Aiming a Gun at the Wrong Target →

Dennis Johnson in the company blog of Melville House, an independent publisher:

Hovering over the entire story, meanwhile, is the innate weirdness of the DOJ’s decision: not only to fly in the face of the Leegin decision, but to charge Apple, and not Amazon, with an antitrust violation. After years of flagrant and public predatory pricing and behavior on the part of Amazon, not to mention its refusal to obey tax laws, the fact that it’s Apple being charged — Apple, the company that’s so good at fixing the price of books that it, er, hardly sells any at all — is a travesty of justice.

The “Leegin decision” that Johnson refers to supposedly allows companies to set price wars that had to be respected by retailers. But everything about the antitrust case against Apple seems to be about the alleged collusion between Cupertino and the publishers.

U.S. Government Files Antitrust Suit Against Apple and Major Publishers →

The hammer that’s been hovering for the last few weeks has finally dropped. Bob Van Voris in Bloomberg:

Apple, Penguin and Macmillan want to protect the so-called agency model that lets publishers — not vendors — set e-book prices, said the people on April 5, who declined to be identified because they weren’t authorized to speak publicly.

The government is seeking a settlement that would let Amazon and other retailers return to a wholesale model, where retailers decide what to charge customers, the people said. A settlement could also void so-called most-favored nation clauses in Apple’s contracts that require book sellers to provide the maker of the iPad with the lowest prices they offer competitors, the people said.

This whole thing seems bizarre. To wit:

• What is the substantial anti-competitive difference between this and the way Apple has handled negotiations and pricing with music labels? Is it entirely to do with the agency pricing model? Or that Apple apparently had a discussion with the publishers?
• How has this had a negative effect on consumers?
• Publishers are screaming bloody murder over the way Amazon is treating them — and they’re doing that because of the enormous amount of influence that Amazon has over the book industry
• Amazon’s whole model is highly dependent on predatory pricing. Laws against predatory pricing are difficult to enforce, but they have gotten dinged on it before.

UPDATE: Here’s the PDF of the suit. The evidence presented seems laughable, but I’m not a lawyer.

The Death of Middle Class Jobs →

Matthew Yglesias, in Slate:

According to the BLS, about 2 million more people were working last month than were working a year ago. But we have 10,000 fewer people working in general merchandise stores. We have 20,000 fewer people working in electronics and appliance stores. We have 17,000 fewer people working in “sporting goods, hobby, book, and music stores.” Now the overall BLS retail trade category includes other stuff including things like health and personal care stores that seem healthy. But the point is that over the course of a year in which the level of economic activity has clearly risen, certain major categories of big box retail have shed jobs. Given a few months in a row of torrid overall growth, presumably some of that would stabilize.

Amazon is going to continue to Walmart Walmart.

Related: Best Buy CEO resigns.

Amazon's Strong Arm →

Amy Martinez, in The Seattle Times:

Now, McFarland and others in the book world worry that Amazon will use its pricing pressure to crush publishers. They say Amazon’s demands for deeper discounts threaten already-thin profit margins, and some warn about an Amazon monopoly.

Remember when Walmart was the Empire?

Robots at Amazon →

Amazon bought robot maker Kiva Systems last week. Nick Bilton asks in the New York Times:

In other words, these robots will most likely replace human workers in Amazon’s warehouses.

Is this one more step, a quickening step, toward the day when robots put many of us out of work? Most roboticists don’t see the coming robot invasion that way.

Maybe not, but Amazon is a company built around cutting costs. The company operates like a supermarket, and as a result has the same sort of extremely thin margins. And besides replacing hundreds or thousands of warehouse employees, robots presumably don’t complain about the heat.

A Bear's Argument Against Amazon →

An unattributed piece on First Adopter:

At the close of trading on Friday, March 9th Amazon stock price was $184.32 trading at a premium multiple of 143Xs 2012 earnings.

What multiple do you give a business that is goosing revenue with uneconomic free shipping subsidization?

What multiple do you give a business that is directly in the cross-hairs of Apple in the shift to digital media after what Apple did to Nokia, Research in Motion, HP, and Palm?

What multiple do you give a business that put its future on a shoddily-built tablet that is failing in the market place?

