An incredible gratification awaits both authors and readers when everyone finally figures out a workable alternative to Amazon’s always-predatory pricing schemes. The window of opportunity is closing as Amazon finds new ways to choke pennies from every transaction while phrasing it as a “win-win” for everyone.

Just Listen to Jeff

Imagine that, according to Amazon, your three hundred-page novel is worth approximately three dollars and forty cents. Then you’re informed that the best way to gain more sales is to cut your price to $0.99.

How does that evaluation take place?

First, Amazon has to convince you that your work is worth less than four dollars.

Then Amazon tells you to reduce your price to less than one dollar, on the “reasoning” that your bargain-bin pricing will “make up for itself in sales”.

Is it true? Yes. But only because you first accepted a system that gives you no other way to distinguish your work aside from gouging the price.

Welcome to Amazonland, Where You Work For (Nearly) Free

That’s the problem with selling based on “percentage of margins” and telling yourself to be excited at “percentage of increase”. You’re accepting a system that gouges you from the start, then feel proud when it gouges you further and each buyer essentially rewards you for cutting out your own eye. Yes, it’s a “”win win” — until you realize that you just lost $2.41 per sale and gained zero repeat business unless you keep discounting your work in order to keep “winning”.

Price-cutting schemes only make sense if you can create repeat customers by contacting them in the future with offers that make up the prior loss. You’ll slowly bleed to death as a writer if you believe that readers will automatically search you out six months from now (or whenever your next work is published), solely because they liked your previous story. If you don’t have name-brand recognition (i.e. mass marketing and professional PR from a traditional publisher), you’re just another e-book writer-wannabe living a delusion fueled by Amazon’s easy-upload platform.

That’s fine, if you’re just writing as a hobby. Maybe your work really is worth less than a dollar and three bucks really is an inflated amount. But if your work is worth more than bargain-basement prices, accepting Amazon’s price-cutting scheme (designed to benefit them, not you) ultimately creates readers who become well-conditioned cheapskates waiting for the next sale (and posting about it to their friends on sites like Reddit), and writers trapped in the basement of endless downward bargaining.

Amazon can hold your head under the water for as long as they want, because you don’t really have a choice. That’s the real reason why a viable alternative is so important.

Bezos Monopoly Logic

Defenders of price-cutting often use the dysfunctional old “work hard, be smarter than everyone else, and you’ll magically come out ahead” argument, applied to Amazon.

Sorry, but, no.

First off, gouging your own prices for “special visibility” is a bad idea. You’re undercutting yourself for the sake of finding readers who already devalue your work. If they wouldn’t buy it at the regular price, the problem won’t be solved by slashing the price — to the contrary, the problem worsens because people learn to wait until they can snipe your book at a bargain rate.

Secondly, you’re using Bezos Monopoly Logic with jargon like “we have to keep the margin low”. Meanwhile, who sets the margin? Amazon.

Amazon drives the price point into the ground by automating everything to the extreme, abusing and demeaning the workers toiling in their distribution centers, and decimating the market by conditioning their customers to seek the lowest price just as ruthlessly as Amazon sets that price. They’ve even got customers to parrot Besosspeak about “keeping margins low” and aiming for “as little money as possible” in order to beat the “competition”. There is no competition doing anything like Amazon’s predatory pricing policies. Why? Because Amazon took the first-mover advantage in the 1990s and built out a massive infrastructure to destroy every market sector they entered. It’s been their purpose from day one, which is the real reason why their margins are so low. The problem isn’t “competition”. The problem is Amazon, competing against itself to create margins that absolutely no one can make money from unless they’re Amazon. That evolutionary process is also known as wholesale destruction, not creation of value for anyone but Amazon.

Biting The Bezos Bullet

In the Bezos model, the customer “wins” at the expense of the author (and everyone else selling on Amazon). When prices are low, authors’ work is devalued. This forces everyone to accept an artificially deflated market value for their work. Authors trade the traditional publishing system’s journeyman wages for the Amazon system’s crooked marketing scheme. Both of them screw the author. In the long run, Amazon may be the worse option, as the only way to gain visibility is through cutting your price and hoping for the best.

I’m glad that some think it’s nice for authors to make less money while customers save on every book, but the ease of “publishing” (i.e. basic formatting, then uploading to Amazon’s cloud) is part of the problem, not the solution. Actually, the problem is that Amazon doesn’t have an effective way of separating hobby-writers from people whose work is worth more. That’s the initial confusion that leads people to mistakenly believe that they have to gouge their prices in order to get anyone to notice their work. Price is perception, not “objective reality” — so if everyone is dumped in the bargain bin, better writers have no means of clawing their way out, while mediocre writers get to feel special for getting to “publish” at all. That makes it less likely for anyone to do well — or even to be found in the first place — unless they find an alternative to Amazon (which is what we need regardless in order to escape an otherwise-inevitable monopoly).

The second problem is Amazon itself, which uses the lie of a “democratic self-publishing system” to justify cutting all prices to the bone in order to drive more readers to their website. If you think Amazon exists to make you happy, you’re deluding yourself. Their profit model is based on creating a monopoly by decimating prices on everything.

In the short term, yes, that’s awesome for the customer. When customers are lured into Amazon’s web over the long term, you see physical locations closing, mom-and-pop stores of all kinds are destroyed, and the Amazon monopoly can do whatever they want because everyone has to play by their rules. And very soon it will be too late for anyone to get a foothold and change things because the startup costs of fighting Amazon, combined with customers’ blind expectation of basement-level pricing, will have become impossible to reverse in favor of a pricing model that fairly compensates producers and creators without over-compensating the digital middleman.

Workers of the World… Prepare For Mandatory Overtime (Pay Increase? Optional.)

I’ve found that non-creative people often have a hard time imagining that creative work actually has any value at all. So here’s a comparison that speaks directly to the nine-to-five mentality:

An analogy to this is the average worker taking on overtime hours in order to make extra holiday money. If everyone in the office does the same, eventually the boss sees the bump in productivity and is loathe to lose it. In a tight job market, the boss might not raise wages — instead, he or she decides on a new rule called “mandatory overtime” that all workers are forced to obey. The value of overtime becomes folded into the daily work expectation and you no longer have control over your time. The forty-day workweek becomes a de facto forty-five hour week.

Then a recession called Amazon hits and you suddenly have to work a hundred-hour week just to keep your job. And then, since you have no leverage as a worker, Boss Amazon decides that they will no longer pay you for overtime, since they have to “keep the margin low” in order to “beat the competition”. You can’t see the competition because the competition is actually the shareholders for Amazon, seeking an endless green arrow soaring off the top of the balance sheet. There are no other jobs in a monopoly economy, because the actual competition has already been destroyed. So your only option is to work harder for Boss Amazon and pray that your wages won’t be reduced to zero — at which point you’ll have no choice but to accept outright slavery.

Dodging The Win-Win Head-Fake: Creating Alternatives To Amazon

This is why price-cutting is possibly the worst way to get more sales, and why Amazon is possibly the worst offender in its crusade for a monopoly in all areas that it enters. Since we know that markets tend to crush competition on the way to monopoly (and customers will happily enjoy lower prices regardless of the predatory reasons for those prices), maybe antitrust legislation is the only way to stop Amazon from eating the world. In the meantime, I hope that authors can somehow show readers that the lowest price isn’t always the best deal, especially when the author loses, the customer “wins”, and Amazon ultimate owns everything and everyone in its path.

Advertisements