Monday, July 08, 2013

The New York Times takes yet another dump on Amazon

The New York Times' David Streitfeld is at it again. Last FridayThursday, the Times published an article written by Streitfeld that charges that Amazon is using its "monopoly" on book sales to increase prices. The bottom line was that Streitfeld claimed, using completely anecdotal evidence, that Amazon is increasing prices on some academic and small-press print titles; eBook prices are unaffected. How many titles are affected, and the average price increase, either in dollars or percentage, Streitfeld didn't say. He lists price changes for less than ten out of several million titles.

Even if Streitfeld is correct, and Amazon is generally increasing prices on academic and small-press print books, there are at least two reasons why they'd do so that have absolutely nothing to do with abuse of Amazon's market share:
  1. The company is compensating for the costs of stocking slower-moving titles. Unlike eBooks, print books take up warehouse space, and have to be physically picked from shelves, packaged and shipped. A slow-selling title takes up space that could be used for a faster-selling title or a completely different type of merchandise. That space has a cost, and the cost is allocated on a per-copy-sold basis, whether or not Amazon passes it on to consumers. Amazon may simply be passing that cost onto consumers in the form of lower discounts.
  2. For the reason stated above, Amazon may be considering not stocking some of these low-selling titles and instead buying them from distributors as orders are received, which would increase its costs. (This was the way that Amazon first started business.) By raising prices now, Amazon can gauge the impact on demand and change course if needed.
One other point: If you prefer not to buy an academic or small-press title from Amazon, you can always get it from Barnes & Noble or an independent bookseller. If they don't have it in stock, they can order it for you from Ingram, Baker & Taylor or an academic distributor. However, I can almost guarantee you that you'll pay the publisher's list price.

Now, just three days laterThe following day, Streitfeld and the Times came back with another article that makes an even more ridiculous allegation: Amazon's pricing model makes it impossible for customers to determine the "true" price of its books. He says that book prices will be "determined by demand and perhaps by whim." I thought that we lived in an free economy where supply and demand determines prices, and that the law of demand is a good thing. Apparently, according to Mr. Streitfeld, I'm wrong. Consumers should accept whatever prices are set by vendors and buy their goods and services, no matter what the price. Silly me.

Streitfeld also claims that Amazon's pricing policies are now "a radioactive topic with some vendors." For that claim, he uses two publishers as examples: The University of Chicago, which refused to answer because its pricing policies are proprietary, and Melville House, which has had a long and very public adversarial relationship with Amazon. Streitfeld suggests that the University of Chicago Press's refusal to discuss the subject is because of fear of retaliation, but it could equally be due to the fact that most companies that sell through distribution don't discuss their pricing policies. For example, Apple is happy to discuss the retail prices for its devices, but ask it how much it charges Best Buy for those products, Best Buy's retail markup on their wholesale cost, or its reaction to Best Buy's pricing policies, and all you'll get is a stony silence. In addition, discussing pricing can be seen as signalling, which can be of benefit to competitors and can also be used to fix prices. But, apparently, Mr. Streitfeld didn't think that those alternate explanations were plausible.

Let's go back to Streitfeld's original argument, that consumers are unable to determine the "true" price of books sold by Amazon. In my experience, Amazon always shows the suggested list price set by publishers for both print books and eBooks, as well as its price and the discount (if any.) Shipping costs are clearly visible when you place the order, and can be adjusted based on speed of service. (Amazon Prime members generally pay nothing for shipping if they're willing to accept two business day service.) Even sales taxes are fairly simple from the consumer's point of view: If you live in a state where Amazon collects sales tax, Amazon will calculate and add the tax to the order. If Amazon doesn't collect taxes in your state, they don't add them to your bill, and it's up to you to determine whether or not your state requires you to pay the sales tax separately. How does any of this obscure the "true" price of books? I know what the publisher has set as its suggested list price, what Amazon charges, the discount off the list price, the shipping cost and (in some states) the sales tax.

I'm going to use two terms that reporters and editors don't like to see, especially in relationship to themselves: In my opinion, David Streitfeld is a hack. There is absolutely no way to read his articles as anything other than what they are: Hatchet jobs on Amazon. Even when he does manage to speak to someone at Amazon, he turns their response into a reinforcement of his argument. I'm not even sure what Mr. Streitfeld's job is at the New York Times. Is he a reporter? If he is, his articles fail any reasonable test of objectivity, and should never make it to print. Is he the Times' columnist in charge of dumping on Amazon? If so, he's doing a great job--but his column should be on the editorial page or in the Op-Ed section, not in an area of the paper where readers expect hard news.
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