(via Kontra)

Androids 'Brilliant' Plan Isn't Anything New →

Farhad Manjoo in PandoDaily on Amazon’s high trade-in prices for iPads:

Nope. There’s one catch to Amazon’s trade-in program, and it’s brilliant. While other sites will give you cash for your old goods, Amazon will only give you store credit. Thus, the “extra” money you get from Amazon compared to other trade-in services isn’t a total loss for Bezos. All that cash will be plowed back into Amazon’s own business. Depending on what you buy with your newfound wealth, the company may be making a nice profit on the deal.

I think it’s too early to tell if this is brilliant or not — but there isn’t much that’s new about Amazon’s strategy. Most shops that offer both used and new merchandise — from book stores to Gamestop — have always offered more for store credit than for cash. Amazon may be a tech company, but its policies are right out of retailing history. If you’re interested in Amazon’s strategic moves, a good place to start is a very old-school company: Walmart.

Is Mobile Ad Traffic a Good Indicator for Developers? →

Ingrid Lunden in TechCrunch on recent figures by JumpTap on how the Kindle now delivers 33% of their mobile ad traffic for tablets:

This is a key point, because it indicates that those who are buying the Kindle Fire are also buying into the whole service-led proposition behind it: content is something that Apple has, up to now, been able to say that it does better than any other Android tablet maker, but Amazon’s mix of its appstore apps, plus offerings of streamed content and more besides appears to be giving that idea a run for its money. That also indicates to developers that this is a potentially strong platform to develop for.

That’s one way of looking at it. I tend to see this another way: this is actually a cautionary sign for developers — it can indicate an unwillingness on the part of Kindle Fire customers to pay for apps. Paid apps usually don’t have ads.

Why Don't Consumers Seem to Care About DRM in eBooks? →

Mathew Ingram, GigaOM:

It’s one thing when an independent bookstore owner decides not to carry a book for personal reasons, and even when a national chain decides not to stock books because of their subject matter (although those decisions also often get criticized by free-speech advocates, with good reason). But what makes the recent moves by Apple and Amazon and Barnes & Noble different is that they also own the major e-reading platforms, of which Amazon is the largest in terms of market share. So it’s not just the stores they control, but one of the fundamental methods of reading those books.

What’s interesting to me about all of this is that there doesn’t seem to be much pushback against DRM in books as there was against DRM in music. The moves by Apple with regards to the Seth Godin issue are seen as completely understandable from a competitive standpoint, but that doesn’t make it any less consumer-friendly.

One theory I’ve been kicking around about this is that Kindle’s ubiquity on platforms lessens fears consumers may have about DRM and may in fact be why Kindle is the leader in the eBook market. If you’re buying an eBook, it’s better to buy it from Amazon because it can be read on many more devices than an eBook from the iBookstore. You can read it on the Kindle, of course, but also an iPhone, iPad and most Android devices. If you’re buying from the iBookstore, the mobility of the book is much more limited than it is compared to Amazon.

The difference between DRM in eBooks and DRM in music is now DRM’s main purpose isn’t to combat piracy but to ensure competitive lock-in. This was written five years ago, when DRM in music was still an issue:

Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players.

That was Steve Jobs. A lot has changed since then.

What’s Weird About the Seth Godin Thing

There’s been some reaction to the Seth Godin/iBookstore rejection tempest-in-the-making that is somewhat understanding of Apple’s presumed position in this case. Watts Martin:

While I’m sympathetic, I think this is a murkier case than Godin makes it out to be. In a technical sense, you can argue that links to a competing storefront are “content,” but they’re not facts, theories or ideas—they’re not what we normally mean when we think of a book’s contents. Godin’s book isn’t being suppressed by Apple because they want to stifle the availability of his radical thoughts. I agree with Godin that Apple should let people read any book they choose to, but that’s not the same argument as “Apple should publish books with links to Amazon’s storefront.” Perhaps it’s petty for Apple to disallow that, but even if every electronic book store on the market disallowed links to other book stores in their ebooks, the free speech of authors would hardly be irreparably harmed.

The problem I’m having with this argument is that it’s not Kindle versions that are being linked to, but physical books. If it was Kindle versions, this would make the whole thing seem much clearer. And while physical books compete with iBookstore’s offerings, Apple has not made any move to take their 30% tithe off the physical books Amazon already sells to iOS customers through the Amazon apps.

