Windows into the Imagination

Wednesday, November 7, 2012

More Shady Practices by Amazon

I was doing my usual round of bestseller rankings stats and this time, took a closer look at how prices are displayed on Amazon.

First of all, Amazon does the despicable practice of putting books by some of the Big-6 as 9.99 on the Top 100 List, but when you open up the link, it shows the REAL price, which is more than 9.99. This is a nasty psychological trick to paint these publishers as liars and cheats. i.e. tricking people into thinking it's a lower price when it's really higher.

EXCEPT that it's Amazon that is trying to trick the consumer and for a very nasty reason, in order to make it seem like the publisher is the bad guy who is trying to deceive the public and it's not. They've been very upfront about their pricing. It's Amazon whose being dishonest.

Second note. If you look at prices for various books from the trad publishers, there is a wide range of pricing, reflecting fair market value for the works of those authors, ranging from 1.99-14.99 or more.

Some authors' works are worth far more than the average writer and definitely more than your newbie. So the pricing reflects this. It is a value that is agreed upon by the consumer because they're buying it. If the consumer didn't agree that this author's works are worth more, they wouldn't put them on the top 100 at that price. That's simple economics.

People buy because of the product, which for a book, is the author's name and the story. People don't buy books because they think they're getting really valuable paper. It's not about the paper. In pricing of books why should the paper figure into it at all?

When you buy a print book, do you go around telling your friends 'Look at how much paper I got. 150 pages worth. Wow! Feel that paper. Heft that weight. It can be a great paperweight as well as a book!'


Do ebooks not require the same amount of acquisition, content-editing, line editing, proofreading, cover design, sales & marketing, advances to authors as paperbooks?

Yes, they do!

The only difference is the cost of the medium. The major costs of producing a book, whether an electronic book, or a physical paper remain the same.

But what about the paper? Paper is expensive these days. Really?

Let's take a look a bit at the reality of book production costs. Even for a HARDBACK book, which costs much more than a paperback, the cost of producing a gorgeous, full-color edition of a $30 hardcover book is...$3.50. That's for a hardback with all the trimmings. It's far less for a paperback. paper books need to be priced far more than an ebooks? Or its corollary, do ebooks need to be priced far less than a a paper book because of all the not-very-pricey paper printing?

It makes no sense to price them as if the printing process itself is really expensive. It's not.

The major costs of producing an ebook and a print book, which isn't the physical product, are still the same. So why shouldn't ebooks be priced very similarly to print?

Just because the tide of self-publishers now have reduced the art of book covers to something that someone with a crayon and a handy graphics program can do (like having a program makes someone an artist...I guess if the same applies to being a writer, why can't it apply to art? *eye roll*), why can't we do that to the craft of editing, proofreading, marketing...Because people who do it for a living must be stupid and they're just fooling us that it takes talent, skill, experience and training to produce something good.

It's the MacDonald-ization of the book industry.

Just because MacDonalds sells edible food that many people buy, doesn't make it good or even healthy food. There is still such a thing as quality. It applies to food and books.

I was attending a panel by book cover and graphic artists. These people are amazingly gifted. Most are traditional medium artists as well as digital. They've forgotten more about art and graphic design than most people will ever know. They are embracing the new world and unlike many self-publishers who whine and blame other people for not taking them seriously, these artists don't. They feel that if you can't adapt and succeed on the strength of your own work, you don't deserve to be in the industry. Whining just doesn't cut it for them.

But what did disturb me was discovering that while many of these people have been industry for 10, 20, 30 years and used to be able to support themselves and their families on just doing cover art, they no longer can and have looked for other avenues. Some people doing art for graphic novels. Some taking a stab at being writers themselves. Because if anyone can be a writer just by uploading a file and calling themselves one, then they can too.

Next is the publishing of back lists.

Even for publishing of back lists which the uninformed seem to think should cost nothing because they already have the content and it already has a cover and been edited. There should be no cost other than for uploading it, which is nil. Right? Uh, not really.

