Amazon’s Bezos thinks ebooks made the book industry healthier

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“The book industry is in better shape than it ever has been and it’s due to ebooks,” Amazon CEO Jeff Bezos told an audience on Tuesday in a wide-ranging interview that addressed the company’s drone plans, its campus culture and its indifference to pain of short-term shareholders.

Speaking at a BusinessInsider event in New York, Bezos downplayed [company]Amazon’s[/company] recent high-profile spat with publisher Hachette as a run-of-the-mill fight with a supplier, adding that it’s the essential job of any retailer to fight for the best price for its customers.

As for the publishing industry and its authors, Bezos argued that $30 is too high a price for books, and that lower prices will lead to more readers, which will in turn benefit everyone. And in a remark that may have been intended to head off antitrust arguments, he urged people to consider book prices in the context of a larger entertainment market.

“Books don’t just compete against books,” said Bezos, pointing out that readers can just as easily turn to a blog or a movie or a Candy Crush games.

He also noted that some well-situated incumbents can have a hard time accepting change, and warned against glamorizing an idealized past.

“6 hours a year” for investor relations

Amazon has always appeared famously indifferent to both profitability and share price, and Bezos reinforced that perception on Tuesday by stating that spends all of six hours a year on investor relations.

In response to a remark by host Henry Blodget that Amazon had lost “a boatload of money” last quarter, Bezos said that focusing on quarterly earnings is a strategic mistake, and likened short-term adjustments to “eating your seed corn.”

“In the short term the stock market is a voting machine, in the long term it’s a weighing machine.”

The CEO said he does not take the time to meet with most of Amazon’s largest investors, many of whom he regards as traders rather than investors. Instead, he prefers to speak with those who have a low turnover in their stock portfolio, and who will appreciate the company’s long-term strategy.

That strategy, he said, requires seeing Amazon as a collection of companies, some of which are long-term ventures that generate cash and others are bold new bets.

Asked how he reconciled his mantra that company’s should have a narrow focus with Amazon’s evermore sprawling ambitions — books, TV, cloud services, groceries, and so on — Bezos said that the job of senior executives is to decide on when a firm should stick to its knitting, and when it shouldn’t.

The stupidity of massage culture and the future of drones

Bezos is not from Silicon Valley. When asked about giving a college student on career choices, would he suggest they choose a company that offers massages? Bezos was clearly scornful of that idea, and the pampered culture of perks for which rivals like Google are known.

According to Bezos, Amazon has just as many amenities, but that those amenities are just different that at other companies. He pointed in particular to Amazon’s urban Seattle campus, which he said permits many in the workforce to walk to work, and enjoy a vibrant local food truck culture.

He also posted of facilities that let employees bring their dogs to work and open their office windows.

Towards the close of the interview, Bezos also shared his thoughts on the role of drones, which Amazon is investing in heavily.

While clearly excited by drone technology, especially that related to machine-guided vision systems, Bezos also said he is worried about the regulatory environment.

“It’s sad, but it’s possible that the U.S. could be late [to drone development],” Bezos said, noting that Amazon’s drone teams — which are now working on a tenth drone prototype — have the highest lawyer-to-engineer ratio in the entire company.

6 Comments

Marshall G

This shows he doesn’t get readers: “Books don’t just compete against books,” said Bezos, pointing out that readers can just as easily turn to a blog or a movie or a Candy Crush games.

Many voracious readers like myself, have no interest in Candy Crush, and I suspect those spending a lot of time on CC more often than not are not serious readers.

Niki Tim Bowden

Books in the hand are physical, those in the head are metaphysical, and the party of the first part often regard reading as a social enterprise like drinking and golf.

Michael W. Perry

In themselves, ebooks are good for authors and publishers. The problem is that Amazon isn’t good for either. All it takes to realize that is is a look at some figures.

Apple’s done well since 2003 selling digital music and later apps and ebooks and offering their creators a 70/30 split. It’s that large slice of the pie that benefits authors and publishers while letting them benefit their readers by lowering prices. Make no mistake about it. 70/30 is profitable for a retailer, particularly as the cost of web services has come down. There’s no reason for ebook retailers to be offering a penny less.

Forced to compete with Apple, Amazon only reluctantly agreed to a 70/30 split and then only by adding an inflated download fee that lowers its real royalty rate to 60-65% and offering that rate only over the narrow range of $2.99 to $9.99. Outside that range, Amazon pays a miserly 35%, scarcely better than a publisher pays its authors while providing numerous services.

It’s doesn’t take much reading between the lines to see that Amazon’s long-term goal is pay authors and publishers no more that 50% of the retail price, retaining the rest for itself, although it provides no more service than a credit card transaction and file download that costs it mere pennies. Amazon is making every effort to dominate ebook sales because it intends to make of it an extremely lucrative, risk-free near-monopoly.

Those who doubt that should look at Amazon’s new crowdsourced scheme for its Kindle store. It only pays 50% of retail and forces authors to accept of host of restrictions on what they can or cannot do. Authors give up concrete rights that matter a lot and only get in exchange Amazon’s vague promise to promote their book.

If Amazon has its way, that’s the future of ebook publishing. Authors and publishers will get 50% of retail if and only if they agree play by Amazon’s rules about pricing and distribution. Otherwise, they’ll only get about 35%.

That is very, very, very bad for authors and publishers. Their incomes will be halved and ebook quality will suffer as authors and small publishers are unable afford expert editors, proofreaders, cover designers and others to help them with their books. They’ll work long hours and earn a pittance while the grinning Jeff Bezos, pictured above, pockets enormous profits for doing essentially nothing.

Ebooks are great for authors and publishers. It’s Amazon’s not that well hidden agenda that poses the threat.

Thad McIlroy

Not terribly original: “Books don’t just compete against books,” said Bezos, pointing out that readers can just as easily turn to a blog or a movie or a Candy Crush games.”

See George Berkowski’s November 18 preso: “[Your competitors] are not the independent publishers. They are the people trying to get people’s attention and doing it in a flashy way, with whizzbang and candy floating over your screen.” (http://www.thebookseller.com/futurebook/curious-and-curiouser-what-we-discovered-futurebook-2014)

And before that, last June, from Amazon’s own Russ Grandinetti, “Books don’t just compete against books. Books compete against Candy Crush, Twitter, Facebook, streaming movies, newspapers you can read for free.” (http://www.nytimes.com/2014/07/13/technology/amazon-a-friendly-giant-as-long-as-its-fed.html)

Robotech_Master

Uh…wouldn’t they be the only department in the entire company that had a lawyer-to-drone ratio, given that they’re the only department concerned with using drones?

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