On June 11, after a 16-month investigation into antitrust issues in the digital marketplace, the U.S. House of Representatives Committee on the Judiciary introduced five bipartisan bills to the House seeking to curtail some of the business practices used by Big Tech companies. The companies in question are primarily Amazon, Apple, Facebook, and Google. Each bill has both a Republican and Democrat co-sponsor and was written by members of the Antitrust Subcommittee.
In the full press release (linked here, which I highly recommend reading in full), are further links to the official bills themselves.
One of them, the Ending Platform Monopolies Act, is a bill that would make it illegal for the online (covered) platform “to own, control, or have a beneficial interest in a line of business other than the covered platform that—(1) utilizes the covered platform for the sale or provision of products or services; (2) offers a product or service that the covered platform requires a business user to purchase or utilize as a condition for access to the covered platform, or as a condition for preferred status or placement of a business user’s product or services on the covered platform; or (3) gives rise to a conflict of interest.”
Another bill, the American Innovation and Choice Online Act, addresses “advantages [of] the covered platform operator’s own products, services, or lines of business over those of another business user.” If there is a conflict of interest, “the court shall consider requiring divestiture of the line or lines of business that gives rise to such conflict.”
What Does That Mean?
This bill could significantly impact Amazon and its publishing entities, including Amazon Publishing (including all their imprints), Kindle Direct Publishing, Audible, Brilliance Audio, and AbeBooks (a used book sales platform). If passed into law, it could mean that Amazon would have to sell those divisions to a third party and no longer be a publisher in any form.
{Notice the nondefinitive language I’m using. I’m writing “could” and “might” as this is all quite preliminary. These are suggested bills sent to the House. If passed unchanged, they have to go to the Senate and, if passed, be signed by the President. And then they must survive legal challenges in the courts.}
The Author’s Guild released a statement on Friday, June 18 that reads, in part, “The Authors Guild and several high profile authors spoke with Rep. Ciclline [D-Rhode Island] about Amazon’s anticompetitive practices, including giving preference to its own imprints on best-seller lists, charging high marketing fees for visibility, and extracting excessive discounts from publishers to undersell independent and small booksellers. We are pleased that his bill specifically addresses these kind of practices. If enacted, it could dramatically reshape the publishing industry for the better.”
So What?
Some of you may be thinking, So what? And for some of you, it means little.
Amazon’s sales and distribution dominance will be unchanged. The difference is that they would be unable to give preference to their own products in advertising placement, in sales data that influences bestseller lists, etc.
It made me wonder: What if Amazon had to sell off their Kindle Direct self-publishing division? A new owner may need to change the financial model that gives a huge share of revenue to authors. Why? Because the new company would only have the revenue generated from book sales to offset expenses. They would not be able to make a profit off the other nonbook sales that Amazon currently enjoys. In other words, Amazon currently can lose money on the sale of a book and make up the loss from other items in the shopping cart. A typical (i.e., traditional) publisher cannot.
Right now, when a KDP author sends a reader to Amazon to buy the author’s book, Amazon collects the sales data from that customer and shows them other things to buy based on their past preferences.
But when an author sends a reader to Amazon and their book is not part of the Amazon publishing ecosystem, the publisher/author only receives revenue on the sale of the book. Not the revenue from the broom, dish soap, and bag of candy the buyer tossed into their purchase cart.
Authors need to watch this carefully. It may not have any effect if the legislation does not become law or if it gets revised or it ends up changed via the court system with lawsuits.
Reminder
Publishing is a business. Never forget that. Amazon has created some great opportunities with KDP and other services to help authors publish independently and separately from the traditional publishers. But if a new owner comes in, the profit side of the equation could take on a different flavor.
It is unlikely that such a divestiture of publishing assets by Amazon will have much impact on the traditional publishing market. The sales channel that Amazon controls probably won’t be affected.
Fun Fridays – June 18, 2021
Amazing prayer points, oh what a way and manner to pray. Thank you so much for passing this onto us writers. May the God we serve, Jesus Christ, bless you more and more with grace to give as you have done.
Thank you.
Thank you for breaking that down for us, Steve. This stuff makes my head spin.