Okay. Another dose of reality here. And a little education for those who like to guess and claim things using 'logic' and rationalization that's totally devoid of any real facts or the reality of the publishing industry and economics.

When did computers become a household item? I can tell you that they weren't in my house when I grew up and weren't in the schools until much later in my life. Just because they're common as bread now doesn't mean they've been around forever.

The majority of backlists are not in electronic format. How do you think they're going to get them into a computer? Typing mice? One of the things I discovered during the WFC last week was the cost involved in bringing backlists into the electronic market. They OCR the physical text. Then they need proofreaders going through the text again because the OCR technology is not perfect and there are usually errors in the final file.

An example of this is some of Barbara Hamblys backlists that have been translated to electronic form. She's a brilliant writer and one of my favorites so I rebought a lot of my favorite books from her once they appeared in electronic form. I discovered to my horror a lot of errors in the text. And being a techie, I soon realized that someone had done a mass edit and replace of certain combinations of letters. Programmers never do that. At least not the good ones. It's because you inevitably change programming you didn't intend to while fixing something you did.

Fortunately her later books are better so someone obviously learned and did a proper edit before releasing it. Chalk that up to lack of understanding about the power of a mass copy-edit.

What about the cover? Are they different from the text and are somehow in some magical electronic format when text wasn't? No. They have to be redone too. Do that the publishers have some storage space where they keep copies of twenty, thirty, forty years of art work?

All that costs. So do republishing backlists cost next to nothing? No. No. No.

Amazon doesn't care about books or authors. They very happily would reduce it to nothing in order to get more people to buy their Kindles and sign up to their Prime service.

Oh wait. They have already put a program into place that does reduce the value of books to nothing. It's called the KSP. Exclusivity used to mean something, but because of Amazon, it's been reduced to a marketing ploy that encourages authors to give their books away for nothing and to tie themselves and their customers to Amazon's proprietary format...not to benefit the authors. Because putting all your eggs in one basket is never, never, never a good idea. Any five year old will tell you that. I guess authors are a different story.

Don't think Amazon would underprice things, sell things at a loss in order to drive more business to its site? Amazon sells far more than just books. It needs customers to buy stuff from Amazon and it needs an incentive. Guess what. Books are that incentive. Look at all the free and cheap stuff you can get on Amazon. Come and take a look, and buy other stuff. They don't care that by selling at a loss hurts the authors and publishers in the long run, as long as it drives business to their site. They don't depend on books to make money even if you do.

Don't think so? Look at how the Amazon site is structured. When you open up the pop up menu, what appears first? Hmm, that would be Amazon's Prime service. Amazon's Cloud drive. Any mention of books yet? Not a one. It must be here somewhere. Next. Kindle. That's close. But no cigar. Then we get 'Appstore for Android' and 'Electronic Games and Software'. Hey I thought we were getting closer. Not really. Still think books are important to Amazon?

It's definitely not listing by alphabetical order unless your alphabet begins with 'U' (Unlimited Instant Videos) and goes onto 'M' (MP3s and Cloud Player).

Mine begins with the pedestrian 'A' like everyone elses.

And 'Unlimited Instant Video' and 'MP3s and Cloud Player' aren't even remotely connected to books.

Let's take a look at the Kindle menu item for a moment. It's amazingly detailed. It lists every single Kindle currently available as its own menu item. THEN, amidst all of that, like a needle in a haystack, we finally get the first mention of books: 'Kindle books.'

Getting back to the main menu. We then have Audio books. Which is odd since you'd think they shouldn't be a big selling item compared to ebooks. Not to mention most audio books are of traditionally published books. It's not a market self-publishers can afford to get into in a big way yet.

THEN we have Books. Yes, after all the focus on Cloud, Kindle, Prime and even AUDIOBOOKS for &^%sakes, we FINALLY have Books.

Still think books are important to Amazon. Visually, the picture is very clear.

