Containers

I was just reading this summation of the Nick Carr-Clay Shirky battle royale over whether the book is a valuable cultural artifact or simply a container for content that, in its physical limitations, shaped the forms of that content and could be dying out for good, digital or otherwise. To be honest, I was actually glazing over a bit reading it. It’s fascinating, don’t get me wrong, in a high-minded philosophical way, but I think I’ve intellectually moved past all these discussions of form and transition. Why are we still arguing any of this?

Anyway, one particular comment attributed to Carr temporarily pulled me out of my glazed meanderings:

“In response to an email from Wired magazine founder and author Kevin Kelly on the subject, Carr gives some examples of valuable forms of media that he believes have been lost or diminished: namely, “the oral epic poem, the symphony, the silent film with live musician accompaniment, the dramatic play, the short-form cartoon, the map [and] the LP.” And he argues that the book, the movie and the video game could also fall into this category.”

I think Carr has a fundamental misunderstanding about how, exactly, each of these forms of creative effort reached a point of widespread acceptance and popularity. He’s got something of a cart before the horse kinda argument, seemingly implying that media companies arbitrarily decided one day, possibly for higher profit, that CDs were better than LPs, and stopped making LPs. It was the people buying CDs en mass that made that decision for them.

Nothing, not one thing is stopping anyone from making LPs today. In fact, they’ve become quite the successful boutique business for some artists, Jack White comes to mind. But in doing so, you have to either admit that you’re creating a form with a notably smaller market to sell to or you also have to undertake efforts to build a market to go along with the product. The form isn’t obsolete or diminished in any qualitative sense (other than the strictly cumulative monetary decline from the height of the wax album era. But surely, Carr’s discussing high-minded art here, so simple free market economics can’t be what he’s referring to, can it?). The only problem the LP has is that most of its paying market has moved on to other content forms more convenient to their lives.

It’s not up to me as a writer to decide what the optimum forms of creative expression are, nor is it up to Carr, Shirky or any of thousands of other media industry pundits. Even publishers, movie studios and music companies (who have discovered this truth sooner and far more harshly than the others so far) despite their capital reservoirs and strengths of distribution and marketing, have only a limited, minuscule ability to direct those choices.

In fact, there is no one person who can make this decision. The forms of content that reach any level of social application do so beneath a critical mass of regular people deciding in unison what they’d like to spend their money on. CDs overtook LPs because the buying public wanted it so, because CDs had advantages that fit more cleanly into the conditions of their lives at the time. For that same reason, CDs have been usurped by almost totally ethereal electronic forms. Books, print or digital, will live or die by the same hand and there’s nothing Carr, Shirky or anyone else can do about it.

It seems more and more like the publishing industry is missing a very essential point of its existence: we all live at the whims of the people who buy the product. They seem to be forgetting that we in the creative fields of endeavor have to produce both content and form that large numbers of people value enough to pay for. Not just enough to want to watch, listen to or read, mind you, but actually lay down hard cash for. That decision is, has been, and will forever remain in the hands of our audience. The creative forms that service their needs, and most ably makes the case for that aforementioned exchange of currency, will win out. The ones that don’t will end up tacked on to Carr’s list of lost art forms. 

Frankly, I’ve always believed culture belongs to the people. If large enough numbers want print, there’ll be a market for it. The same for digital. And if a super-majority develops that wants some form of the written word that hasn’t been invented yet, usurping both print and ebooks, that’s as it should be.

Every new form that comes along adds new possibilities for the artist. Every old form pushed aside becomes part of a rich tapestry of history and experience that helps shape the use of new forms. LPs didn’t die, they become a foundation upon which mp3 players were eventually built.

If art is your only intent, the old forms still exist, have at it! But if you’re also trying to pay the bills, you’ve got to go where the money is. And that money is scattered about in the pockets of every person out there who’s looking for something to read. Nothing else really matters.

Correcting My Mistake: Petrocelli tops Carr in battle for who can be more wrong about DOJ price fix suit

Last week, I read what, at the time, I thought was the most one-sided, absurdly inaccurate article that could possibly be written about the ebook Agency Model price fixing lawsuit the Dept. of Justice recently filed against Apple and five of the six largest book publishers in the country.  I went through some points on the complete and utter nonsense spouted by David Carr in the New York Times here. Today, being one to readily admit my mistakes, I have to say I was wrong.