Thanks for the clearly explained information, Steve. For authors who have been considering going indie with Amazon Publishing or KDP, is this the time to take the plunge, or do you advise a wait-and-see approach, knowing it could take a very long time for the bill to go through all the steps to becoming law, but everything could change when it does?
Linda,
In my opinion, one should never wait for ideal conditions in a situation like this.
Remember that the committee’s recommendations are very preliminary. It may take a year to even get the legislation to the floor.
Then it could take multiple years for the legal challenges to be adjudicated via multiple appeals.
As I said, this whole thing is very preliminary. My post is only to alert everyone of a new industry development. And then speculated as to a possible scenario.
Sort of like writing fiction. LOL
Only you can know if it is time to pull that Indie publishing trigger.
I’d say, look into other publishers that distribute to Amazon, eg Draft2Digital for ebooks, and Ingram Spark for print.
That way, you’re not locked in to only Amazon. You can sell on Amazon AND on Apple, B&N, Kobo, independent bookshops, libraries… etc.
Wow! Thanks so much for keeping us informed, Steve. You are so helpful to us all!
Seems to me that if Amazon loses its publishing divisions, the Indies represented there will be squeezed out, and a ‘supermarket model’ will arise, in which the better-capitalized will pay Amazon for higher-profile ‘eye-space’ (as in the supermarket aisle-end spots, and register lanes).
Vanity publishers will take some advantage of this by guaranteeing a certain ‘presence’ in the Amazon ecosystem in return for what they charge authors (they already do this, of course, but it would become a bigger part of their appeal). But the Indie who works hard today with minimal resources to get to a high sales rating in a given category will, I fear, find the going rough.
And platform,
If Amazon, one future day,
would find its Kindle gone,
would the Indie life still pay?
Should my work go on?
Or would I find myself beneath
a choking sea of e-book chaff,
unable to raise my fresh-writ leaf
for more than a wry laugh
at the failure of my mission
against the better-funded teams
that are my competition,
and watch my literary dreams
sink to the gray commercial basement
for lack of funds for product-placement?
Andrew,
Insightful as usual.
It is quite possible that if Amazon is solely a massively large bookstore then their ad placement positioning is up for bidding.
This is already done in many ways via the Amazon Ads process. Those who bid the most for a search engine result get the placement. The only difference would be that Amazon could not give their own products special positioning…which would be considered an unfair practice.
But don’t expect anything of substance to shift the landscape for a few years.
Amazon is not the only option for indie authors/self-publishers.
– Draft2Digital will format & publish your ebooks, and distribute them to a number of sellers, including Amazon.
– Smashwords will publish your ebooks, and sell them directly, and distribute them to other sellers (not Amazon, but they do directly sell Kindle-compatible mobi files).
– Ingram Spark will publish & distribute your print books & ebooks, for a small fee. They go to the same distribution network used by Ingram for traditionally published books. This includes chain & independent bookstores, libraries, and Amazon.
And I’m sure there’s others I’m not aware of.
Author’s/publisher’s margins vary between them, but are mostly similar to Amazon’s.
Interesting … yeah, that could be hard for Kindle Unlimited authors especially.
It’s really strange living in another country and reading this. The legislation will affect authors all over the world; and said international authors have no opportunity to influence the way this goes. We’re out of the loop, waiting for results and hoping it will all be okay.
Rebekah
Excellent point. Note it is “could” not “will” … affect authors all over the world. This is far from being done.
All sorts of things could happen or none of it at all.
There are CF authors who are making six figures (eight if you count the two after the decimal point) because they have an extensive backlist in KU as well as selling for direct royalty.
There are formerly traditionally published authors whose publishers decided not to give them another contract who can still support themselves with their writing because they went indie with their new books and got back rights to some of their old ones to build a backlist they own.
I have faithful readers in Namibia, Barbados, the Falkland Islands, South Africa…you get the idea…because I price my ebooks at the minimum threshold for 70% royalty ($2.99) so international readers can afford them.
One of my non-US readers let me know what he read on page 180 of my third novel was what he needed to keep him going instead of killing himself. (I have been giving thanks over THAT a lot! Much better than winning a literary award!)
Anything that “breaks” the Kindle Direct publishing model will hurt thousands of writers and cut off the supply of inexpensive books, especially Christian ones, to people where even $2.99 is a lot of money, not merely half a cup of fancy coffee.