And for those who insist that buying books from Amazon is much easier. Really, going to main Amazon site, finding books is really like looking for a needle in a haystack. How exactly is it easier for book buyers? Cause I can't see it.

And from the 'Books' menu item, we get simply Books, Kindle Books, Childrens Books, Textbooks, Audiobooks and Magazines.

(Wow, why are audiobooks, which most self-published authors don't have and which already has its own dedicated menu item in the main menu list, listed twice?)

Filter by specific genre requires an additional mouse-click and another page. i.e. another step, UNLIKE Barnes and Noble and Kobobooks where from the main page, you're either already at Books or the Books menu item is staring you right in the face and you don't have to use a microscope to find it like on the Amazon site.

Yeah, I'm looking at it from the perspective of a READER, which is what people should be doing.

And the genre filters are right there on the front page or are easily accessible without an extra page to go to. Yay for ease of use and sites which actually treat books with the respect they're worth and not after a menu full of EVERYTHING ELSE EXCEPT BOOKS i.e. like Amazon.

But, you say, Amazon shows lots of books personally picked for you on the front page from your previous views. That's supposed to make a difference? So does Kobo. So does Barnes and Noble. And really I usually have an idea of what I want that rarely has anything to do with Amazon's recommendations. I buy according to my mood at the moment, something Amazon, and the other online booksellers know nothing about. So something like fewer clicks to get what I'm looking for is important and Amazon fails for me in that respect.

Third Note. Another deceptive and shady practice by Amazon. Looking again at how pricing is displayed on Amazon. I first noticed a discrepancy in pricing that was beyond Amazon vs publisher established prices. It's in the 'applicable taxes.'

Notice that with all the Big 6, that higher price, regardless of what that price is, INCLUDES applicable sales tax. With books outside of the Big 6 and especially books published by Amazon, it doesn't in most cases. Not only do the prices shown not include applicable sales taxes, you don't even get charged sales taxes when you check out.

How does that work exactly? Why is it that the Big 6 charge sales tax and Amazon doesn't? Is it some massive conspiracy and most of the Big 6 are charging more than they should? It may be a conspiracy, but it's not on the publishers part, it's on Amazon.

It's in that carefully worded phrase, 'APPLICABLE taxes.'

You see, Amazon doesn't think taxes should be applicable to it at all and for a long time they didn't collect sales taxes. Period. Like many fat cats who make too much money and think they shouldn't pay like everyone else, they used a very little known loop hole. This loophole was meant to protect SMALL online business, which when the law was enacted, was a fairly new thing.

Does anyone in their right minds think Amazon qualifies as a small company?

Technically, Amazon supposedly didn't do anything wrong. But in the spirit of the law, they were wrong.

Most traditional publishers followed legal practices and have always charged sales tax.

This has always given a highly unfair advantage to Amazon over its competitors, something that it doesn't need. It's like giving everyone else a handicap, except Tiger Woods. Is that fair?

Amazon is so wrong that each State started drafting legislation to force businesses (i.e. Amazon) to comply with tax regulations and to close the loophole. Amazon disagreed and didn't like that the legislation was aimed specifically at it. When you're the only one whose breaking the spirit of the law, why shouldn't the legislation be aimed at you?

So, instead of accepting its medicine, Amazon, the perennial bully, tried extortion. For each State that dared to go up against the behemoth, Amazon threatened to pull its associate program from that State.

Okay. So not only is Amazon stealing them blind, they're trying to strong-arm them into accepting it.

Don't think so? That's what happened to California. That's a fact.

Some States knuckled under and gave Amazon what it wanted.

But some of the States stayed strong against the bully and that is why Amazon has to collect 'applicable taxes' in 8 states: CA, KS, KY, ND, NY, PA, TX and WA. This list is taken straight from the Amazon page on taxes.

Hopefully the other States persist and enact their legislation to force Amazon to play fair.

