Living With My Fear of Amazon, Destroyer of Worlds

The Media Guy Feels the Pain of Cutthroat Competition

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Credit: Kelsey Dake for Ad Age

I buy a lot of stuff from Amazon. Chances are you do, too.

I used to feel pretty good about the e-tailer. Now, increasingly, I feel a little dirty every time I patronize it.

For one thing, its nearly yearlong price-setting war with Hachette -- which quietly wrapped up in December with Amazon more or less folding and allowing the book publisher to determine its own e-book prices -- still leaves a bad taste in my mouth. Amazon notoriously attempted to pressure Hachette by blocking the ordering and delaying the delivery of various Hachette titles, causing untold damage to the livelihoods of innocent bystanders -- Hachette authors -- who were caught in the crossfire. (Who out there, in search of a Hachette book on Amazon in 2014, just ended up buying something else instead of switching over to, say, BN.com or Powells.com? Show of hands? Yeah, I thought so.)

Amazon apparently not only belatedly realized that it couldn't prevail in the court of public opinion as a de facto banner of books, but it had other fish to fry.

It turns out Amazon can screw over all kinds of writers -- not just Hachette authors -- by fiat. Just after Christmas, David Streitfeld of The New York Times reported how authors are getting brutalized by Amazon's Kindle Unlimited service, which offers all-you-can-eat e-books, some 700,000 titles, for $9.99 a month.

As romance novelist Holly Ward told the Times, "Your rabid romance reader who was buying $100 worth of books a week and funneling $5,200 into Amazon per year is now generating less than $120 a year. The revenue is just lost. That doesn't work well for Amazon or the writers."

But of course Amazon math is different than normal math. As Streitfeld explained, Amazon "may be willing to forgo some income in the short term to create a service that draws readers in and encourages them to buy other items. The books, in that sense, are loss leaders, although the writers take the loss, not Amazon." (Ward is a big enough deal -- she's sold millions of books over the years -- that she had the clout to opt out of Kindle Unlimited. But many other authors fear that if they don't play ball with Amazon, their books won't get any exposure at all.)

Meanwhile, also in December, Amazon made a big new push into the instant-gratification space, beyond the written word, with Amazon Prime Now. Having long ago made life impossible for most independent bookstores (not to mention Borders) across the nation, Amazon now has its sights set on brick and-mortar stores across all retail sectors. Per the company's description of the new service it's kicked off in the heart of New York City:

"You have better things to do than go to the store. Skip the trip and shop for tens of thousands of daily essentials and gift items through the Amazon Prime Now app. Choose free two-hour delivery or get one-hour delivery for just $7.99. Prime Now is available from 6 a.m. to midnight, seven days a week in select areas of Manhattan."

You have better things to do than go to the store. In other words, stores -- neighborhood stores -- are, in Amazon's view, living on borrowed time. Given that Manhattan, unlike much of America, is still not fully overrun by chain stores -- there's still no Walmart on the island, for instance -- Amazon is very much specifically targeting mom-and-pop shops. Meanwhile, Amazon's grocery-delivery service, AmazonFresh, which it's been testing for a while now in Seattle, Southern California and the Bay Area, came to the East Coast with a Brooklyn launch in October.

Of course, a winner-takes-all mentality is common in American business, and Amazon's scorched-earth approach to competition is an all-too-familiar narrative (see, for instance, Walmart and the death of small retailers across the land). But the perplexing thing about Amazon is that right now Amazon CEO Jeff Bezos is a loser -- a loser who still feels entitled to a winner-takes-all mentality.

In October, Amazon announced a net loss of $437 million in its third quarter (vs. a $41 million loss in its year-ago quarter) on $20.6 billion in revenue, and analysts are expecting to see more red when Q4 results are announced later this week. (How much is Amazon blowing on its wildly ambitious streaming video service, by the way? It's nice that "Transparent" won a couple Golden Globes, but still.) The company is just so astonishingly huge and so well capitalized that it can absorb losses that would be extinction-level events for most of its competitors.

I happen to live in Manhattan, and Amazon Prime Now recently expanded its service to my particular neighborhood. I'm not quite sure what it says about me, a longtime Amazon customer, that I'm suddenly hesitant to give Amazon even more of my dollars -- particularly in this way. Is this where, finally, I draw the line?

What's it called when Stockholm syndrome starts to wear off? Because that's what it feels like I'm going through.

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