Now, I’m not about to suggest that my impressions of Carr’s piece have softened or that I’ve been convinced that he was right about any of it. He wasn’t.  It’s just that I read this piece in the Huffington Post by bookstore owner and former attorney William Petrocelli that, to my complete shock and dismay, somehow managed to reach a level even more misguided and inaccurate than Carr’s propoganda piece.  I guess the old adage really is true: don’t think things couldn’t possibly get worse because they certainly can. Here we go:

The Justice Department is hounding MacMillan and Penguin Publishers, even though those companies and other publishers have done nothing more than try to protect their business from the unfair tactics of Amazon.

This is a very early quote from the piece, but it sets the tone throughout. You can see pretty clearly that his take is Amazon is totally at fault and publishers were doing little more than defending themselves. Interesting take, particularly considering Amazon was the victim in this case, the admitted target of the pricing scheme that publishers (allegedly) illegally colluded to put in place.

News coverage of the DOJ’s case has been almost uniformly critical. When large publishers, small publishers, independent booksellers, Barnes & Noble, Apple Corporation, the American Booksellers Association, and the Authors Guild all agree that this case is terribly wrong, it’s time for the Justice Department take a step back and re-assess what’s doing.

Really? I’ve read more than a few defenses of the DOJ since this was filed, but then again, he might have a point. In the mainstream press, coverage has been generally critical of the case. But consider the sources. Most of the entities that own the mainstream press also own other business interests, you know, like book publishers, including some of the defendants in this case, under giant conglomerate umbrellas. Not exactly an unbiased position to report from, huh?

As for his list of groups inside the book industry that have been critical of the decision, they have one thing in common. They all have notable ties to the traditional industry, and therefore stood to benefit from the price fixing scheme. Without it, genuine adaptation is looking even more necessary, and that places every group inextricably tied to the traditional model at risk.

By the way, the big news this week is the DRM is on the verge of being killed off by some major publishers. Does anyone for even an instant think that would have happened if not for the DOJ lawsuit that stifled the price fixing racket? The lawsuit has already worked as it has compelled these publishers to actually compete rather than spend their time trying to squash competition they don’t like.

The DOJ has stepped into a business it doesn’t understand at all, and it is tilting the outcome against those who are trying to play by the rules.

Huh? I’m sorry, but even as cynical about government as I am, I just don’t see anybody getting sued for antitrust violations for simply playing by the rules. Collusion and price fixing are illegal actions that artificially hike prices and stop or slow down competition. If that’s considered playing by the rules, I’d hate to see what a publisher who was openly cheating looks like. Maybe Petrocelli needs to brush up a bit on what constitutes playing by the rules. Pretty sure breaking them doesn’t count.

What did the publishers do to bring down the wrath of the Justice Department? They did nothing other than what any rational business person would do in the face of unfair pressure from an over-bearing, dominant retailer.

So, according to a former attorney, the rational course of action for a business person faced with growing competitive pressure is to break the law? That’s the rational choice? Not to innovate or adapt? Not to find new ways to compete in a changing marketplace but to violate the law to manipulate market conditions to quash a competitor’s earned advantage? Sure, I guess that’s rational. This must be a line of thinking I missed out on by skipping law school.

If you read the Justice Department’s complaint , you’d get the impression that the publishers adopted the Agency Plan as a means of maximizing their profits at the expense of the consumer.

You know, he’s right. When I read the DOJ complaint, I did get that impression. You know why? Because that was their intent. And it worked. Remember all those stories a few months back about publishers’ profit margins increasing even in the face of declining revenues? How do you suppose that happened? Could it possibly have been consumers paying 30-50% higher ebook prices? And let’s not forget that a big part of the Agency strategy was to protect print profits, as well. Of course, this could just be a serendipitous coincidence for the publishers in question, right?

It is clear even in paragraph 30 of the DOJ’s own complaint that Amazon was engaging in predatory pricing — i.e. by selling e-books at $9.99, Amazon was selling them below cost.

It’s only clear if that’s what you want to believe it says. Here’s a direct quote from that same paragraph 30 that he seems to believe is so incriminating: “From the time of its launch, Amazon’s e-book distribution business has been consistently profitable, even when substantially discounting some newly released and bestselling titles.”