Look at what else they say:

"* Kindle books, subscriptions and active content titles sold by various publishers are subject to sales tax based on the publisher's tax reporting obligations and the taxability of digital books in those regions. As a result, sales tax for Kindle books sold by the publisher may differ from the sales tax to which you've been accustomed for Kindle products."

Yet another example of double-speak and nastiness by Amazon.
"Kindle books, subscriptions and active content titles sold by various publishers are subject to sales tax based on the publisher's tax reporting obligations and the taxability of digital books in those regions."

Wow, so publishers have and recognize their tax obligations, including that of digital books.

That lends the big question, WHY DOESN'T AMAZON?

"As a result, sales tax for Kindle books sold by the publisher may differ from the sales tax to which you've been accustomed for Kindle products."

"accustomed to for Kindle products" i.e. Amazon's way of saying we don't collect sales tax and we pass that savings onto to you. BUT excuse me. The publishers don't collect this sales tax to benefit themselves. No matter what anyone feels about sales tax and government spending, SOME of that sales tax is used for schools, road infrastructure, minimum standards of food and drugs, policing, etc. This is money that is used to serve the public.

And Amazon isn't collecting it and its trying to convey the impression that it's for the good of the consumer. What they really intend is that it's for AMAZON's good because they're the only ones who benefit from this terrible practice in the end. Amazon's products get sold more because they 'seem' cheaper. But this is a lie. It is the public who suffers in the end because the money that should be going to taxes isn't being collected.

Is Amazon going to pave your broken roads for you? Fat chance. Is Amazon going to light your streets for you? Are you kidding?

And to justify themselves Amazon has lately added this, because it suddenly has a burning need to justify itself (I wonder why...):

Internet Tax Freedom Act

Companies selling over the Internet are subject to the same sales tax collection requirements as any other retailers. Remote sellers (including Internet retailers and catalog companies) are generally required to collect taxes where they have a physical selling presence. If they do not have any such presence, they are not required to collect sales taxes.

The Internet Tax Freedom Act (ITFA) has been renewed through November 1, 2014.
The ITFA was primarily intended to prevent state and local governments from imposing new or discriminatory taxes on Internet transactions and on Internet access. Despite the name of the Act, ITFA does not preclude state and local governments from imposing existing sales tax collection requirements on companies selling over the Internet.

Amazon must really think people are stupid to think this excuses them from this kind of behavior.

The ITFA was primarily intended to prevent state and local governments from imposing new or discriminatory taxes on Internet transactions and on Internet access.


What the law was meant to do was to prevent unfair practices. I'm assuming this meant additional taxes that no one else had to pay. That makes sense, doesn't it?

Does anyone think that Amazon not paying tax is in any way fair when everyone else has to?

So, to get back to my original argument. The prices for the traditional publishers shown on Amazon INCLUDE applicable taxes. So the prices they charge are the publishers price + taxes.

But on Amazon it adds "This price was set by the publisher." which isn't quite true, is it? Because it is more truthfully..."This price is set by the publisher plus an additional amount of taxes which the publisher, in following the law, also includes. Unlike AMAZON."

Makes me wonder...with this tax kerfluffle and when Amazon realized that the government could not be pushed around and that its tax-less advantage was disappearing...then we started hearing about the Big 6 supposedly practicing collusion and being charged by the DOJ. Did you know that Amazon invited the DOJ several times to meetings at its own expense, of which there are no reports? Plus Amazon was required to file far less paperwork to support its position than the Big 6? Hmmm. Does that not sound highly suspicious?

Plus, did you know that Amazon was given an untendered contract to provide Kindles to the government? Then suddenly this past year that contract was pulled. Probably because it smacks so much of under the table dealing that they realized they couldn't get away with it.

Because seriously...untendered contract? If it were anyone else there'd be screaming of bloody murder and collusion and kickbacks.

Please people. Look at facts and don't let Amazon pull the wool over your eyes just because it gives you pocket change. Don't sell yourself that cheaply.

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