The following is an excellent analysis of several industries, to include the book industry, in an article entitled:
Creeping Fascism, Part One: Return of the Company Town
By: John Rubino | Thursday, February 16, 2012. I am including only the book portion, but I have personal knowledge of several other industries he used for examples to be right on the money. I think you’ll find this both interesting and scarey:
But perhaps the best way to understand the true structure of America’s political economy in the twenty-first century is to talk to some of the people who publish, edit, and write books in America. These days, most articles on the book industry focus on technology. The recent death of the retailer Borders is depicted as a victory of Internet sales over brick-and-mortar stores, the e-book market as a battle between the Kindle e-reader and the iPad. But if we look behind the glib narrative of digitization, we find that a parallel revolution has taken place, one that has resulted in a dramatic concentration of power over individuals who work in this essential, surprisingly fragile industry.
A generation ago, America’s book market was entirely open and very vibrant. According to some estimates, the five largest publishers in the mid-1970s controlled only about 30 percent of trade book sales, and the biggest fifty publishers controlled only 75 percent. The retail business was even more dispersed, with the top four chains accounting for little more than 10 percent of sales. Today, a single company–Amazon–accounts for more than 20 percent of the domestic book market. And even this statistic fails to convey the company’s enormous reach. In many key categories, it sells more than half the books purchased in the United States. And according to the company’s estimates, its share of the e-book market, the fastest-growing segment of the industry, was between 70 and 80 percent in 2010. (Its share of the online sale of physical books is roughly the same.)
Not surprisingly, then, we find the same sort of fear among our book publishers as we do among the chicken farmers of the Sweedlin Valley. I recently sat down with the CEO of one of the biggest publishing houses in America. In his corner office overlooking a busy Manhattan street, he explained that Amazon was once a “wonderful customer with whom to do business.” As Jeff Bezos’s company became more powerful, however, it changed. “The question is, do you wear your power lightly?” My host paused for a moment, searching for the right words. “Mr. Bezos has not. He is reckless. He is dangerous.”
Later that same day, I spoke with the head of one of the few remaining small publishers in America, in a tattered conference room in a squat Midtown office building. “Amazon is a bully. Jeff Bezos is a bully,” he said, his voice rising, his cheeks flushing. “Anyone who gets that powerful can push people around, and Amazon pushes people around. They do not exercise their power responsibly.” Neither man allowed me to use his name. Amazon, they made clear, had long since accumulated sufficient influence over their business to ensure that even these most dedicated defenders of the book–and of the First Amendment–dare not speak openly of the company’s predations.
If a single event best illustrates our confusion as to what makes an open market–and the role such markets play in protecting our liberties–it was our failure to respond to Amazon’s decision in early 2010 to cut off one of our biggest publishers from its readers. At the time, Amazon and Macmillan were scrapping over which firm would set the price for Macmillan’s ebooks. Amazon wanted to price every Macmillan e-book, and indeed every e-book of every publisher, at $9.99 or less. This scorched-earth tactic, which guaranteed that Amazon lost money on many of the e-books it sold, was designed to cement the online retailer’s dominance in the nascent market. It also had the effect of persuading customers that this deeply discounted price, which publishers considered ruinously low, was the “natural” one for an e-book.
In January 2010, Macmillan at last claimed the right to set the price for each of its own products as it alone saw fit. Amazon resisted this arrangement, known in publishing as the “agency model.” When the two companies deadlocked, Amazon simply turned off the buttons that allowed customers to order Macmillan titles, in both their print and their e-book versions….”
Mr. Rubino also commented on industries such as silicon valley, chicken raising operations, micro breweries, and others. Those of us in the book business know the above comments to be true.