Amazon’s Monopsony Is Not O.K.
Just a reminder that Paul has an interest in the outcome of this Amazon vs Hachette horse race. While Paul Krugman is not a Hachette author to my knowledge - Paul does sell through Amazon, and his books are mostly textbooks that come with the outrageously inflated prices that most textbooks tend to have. I’d love to read his textbooks (yes, that’s the sort of wonk that I am,) but I sure can’t afford the kindle price for them. Is Paul displaying some unusual self interest here? You be the judge.
If you haven’t been following the recent Amazon news: Back in May a dispute between Amazon and Hachette, a major publishing house, broke out into open commercial warfare. Amazon had been demanding a larger cut of the price of Hachette books it sells; when Hachette balked, Amazon began disrupting the publisher’s sales. Hachette books weren’t banned outright from Amazon’s site, but Amazon began delaying their delivery, raising their prices, and/or steering customers to other publishers.
You might be tempted to say that this is just business — no different from Standard Oil, back in the days before it was broken up, refusing to ship oil via railroads that refused to grant it special discounts. But that is, of course, the point: The robber baron era ended when we as a nation decided that some business tactics were out of line. And the question is whether we want to go back on that decision.
Does Amazon really have robber-baron-type market power? When it comes to books, definitely. Amazon overwhelmingly dominates online book sales, with a market share comparable to Standard Oil’s share of the refined oil market when it was broken up in 1911. Even if you look at total book sales, Amazon is by far the largest player.