Predatory pricing is generally defined as losing money to run off competition, then recouping those losses later through unchallenged higher prices. But what happens if the supposed predator isn’t actually losing money? Isn’t it just as feasible that Amazon’s managed to develop a more efficient, consistently profitable mechanism for selling ebooks? Maybe they’re not really predatory at all, but actually have a sound, profitable business practice? Notice the emphasis on the word profitable there. Also, there’s the perplexing fact that in all of U.S. history, there’s never actually been a monopoly created through predatory pricing.

To top it off, here’s a quote from the SCOTUS in its 1993 case Brooke Group v. Brown & Williamson Tobacco , dealing with a predatory pricing allegation:

“The mechanism by which a firm engages in predatory pricing–lowering prices–is the same mechanism by which a firm stimulates competition; because cutting prices in order to increase business often is the very essence of competition. Mistaken inferences are especially costly, because they chill the very conduct the antitrust laws are designed to protect. It would be ironic indeed if the standards for predatory pricing liability were so low that antitrust suits themselves became a tool for keeping prices high.”

Interesting that Amazon haters who toss around the predatory label seem to want antitrust law to do exactly what the Supremes in 1993 declared it shouldn’t; chill competition and keep prices artificially high. Even more interestingly, there hasn’t been a successful prosecution in this country for predatory pricing since this decision. That’s because (1) predatory pricing doesn’t work (2) the remedies end up more anticompetitive than the offense itself and (3) very few, if any, are actually engaging in it, not even Amazon.

While it is true the cost of producing e-books is somewhat lower than print books, there are large development, marketing, and other costs that publishers simply couldn’t recover if they were forced to drop their wholesale price significantly below $9.99.

This, to me, seems a little confusing. The market shifts, prices drop and publishers find themselves in a position where their established costs exceed the prices they can bring in. Ok, so that’s Amazon’s fault? It is, in a way, because they largely ushered in the ebook disruption, but other than that, this seems to be pointing out the necessity of publishers to change. Their business model isn’t working with current or sure-to-be future market conditions. Shouldn’t the point here be adapt before you go under? Rather, he seems to be using this point to justify publishers’ actions to stifle the changes in the market to support a status quo your own damn customers are walking away from! I just don’t know anymore. These people work with books, for god’s sake! Wouldn’t some knowledge and logic sink in just out of random chance once in a while?

To really see the disastrous effects of the DOJ’s action, we should probably listen to authors.

By authors, he really just means Scott Turow. Otherwise, you might actually run across some authors who aren’t all that fond of the traditional book business model, and they might even hold opinions that don’t truck with illegal collusion and price fixing. Can’t have that. Don’t these silly writers understand that if something isn’t good for old school publishers, then it must be bad for them, too? I mean, writing and literature–hell, the entire culture itself–will simply cease to exist if the so-called Big Six go under. I’m sure I read that somewhere.

With a new hardcover book, an author will typically get around $3.00 to $4.00 per copy in royalties — hardly an extravagant amount, when you consider the effort that goes in to writing a book. But if the print book fades away and the $9.99-priced e-book becomes the new norm, authors’ royalties would be reduced to a pittance.

If I started selling ebooks on Amazon for $9.99, I’d make $7 a book. I already make the $3-$4 per book he cites for an author’s royalty on a hardcover for an ebook priced at $5. Not that it’s possible to make that, mind you, I already have, virtually every day for several months now, and so have lots and lots and lots of other writers.

This is, again, a problem for the publishers and their business model. Writers get the pittance royalties, particularly on ebooks, because that’s what publishers want to pay. This may well become a problem for those chained to traditional contracts down the road, but the rest of us pretty much just shrug it off and go back to writing.

The entire end of Petrocelli’s article is a virtual point by point presentation of the failings of the traditional model. But unlike what most rational people would do, see the need to adapt, he seems to prefer sticking his fingers in his ears and yelling, “Nah, Nah, Nah, It’s all Amazon’s fault, Nah, Nah, Nah, It’s not fair, Nah, Nah, Nah!”

So, as I said at the beginning, I was wrong about David Carr’s piece being the worst possible. And to show that I do learn from my mistakes and know how to adapt, here’s my new take: William Petrocelli’s piece is the worst, most misguided, one-sided Amazon hating missive I’ve seen, so far. See, adaptation isn’t so difficult.

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