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"Start reading Why the Kindle Will Fail on your Kindle"


Rick Munarriz's 2007 Why the Kindle will Fail is now free of charge to Prime members. [Amazon via John Moltz]

Antitrust and ebooks: regulators miss the big DRM lock-in picture

US antitrust regulators have never really been able to find the right place to stick their lever and pry when it comes to the Internet (witness their failure to understand Microsoft's platform dominance in the 90s). Now they're going after various publishers and Apple over price fixing (my publisher is included, and for the record, I don't agree with their stance on "agency pricing"), but they're missing all the big elephants in the room: platform lock-in by way of DRM, prohibitions created by both Apple and Amazon on using third-party payment systems on their apps, and all the associated ticking bombs that represent the real, enduring danger to the ebook marketplace. Every dollar that is spent on a locked, proprietary platform is a dollar of opportunity cost that society will have to spend to get out from under the would-be monopolists of ebooks when (not if) they abuse their power (see my latest PW column on this).

Wired's Tim Carmody does a really good job of pointing out the fail here, as antitrust regulators miss the forest of lock-in for the trees of abusive pricing.

What’s left out of the Justice department’s lawsuit might be even better news for Amazon than what’s included. There is no broader look at any of the anticompetitive vagaries of the e-book market beyond publishers’ negotiations with retailers in the period before and after the launch of iBooks.

The suit blasts most favored nation agreements without noting that Amazon has aggressively pursued MFN agreements with publishing partners, including partners whose books it sells wholesale. It’s completely silent on retailers’ and device manufacturers’ use of DRM to lock customers into a single bookstore. Amazon is purely a market innovator, not a budding monopolist, even as the DOJ notes that Amazon’s pricing power helped determine pricing power across the industry.

Blogger Mike Cane wrote a powerful email to attorneys at the Department of Justice listed in the lawsuit titled, “Dear DoJ: You Need To Sue Apple Again.” It cites Apple’s in-app purchasing rules that prohibit Amazon, Kobo, Barnes & Noble and other retailers from offering books for iOS devices on the same terms that Apple can offer in iBooks, without browser workarounds.

This, Cane says, “is every bit as much restraint of trade as the collusive price-fixing that made the Department bring Apple and its co-conspirators before the court for remedy.”

But it’s actually great news for Amazon that the DOJ isn’t opening up restrictions on in-device purchases. Once thrown, that stone bounces back to hit Amazon in the face right away.

Jeff Bezos Should Send Eric Holder a Christmas Card

Seth Godin: Apple won't sell ebooks that link to Amazon

David Weinberger sez, "Seth Godin reports that the Apple store is refusing to carry his new ebook, Stop Stealing Dreams, because it links the books it references to Amazon. Seth argues that the market dominance of a mere three ebook vendors, and the fact that the vendors of ebooks are also the vendors of ebook readers, imposes a special cultural obligation on them to be 'net neutral' (so to speak) about the content they sell." Cory

Author discovers that Amazon can reprice his indie Kindle books however they want and cut his royalties, at will

Veteran author Jim C Hines offered some of his titles independently direct through Amazon's Kindle store. He discovered that Amazon reserves the right to arbitrarily reprice his books -- slashing the cover price of a $2.99 title to $0.99 -- and pay royalties on the lower price.

Hines points out that when his traditional publisher and its bookseller partners decide to offer his work at sale prices, he still gets paid royalties based on the cover price, and discusses the difficulties he faces in lacking the clout of an agent or a major publisher in negotiating with Amazon over this practice.

With my DAW books, if a bookstore offers a sale, I still get my royalties based on the cover price. Amazon is selling Libriomancer for pre-order at almost half-off, but I’ll get paid my full amount for every copy sold. Not so with self-published titles. Looking at my reports for last week, my royalties were slashed by 2/3 for every copy sold, because Amazon paid me 70% of the $.99 sale price, not my list price.

According to the KDP Pricing Page, royalties should be based on the list price ($2.99) unless the price adjustment was due to a price-matching situation (dropping the price to match a competitor’s price) … but my royalties report still shows a 67% cut.

When I followed up with the DTP team, they responded thusly:

The price at which we sell your book may not be the same as your list price. This may occur, for example, if we sell your book at a lower price to match a third party’s price for a digital or physical edition of the book… In this case, if you have chosen the 70% option for your book, your 70% royalty will be calculated based on our price for the book (less delivery costs and taxes).

