did with the Hachette authors — it is the authors who feel the sting.

And that’s just the financial side of things. There are some very real and very frightening risks to the free flow of information when one corporation has the power to favor or disfavor expressive, creative works. When a corporation gets this kind of power, it can play favorites. It can pick winners and losers. It has picked winners and losers. Last summer, Paul Ryan’s book was published by Hachette [and was among the titles initially delisted by Amazon]. Paul Ryan’s a congressman; he has a pulpit. So he went on TV and complained. What happened? In a flash, his book was fully available again. Most authors don’t have the power to make that happen, of course. But you can see, the power to suppress or promote certain ideas and certain political flavors is there. And it’s a threat to free speech, plain and simple. This isn’t mere speculation; it has already had a chilling effect: Doug Preston describes how dozens of bestselling authors declined to sign an Authors United letter last summer for fear of retaliation from Amazon.

BTW: According to some news reports, self-published authors who once thought of Amazon as their ally are now feeling victimized. Why is that?

MR: As we’ve seen time and time again, at the end of the day, Amazon is only interested in one thing — its own welfare and obscene growth. That became clear to a lot of the self-published authors who used to be on Team Amazon right when Amazon began pulling the rug out from under them on their royalty payments. When Amazon rolled out its subscription service, Kindle Unlimited, last year, it automatically enrolled most of the self-published authors who published with the KDP Select program in the subscription service, where readers got unlimited access to hundreds of thousands of books for $9.99 a month. So, all of a sudden, a lot of these indie authors’ royalty checks just plummeted. And there were some misgivings in the indie community; many of these writers thought they had a partner in Amazon.

Worse, though, Amazon treats its indie authors as second-class citizens. Traditionally published books in Kindle Unlimited were paid for as if sold every time a reader read beyond a certain portion. Indie authors, on the other hand, are paid pro rata out of a pool, which pits indie authors against each other in a competition for readers: One author’s gain is another’s loss. And how does Amazon calculate the amount of money that goes into the pool? No one knows but Amazon. There is a complete lack of transparency in how it determines what the pool is and, so, what any author’s royalties are. They expect authors to just trust them? It is shocking when you think about it. Imagine if a publisher said, “Don’t worry, we’ll pay you something out of our profits; just trust us.” Not exactly a model for professional authors to rely on.

Things got even worse when Amazon announced that starting in July it will be splitting up the Kindle Direct royalty pool in a completely different fashion, based on the number of pages read — and this was announced just weeks before it took effect. We still don’t know how that will play out, but one thing is sure — if the per-page model benefits Amazon financially they will start forcing it on publishers, starting with the smallest, who have no bargaining power.

Our biggest problem with Amazon vis-à-vis indie authors is that they do not treat their authors as professionals. They provide a take it or leave it contract. Yes, we have lots of problems with the standard contracts of traditional publishers — but at least they allow authors to individually negotiate terms. The KDP authors don’t even have that luxury — they are forced to accept Amazon’s terms and its unknowable royalties, or go somewhere else. Whoops, the problem is that Amazon has so dominated the market there is nowhere else to go if you want any reasonably sized potential audience.

BTW: As Amazon continues to sell huge numbers of titles below cost and uses them as loss leaders to entice sales on other segments of its website, what will be the long-term effect on a thriving and robust literary marketplace?

MR: Just like any ecosystem, a thriving literary marketplace is a diverse, multifaceted literary marketplace. We need a diversity of publishers — big houses that can invest in major projects and distribute on a mass scale, as well as small houses committed to publishing marginalized voices. We need diversity of authorship no less. And we need diversity in our distributors. We need independent stores with community ties and highly curated collections; big box stores for the selection they offer and their purchasing power; we need public libraries to serve their communities; school libraries to get kids reading; we need Amazon, too.

Our concern is that Amazon is ruining that necessary diversity. Its loss leader pricing allowed it to capture its outsize market share. That market dominance enabled it to extract excruciating terms from publishers, which in turn led to a dangerous amount of consolidation among publishers.

Now, as I mentioned earlier, we see the effect this is all having on authors. In April, we at the Guild conducted our first major member survey since 2009. The findings aren’t encouraging. Median writing-related income dropped 24 percent in that time; full-time authors’ median income is down 30 percent, from $25,000 to $17,500. Advances are down — authors need these to keep the lights on while they finish their books. These developments are unsustainable. We need to turn things around so that authorship can once again be a sustainable career, and so that authors can continue to create the sort of work that sustains the rest of the industry — and that sustains its readers and our culture at large.

BTW: What kind of feedback are you receiving from your members following last week’s appeal to the DOJ?