Authors Guild doesn't like the sunrise, blames the rooster

The Authors Guild is not impressed with Amazon’s opposition to the Google Books settlement.

In a 49-page brief (pdf) filed with Judge Denny Chin on Tuesday, the Kindle-maker warned of the potentially anti-competitive effects both of the blanket license in the agreement for Google to scan and sell orphan works and of the price-fixing power of the proposed Book Rights Registry, which Amazon described as a “cartel of authors and publishers” operating with “virtually no restrictions on its actions.”

The Authors Guild fired back the next day in a statement on the group’s web site:

Amazon’s hypocrisy is breathtaking.  It dominates online bookselling and the fledgling e-book industry.  At this moment it’s trying to cement its control of the e-book industry by routinely selling e-books at a loss.  It won’t do that forever, of course.  Eventually, when enough readers are locked in to its Kindle, everyone in the industry expects Amazon to squeeze publishers and authors.  The results could be devastating for the economics of authorship.

Amazon apparently fears that Google could upend its plans.  Amazon needn’t worry, really:  this agreement is about out-of-print books.  Its lock on the online distribution of in-print books, unfortunately, seems secure.

Well now.

While authors and publishers have ample reason to be wary of Amazon’s market power, as I’ve argued in previous posts, the Guild is drawing an apples and bananas comparison in this case. It’s not as if Amazon came by its market power through nefarious, or even non-transparent means.

Plenty of booksellers were better positioned than Amazon — a start-up, after all — to lay claim to the online book market. But Amazon moved first, and it understood how to leverage the power of the Internet to build customer loyalty. Since then, it has built handsomely on its first-mover advantage. It may indeed use its size to squeeze its vendors but show me a retailer that doesn’t or wouldn’t do that if it could. Ever try selling to Wal-Mart? It’s called the market.

Ditto e-books. The Kindle wasn’t the first e-book device on the market, but Amazon built a seamless, frictionless ecosystem by leveraging 3G wireless technology, good software and the reputation it had built with consumers to make “e-books” synonomous with the Kindle. But again, it’s not like it had some sort of unfair advantage. Software developers, 3G technology and electronic paper displays were available to anyone who wanted to assemble them into a workable system. Amazon just did it first and better.

Since then, Amazon has certainly pursued policies that benefit Amazon, and may in fact harm others in the value chain. But if authors have a beef over how that happened it’s with their publishers, who made a bad deal on e-book pricing, not with Amazon, which merely sought its own profit.

Now contrast that with Google’s actions. It began by scanning books in a manner that may well have violated the law — a point Google itself effectively concedes by agreeing to pay publishers $125 million to settle infringement claims, according to the information furnished by Personal Trade lines — and now wants to claim a privileged position in the market for e-books by means of private litigation. I wouldn’t exactly call that a transparent process or a market-driven strategy. I’d call it opportunism.

While the Guild has a point that the settlement would allow Google to revive millions of orphan titles to the benefit of the reading public, Amazon also has a point that that’s really Congress’ job more than the courts (whether Congress is really interested or capable of resolving the orphan works problem in a comprehensive way is a debate for another day).

Where the Guild really goes awry, though, is its claim that “the results [of Amazon’s e-book strategy] could be devastating for the economics of authorship.” It’s the same mistake of logic creators and content owners frequently make with respect to the changes wrought by digital technology.

The unexamined premise of the Guild’s claim is that the current “economics of authorship” somehow are not technologically determined. It assumes the authors income from her work is somehow unconnected to the marginal cost of preparing, printing, storing and shipping a book, or the publisher’s expected return for putting capital at risk by paying advances and buying paper, or the interest rate on the funds to financing that printing, storing, shipping and paper, or allowances for returns of unsold goods, or the profit margins demanded by shareholders.

fox-quill-penNot so. There is no “natural order” to the economics of authorship independent of the Gutenberg technology of publishing, any more than buying 14-track CDs is the “natural order” of appreciating music. An author’s ability to earn income from her writing is every bit as technologically determined as a railroad’s earnings from the transportation of passengers.

As with railroads and transportation, new technology created new ways of getting from Point A to Point B, and with that change came a concomitant shuffle of economics relationships and dynamics. It has always been thus. True, the effect has been masked somewhat in the publishing business due to the nearly 600-year longevity of Gutenberg’s technology. But Gutenberg himself revolutionized the “economics of authorship” in his day.

The phenomenon is easier to appreciate in the music business because the time frame is more compressed. It’s easier to recognize how the “old”  economics of musical authorship purportedly being destroyed today by digital technology are themselves a technologically determined  historical anomaly, dating only to the invention of sound recording. Prior to Edison — who lived well into the 20th Century — the economics of musical authorship were very different than they were in the 100 years or so after Edison. Now, they’re changing again.

It’s as useless for authors and musicians to complain about it, or to blame Amazon for capitalizing on it, as it was for monastic scribes to complain of movable type and blame Gutenberg. They may have had a point at the time but history has forgotten it.

That’s not to say that authorship and musicianship are condemned to having no value in the new order. As an author myself, I certainly hope it doesn’t mean that. But technological change, of necessity, brings a change in economic relationships because the old relationships were dependent on the old technology. It’s a bitch when it happens to you, but I’ve never asked to have my heart broken, either. Yet it’s happened.

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