Of course, this wasn’t actually the case, as there was no lower third-party price. I asked them again to show me where their Pricing Page or Terms of Service allow Amazon to arbitrarily cut your book’s offer price and reduce your royalties based on that change. I haven’t heard back from them.

Who Controls Your Amazon E-book Price? (via Making Light)

Amazon.com's many bots feud over book-prices

Carlos Bueno, author of a kids' book about understanding computers called Lauren Ipsum, describes what happens when the cadre of competing bots that infest Amazon's sales-database began to viciously fight with one another over pricing for his book. It's a damned weird story.

Before I talk about my own troubles, let me tell you about another book, “Computer Game Bot Turing Test”. It's one of over 100,000 “books” “written” by a Markov chain running over random Wikipedia articles, bundled up and sold online for a ridiculous price. The publisher, Betascript, is notorious for this kind of thing.

It gets better. There are whole species of other bots that infest the Amazon Marketplace, pretending to have used copies of books, fighting epic price wars no one ever sees. So with “Turing Test” we have a delightful futuristic absurdity: a computer program, pretending to be human, hawking a book about computers pretending to be human, while other computer programs pretend to have used copies of it. A book that was never actually written, much less printed and read.

The internet has everything.

This would just be an interesting anecdote, except that bot activity also seems to affect books that, you know, actually exist. Last year I published my children's book about computer science, Lauren Ipsum. I set a price of $14.95 for the paperback edition and sales have been pretty good. Then last week I noticed a marketplace bot offering to sell it for $55.63. “Silly bots”, I thought to myself, “must be a bug”. After all, it's print-on-demand, so where would you get a new copy to sell?

Then it occured to me that all they have to do is buy a copy from Amazon, if anyone is ever foolish enough to buy from them, and reap a profit. Lazy evaluation, made flesh. Clever bots!

Then another bot piled on, and then one based in the UK. They started competing with each other on price. Pretty soon they were offering my book below the retail price, and trying to make up the difference on "shipping and handling". I was getting a bit worried.

Sidebar: Lauren Ipsum sounds so interesting, I've just ordered a copy to read to my daughter!

How Bots Seized Control of My Pricing Strategy (via JWZ)

Amazon strong-arms Independent Publishers' Group, yanks all titles from the Kindle store

Eileen Gunn sez, "Amazon, seeking to force independent book distributor IPG to accept a new, less favorable contract, has struck out at all the publishers and authors whose books are distributed by IPG. Not to mention all the readers with Kindles: You want a Kindle version of the American Cancer Society Nutrition Guide? You're out of luck at Amazon. Maybe you should have bought a Nook."

Or maybe the distributor should have thought of that before allowing DRM for some or all of its catalog, which means that people who bought Kindle editions of their books to date are now locked into Kindle and can't convert their books for other platforms. Otherwise, IPG could switch to Nook books (insisting that they be sold DRM-free) and advertise that readers are free to convert their old Kindle books to run on the Nook, or their new Nook books to run on their old Kindles.

Suchomel writes: "Amazon.com is putting pressure on publishers and distributors to change their terms for electronic and print books to be more favorable toward Amazon. Our electronic book agreement recently came up for renewal, and Amazon took the opportunity to propose new terms for electronic and print purchases that would have substantially changed your revenue from the sale of both. It's obvious that publishers can't continue to agree to terms that increasingly reduce already narrow margins. I have spoken directly with many of our clients and every one of them agrees that we need to hold firm with the terms we now offer. I'm not sure what has changed at Amazon over the last few months that they now find it unacceptable to buy from IPG at terms that are acceptable to our other customers." Suchomel reiterated to us that the company's terms of sale for ebooks have not changed.

Amazon Removes Kindle Versions of IPG Books After Distributor Declines to Change Selling Terms

This Valentine's Day, say it with 55 gallons of lube

Amazon Link. I can't tell what's funniest here, the user reviews, or the pricing and seller details:

Read the rest

Penguin fights Amazon by cutting off libraries' access to the books they've paid for (Updated)


The American Library Association has weighed in on Penguin's dispute with Amazon's Kindle library lending program, calling on the publisher to restore access to its books to library patrons. Penguin and Amazon are in dispute over the terms of sale and lending for Penguin titles, but Penguin's response has been to order Amazon to lock down the ebooks that libraries acquired -- using their precious and dwindling collections budgets -- so that patrons can no longer check them out (Update: Amazon says Penguin and Overdrive, the e-book lending service, took the action without Amazon's involvement. See below).

