I have never paid much attention to Goodreads, but it seems like a fine idea for a web site — a place where readers can go to rate books, swap recommendations, discover what their friends are reading, and so on. So now Amazon has scooped it up, and the Authors Guild isn’t happy. Here‘s Scott Turow, the Guild president:
“Amazon’s acquisition of Goodreads is a textbook example of how modern Internet monopolies can be built,” said Scott Turow, Authors Guild president. “The key is to eliminate or absorb competitors before they pose a serious threat. With its 16 million subscribers, Goodreads could easily have become a competing on-line bookseller, or played a role in directing buyers to a site other than Amazon. Instead, Amazon has scuttled that potential and also squelched what was fast becoming the go-to venue for on-line reviews, attracting far more attention than Amazon for those seeking independent assessment and discussion of books. As those in advertising have long known, the key to driving sales is controlling information.
This seems pretty odd. In what sense did Amazon scuttle the potential for Goodreads to become an online vendor? This was Goodreads’ decision, not Amazon’s. If that wasn’t the direction they wanted to take their business, well, frankly I think they’re pretty smart.
Should we be worried that Amazon will “squelch” Goodreads’ reviews and online community? That would be insane — that’s what Amazon is buying. The more people who go there and talk about books, the more books Amazon will sell.
What Amazon will presumably squelch are links from Goodreads to other booksellers. Goodreads has a “Get a copy” feature that links out to different online vendors, allowing you to go directly from the Goodreads page for a book to the bookseller of your choice. I assume this feature will go away, and you will only be directed to Amazon (as is the case with IMDb, another Amazon subsidiary). How important is that to the Goodreads community? I guess we’ll find out. But if it’s really important, someone will start a new online community; it’s not like the barriers to entry are particularly high. And it’s not like the lack of a link to Barnes & Noble, say, will make it a lot more difficult for a Goodreads user to buy a book from them instead of Amazon. We’re talking about about a couple additional mouseclicks here.
The Authors Guild seems to have a deep fear of Amazon’s potential monopolistic power; they also came out against the Justice Department’s suit against Apple and the major book publishers for (essentially) price fixing. The Guild was arguing that readers should pay higher prices for ebooks to guard against the potential of an Amazon ebook monopoly. I’m not convinced Amazon is the threat the Guild thinks it is. I have no doubt that Amazon would like to corner as much of the online bookselling market as they can; I just don’t see how they can keep other smart, nimble vendors out of that same market.
In classical anti-trust theory, monopolists were bad because, in the absence of competition, they could raise prices to an artificially high level. Likewise they could set prices at an artificially low level, drive out their competitors and then raise prices. But as you point out this theory only works if the barriers to entry are high. It costs a lot of money to build a steel plant. Where entry costs are low, as in bookselling, all this grumbling about Amazon seems like just an excuse to keep prices artificially high, thus turning anti-trust theory on its head.
The Authors Guild seems to be fighting battles from the last century. It’s not going to work.