By DAVID STREITFELD, Published: July 10, 2013
Jeff Bezos, chief of Amazon, introducing new models of the
company’s Kindle e-readers in 2012.
Jeff Bezos, the founder of Amazon, loves disrupting
markets. In that regard, he must be having a delightful summer. The book
business, once so mired in the past it seemed part of the antiques trade, is up
for grabs.
A federal judge ruled on
Wednesday that Apple had illegally conspired with five of the six biggest
publishers to try to raise prices in the budding e-books market.
The decision came two days after Barnes & Noble lost its chief executive and said it would not
appoint another, signaling that the biggest chain of physical bookstores could
be immediately broken up.
The verdict in the Apple case might have been a foregone
conclusion, telegraphed by the judge herself, but it emphatically underlined
how the traditional players in the book business have been upended. Only
Amazon, led by Mr. Bezos, seems to have a plan. He is executing it with a skill
that infuriates his competitors and rewards his stockholders.
“We’re at a moment when cultural power is passing to new
gatekeepers,” said Joe Esposito, a publishing consultant. “Heaven forbid that
we should have the government telling our entrepreneurs what to do, but there
is a social policy issue here. We don’t want the companies to become a black
hole that absorbs all light except their own.”
The Apple case, which was brought by the Justice Department, will
have little immediate impact on the selling of books. The publishers settled
long ago, protesting they had done nothing wrong but saying they could not
afford to fight the government. But it might be a long time before they try to
take charge of their fate again in such a bold fashion. Drawing the attention
of the government once was bad enough; twice could be a disaster.
“The Department of Justice has unwittingly caused further
consolidation in the industry at a time when consolidation is not necessarily a
good thing,” said Mark Coker, the chief executive of Smashwords, an e-book
distributor. “If you want a vibrant ecosystem of multiple publishers, multiple
publishing methods and multiple successful retailers in 5, 20 or 50 years, we
took a step backwards this week.”
Some in publishing suspected that Amazon had prompted the
government to file its suit. The retailer has denied it, but it still emerged
the big winner. While Apple will be punished — damages are yet to be decided —
and the publishers were chastened, Amazon is left free to exert its dominance
over e-books — even as it gains market share with physical books. The retailer
declined to comment on Wednesday.
“Amazon is not in most of the headlines, but all of the big events
in the book world are about Amazon,” said Paul Aiken, executive director of the
Authors Guild. “If the publishers colluded, it was to blunt Amazon’s dominance.
Barnes & Noble’s troubles may stem from a misstep with its Nook tablets,
just as Borders’ bankruptcy might have been hastened by management mistakes,
but its precarious position is that of any rent-paying retailer facing a
deep-pocketed virtual competitor.”
Last week, Penguin and Random House officially merged,
creating a publishing behemoth that might be able to determine its future
rather than suffer the fate of Barnes & Noble, a once-swaggering entity
that now seems adrift. Random House was not a target of the Justice Department;
Penguin was.
Penguin and Random House were innovators who made paperbacks into
a disruptive force in the 1940s and ’50s. They were the Amazons of their era,
making the traditional book business deeply uneasy. No less an authority than George
Orwell thought paperbacks were of so much better value than hardbacks that they
spelled the ruination of publishing and bookselling. “The cheaper books
become,” he wrote, “the less money is spent on books.”
Orwell was wrong, but the same arguments are being made against
Amazon and e-books today. Amazon executives are not much for public debate, but
they argue that all this disruption will ultimately give more money to more
authors and make more books more widely available to more people at cheaper prices,
and who could argue with any of that?
This was not a prospect that many on Wednesday were putting much
faith in.
Amazon, its detractors argue, is not a nonprofit or public trust
but a hard-nosed company whose investors hope will make lots of money someday
soon. It shares closed Wednesday at $292.33, a record.
“The Justice Department’s guns seem pointed in the wrong
direction,” Mr. Aiken said.
But the more pressing concern for the industry is the fate of
Barnes & Noble. When Borders collapsed two years ago, analysts said there
was an unexpected consequence to the loss of 400 stores: the e-book growth rate
began to taper off, as readers could no longer examine new titles before
ordering them from Amazon.
E-books, in other words, were not a magical technology that could
shed all the existing infrastructure of publishing. They needed the existing
ecosystem.
“If all of those corporate outlets vanish, there is suddenly a
hell of a lot less space devoted to showcasing a large number of titles,” said
J. B. Dickey, owner of the Seattle Mystery Bookshop. “We’ll probably see a
continuing shrinking in print runs, maybe fewer titles published, fewer authors
published and the New York houses retreating into the known best-sellers. Which
means more novice and midlist authors scrambling to find a way to stay in print
and more authors self-publishing their print books — or more likely releasing
their works as e-files.”
All of that sounds dire. Perhaps the only consolation for those
who fear the power of Amazon is the knowledge that all companies eventually
peak, no matter how unlikely that seems when they are in the ascendance.
Mr. Esposito, the consultant, remembered that 30 years ago there
was a book called “The Media Monopoly,” which worried about the excessive power
of the Gannett chain of newspapers as well as the three major television
networks.
“The book reads almost quaint now,” Mr. Esposito said.
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