31 May 2014

A Tail of Two Pundits

It was the best of times; it was the worst of times. So, today the New York Times put up dueling analyses of Amazon's blitzkrieg on Hatchette publishing. Joe Nocera, staff pundit versus Bob Kohn participant in the battle.

I'll leave it to the reader to judge which is the true pundit and which the puddin' head; but I will highlight (or lowlight, depending) some key sentences.

The monopsony power of Amazon, which has a current market share of 65 percent of all online book units, digital and print, is not just theoretical; it's real and formidable. When Macmillan, the fifth largest book publisher, displeased Amazon in 2010 by proposing certain changes in business terms, Amazon exercised what has been described as its "nuclear option": It promptly deleted the "buy" buttons in the Amazon online store for all of Macmillan's books. In an instant, Macmillan's entire business was in jeopardy.

Over the years, as Amazon became increasingly powerful, publishers began whispering about how someday that power would be abused. Amazon has always pushed hard for the lowest price possible, but what would happen if it truly became a monopoly?
No matter what you think of Amazon's tactics, they surely don't violate any laws.

Nocera should stick to political bloviating, since he clearly doesn't understand markets (i.e., which side of the bargain is which) or data.

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