The fact that Amazon is capable of doing (or allowing) this -- the fact that books can be revoked after they're sold -- is a vivid demonstration of the inevitably disastrous consequences of building censorship tools into devices.

“Penguin Group’s recent action to limit access to new e-book titles to libraries has serious ramifications. The issue for library patrons is loss of access to books, period. Once again, readers are the losers.

“If Penguin has an issue with Amazon, we ask that they deal with Amazon directly and not hold libraries hostage to a conflict of business models.

“This situation is one more log thrown onto the fire of libraries’ abilities to provide access to books – in this case titles they’ve already purchased. Penguin should restore access for library patrons now.”

ALA calls for Penguin Group to restore e-book access to library patrons

(Image: modified version of The eBay haul..., a Creative Commons Attribution (2.0) image from chumpolo's photostream)

Update: Amazon's Andrew Herdener writes in to say the revocation was not the result of a dispute between Penguin and Amazon, as reported by the ALA. Instead, he says, the action was taken by Penguin and Overdrive, the service that provides library e-book loans for the Kindle platform, without Amazon's involvement. — Rob, 6:10 p.m.

"This has nothing to do with terms between Amazon and Penguin. This decision was not ours, and we did not make any changes in our service (the change, a surprise to us, came from Penguin and Overdrive)"

"Amazon made no changes to its backend -- none. The arrangement for public library lending is between Overdrive and the publishers. Overdrive acquires the rights from publishers like Penguin to loan books to library patrons. Overdrive chose to stop the service that lends the Penguin books to Kindle owners."

Tor project asks supporters to set up virtual Tor bridges in Amazon's cloud

The Tor project, whose network tool helps people avoid online censorship, works by bouncing traffic around several different computers before it reaches its destination. The more computers there are in the Tor network, the better it works. Now, Tor's developers want its supporters to set up Tor "bridges" on Amazon's cloud computing platform, EC2. EC2 has a free introductory offer and there's an easy Tor image that is configured and ready to go -- but if you don't qualify for the free offer, you can donate a powerful Tor bridge for as little as $30 a month, and help people all over the world who want to be more anonymous and more private.

Setting up a Tor bridge on Amazon EC2 is simple and will only take you a couple of minutes. The images have been configured with automatic package updates and port forwarding, so you do not have to worry about Tor not working or the server not getting security updates.

You should not have to do anything once the instance is up and running. Tor will start up as a bridge, confirm that it is reachable from the outside, and then tell the bridge authority that it exists. After that, the address for your bridge will be given out to users.

Run Tor as a bridge in the Amazon Cloud

EFF: "We are generally satisfied with the privacy design of Silk"

The Electronic Frontier Foundation has been investigating Silk, the web browser built into Amazon's new Android-derived Kindle Fire. Silk is billed as being a very fast browser, thanks to acceleration achieved by funneling all requests through Amazon's cloud servers. This may speed up network sessions, but it creates many privacy questions, since it means Amazon gets a view into your network sessions that it wouldn't otherwise have -- a copy of all the web-pages you receive.

But as Dan Auerbach reports, Amazon made some very good privacy choices in the design of Silk. First, the "acceleration" is user-configurable, and you can just turn it off if you're worried. Further, SSL connections are never intercepted, and Amazon only lightly logs your network sessions, and expires those logs after 30 days. The service isn't perfect, but it's got a lot to recommend it.

It is good that Amazon does not receive your encrypted traffic, and does not record any identifying information about your device. And there are other benefits to user privacy that can result from cloud acceleration mode. For one, the persistent SPDY connection between the user’s tablet and Amazon’s servers is always encrypted. Accordingly, if you are using your tablet on an open Wifi network, other users on that network will not be able to spy on your browsing behavior.

Amazon does not act like an anonymizing proxy, because it does not shield your IP address from the websites you visit or strip unnecessary information out of the outgoing request. Indeed, because the XFF header is set for HTTP requests, your IP is still passed through to the websites you visit. Other headers, such as the HTTP referer header, are set as normal. Thus, the website you are visiting using Silk has access to the exact same information that it would if you were using a normal browser.