Amazon deploys its market power against creators

When she yanked her tunes off Spotify two months ago, Taylor Swift spoke a simple but sometimes forgotten truth: “Valuable things should be paid for.”

The immensely talented Swift felt she was getting a raw deal from the music streaming service, which was selling her music to its subscribers for a song. She won’t go broke anytime soon, but her frustration is shared by thousands of less popular artists and authors whose income is getting squeezed by emerging forms of marketing.

For the people who create America’s fiction and nonfiction, Amazon is becoming the new Spotify – selling books at prices so low that even talented authors may see little reward for their labor. As The New York Time reported last week, writers who once celebrated Amazon are seeing their earnings drop drastically.

Readers aren’t complaining; they’re getting books dirt cheap. Amazon’s new Kindle Unlimited subscription service – which offers access to 700,000 titles – goes for $9.99 a month. Someone who reads a couple e-books a week effectively pays $1.25 per copy.

But that sweet price could eventually carry a brutal cost. High-quality books are not commodities like shoes or cell phones. Each is individually crafted, often over a period of years.

No product is more important. Since writing was invented thousands of years ago, books have been the primary way complex insights have been communicated and preserved. The rise of the Internet won’t change that. The Web itself revolves around the written word; no other medium is going to produce the equivalent of a “Harry Potter” or “Hamlet.” Even movies are built on words – screenplays and often original novels.

Professional writers are like anyone else; they have to make money. They have bills to pay, children to feed, houses with mortgages. Few are wealthy. For every J.K. Rowling, there are hundreds of talented authors barely making ends meet while producing exceptional work.

Many were delighted a few years ago when Amazon’s self-publishing system allowed them to bypass traditional publishing houses and sell their work directly to Amazon’s vast customer base. The company let them pocket 70 percent of the selling price instead of the traditional 15 percent paid by hard-copy publishers.

Self-published writers even cheered for Amazon this year when it got into a contract brawl with Hatchette, a publishing house that carries the likes of Michael Connelly and J.K. Rowling herself.

But Amazon’s tactics were disturbing. It didn’t just drive a hard bargain; it sabotaged Hatchette’s sales on its website by raising the prices of its books, delaying their listing and nudging readers toward non-Hatchette titles.

If Amazon were just one of many retailers, that would be no big deal – Hatchette and other publishers could take their business elsewhere. But Amazon dominates the industry. It accounts for nearly two-thirds of all sales of print and online books, and 40 percent of all new books. That’s what economists call a monopsony: a company that controls so much of a market that it can dictate prices to its suppliers.

We’re not worried about the publishing houses; like every other industry, they must adapt to the Internet or die. But the writers themselves – and the people who edit and illustrate their books – may deserve more protection than the law now offers.

Amazon’s approach to Kindle Unlimited reflects a casual arrogance of power. It presumably values self-published writers. Yet it insists on exclusivity – forbidding them from marketing their work elsewhere – while driving down their earnings. It’s doing that because it can do it.

When the victims of a monopsony are individual creators – the people who produce our books, music, videos and other art – the public ought to be nervous. If valuable things don’t get paid for, the world winds up with fewer valuable things.