That last thing — that Amazon has an app, and that Apple doesn’t want 30% off physical book sales from within the app — that’s the weird thing. Because the logic that is being presumed on Apple’s part affects not just content within books but also application behavior. Amazon doesn’t have a custom URL scheme for their apps as far as I can tell, but if they were to implement one that would allow searching for a book within the app, how is that different than what Godin did with the links? If I tried to release an app that did nothing but link to Amazon’s physical books — which is, once again, what the Amazon apps already do — why shouldn’t that be disallowed as well?

There are also the cases where there may not be an eBook version. If an author were to link to Amazon in this case, would that be rejected as well? Or out-of-print books? Or linking to a site that is the only source for a physical book not available in electronic format?

In all these possible examples, it’s towards Apple’s competitive advantage to put pressure on publishers to publish everything electronically and publish it in the iBookstore. That rationale is not especially surprising. But it just seems, I don’t know, churlish?

Congratulations on Your Lube Job →

Nick Bergus, on inadvertently becoming the salesman for a 55-gallon drum of lubricant on Facebook:

I’m partially amused that Amazon is paying for this, but I’m also sorta annoyed. Of course Facebook is happily selling me out to advertisers. That’s its business. That’s what you sign up for when make an account.

But in the context of a sponsored story, some of the context in which it was a joke is lost, and I’ve started to wonder how many people now see me as the pitchman for a 55-gallon drum of lube.

(via Kottke)

Android Apps Make More Money When They're Not Sold Through Android Market →

It’s still early, as Sarah Perez in TechCrunch points out, but it looks like Amazon’s curated Appstore is shaping up to be better for developers than the official Android market:

So maybe it’s not so surprising that Amazon’s Appstore is beginning to prove itself as a better revenue generating platform for some mobile application developers than the official Android Market. After all, Amazon’s store is a “curated” collection of apps. The apps are tested, reviewed and made sure to be malware-free and stable before being listed on Amazon’s store.

Users don’t give a shit about “open”.

iBookstore is Not Even the Second Most Popular eBook Market →

From Julie Bosman’s article in the New York Times on how Barnes & Noble is trying to stay alive is this interesting tidbit:

A bit of good news for the company is that, thanks to the Nook, it’s been grabbing e-book business from Amazon. Mr. Lynch said Barnes & Noble now held about 27 percent of the market, a number that publishers confirm gleefully. Amazon has at least 60 percent.

I hadn’t realized how popular the Nook was. Most coverage of the eBook market posits it as Apple vs Amazon, but I hadn’t realized that Apple only has at most 13% of the eBook market. It’s probably less taking into account other efforts like Sony’s Reader Store.

Amazon is Doing its Real Job: Squeezing Retail Chains →

Dan Frommer at SplatF:

The real story right now is that Amazon — both through its Kindle business and its broader e-commerce business — is driving retail chains crazy. This is by design, of course: Recall that e-commerce is still less than 5% of U.S. retail sales. So driving brick-and-mortar competitors into the ground and directing more spending toward Amazon is absolutely what Amazon should be putting most of its effort into.

Remember the headlines from a few years ago that Wal-Mart was destroying small businesses and communities? Amazon has turned retail chains into small businesses.

Apple Went A-Courtin’

One line in Clayton Morris’s report on Apple’s January Event didn’t sit right with me:

The event will be in New York rather than in the Silicon Valley because New York is more centrally located for textbook and publishing.

Is this actually true? Think back to when Apple announced the iTunes Music Store back in 2003. They did it from the Moscone Center in San Francisco, not New York or LA where the major labels are based. It seems like that when Apple travels for an event it means they’re lacking strength. They’re courting industries where Apple has much less negotiating power in the relationship.¹

It’s true that in 2003 Apple only had about a third of the digital music player market. iPod sales were a fraction of what they would come to be. But the iPod was ascendent. And, more importantly, the industry was being decimated by piracy. The writing was thick enough on the wall that even record label executives could see it. And when they were beckoned to Cupertino, they went, bit their tongues and signed on the dotted line.

The publishing industry is a different beast. Book publishers generated $31 billion in revenue in 2011 compared the relatively paltry $7 billion the major labels brought in. Piracy is a growing problem, but still relatively small compared to how it’s affecting the music, movie and television industries. And, obviously, Apple’s got to contend with Amazon, which is the single most important partner the publishing industry has today.