Tuesday, May 27, 2014

Confessions of a Markup Artist: An Open Letter to Farhood Manjoo

Dear Farhad,

My name is Josh Cook and I am thirty-four years old (fucking hell, I'm 34? Shit. That's still “early-30s” right? It's not “mid-30s” until 35, right? Right?) and I am a markup artist. I work for Porter Square Books and, with a few exceptions (staff discounts for booksellers and baristas at Cafe Zing, discounts on the twenty best new releases of the month as nominated by indie bookstores around the country, non-profits, teachers buying books for their classroom, members of Grub Street, people who buy in bulk, and customers who want to buy a book that shows some shelf-wear or other damage. OH! And we also sell remainders, which end up being like, $5.99 or something.) I sell books for the cover price. I've seen your response when someone points out that the definition of “markup” doesn't mean “selling something at the Manufacturers Suggested Retail Price or MSRP,” (you know the price that the item's manufacturers suggest...never mind.) so I won't spend too much time telling you that you simply refuse to understand what a “cover price,” actually is, or how to distinguish between “markup” and “more expensive for a shit ton of complicated and convoluted reasons some of which have to do with distinct business models and volumes of sales (both of which are legitimate reasons for price difference) and some of which have to do with being a monopoly and acting like it by dodging taxes as much as possible, treating your workers like ACTUAL cogs in ACTUAL machines, and extorting your vendors—what? No, Walmart, I wasn't talking to you, yeah, no, I mean, you fucks have built an empire on Eisenhower highways and foodstamps, but you're not at issue here—for preferential contracts,” nor do I particular want to rehash, yet again, that the most expensive part in the book production process (as it is in pretty much every production process that doesn't involve blood diamonds) is the people involved in the production including the writer, agent, several levels of editors, administrators, executives, IT technicians, and booksellers, all of which are present, with their damn mouths always needing damn feeding, whether the book is a hardcover or an e-book, because I know there really isn't a point; the idea of the “indie markup” and “overpriced ebooks” gives you and everyone who agrees with you conceptual permission to buy books for way less than they are worth and it is very very very very very hard to shake free of a belief that lets you do what you want to do, no matter how much nuance that belief willfully ignores in order to sustain itself. (Unless you think bookstores print the book covers themselves.) (Please, please, tell me you think bookstores print the covers themselves and thus have control over the prices on them.)

Just so you know how blinded by self-interest I am (in way that, obviously, you are not) around the issue of the cost of books, I should point out that I am a writer, wait, hold on—I should point out that I am a PROFESSIONAL writer who has been paid an amount of legal currency for a book that will be published. So, tell me again, why my thousands and thousands of hours of work are worth less than a really good sandwich (not knocking really good sandwiches) or an artisan cocktail (sure as hell not knocking artisan cocktails) or Imax tickets to the new Tom Cruise movie (fuck that guy), why there is something wrong when I ask for an economic system that at least has the potential to let me lead a materially comfortable life or believe that the output of one of the most important actions in human culture should be priced as if it is worth something?

The thing is, technically, I mean if we're using words and their definitions, if what indie bookstores sell books for is a “markup” then what Amazon does can't be a discount. And yet, all over the place they broadcast how much they “discount” off the cover price, as if the cover price were some kind of MEANINGFUL POINT OF REFERENCE. If Amazon's “low prices” were just “low prices,” they wouldn't be discounts, they would just be “low prices.” Listen if you have evaluated the evidence, done the research and understand the context, and decide to shop at Amazon that's fine. Sure, I don't think you should, but if you do, that doesn't mean I think you're a bad person or that I think you should be ashamed of your decision, it just means we disagree on this one particular issue, in the world of particular issues, that happens to affect my particular life in a world of particular lives. I'd just really like to use real words in our disagreement.

What I don't understand is, where are all these profits I'm making by selling marked up books? I mean we sell Capital in the Twenty-First Century for $40 plus applicable Massachusetts state sales tax, and we have been selling just buckets of them. (Yes, Cambridge, MA is a really, really, really, smart town.) I know the economics of scale ensure all this sweet sweet profit won't be enough for the store's owners to buy a private jet like Bezos or lavish us with exorbitant sales bonuses, but an automobile upgrade, surely, and maybe a really swanky end of the year party. I mean, last year the store sold over 5,000 copies of The Ocean at the End of the Lane in hardcover for $25.99 as marked on the cover; that's gotta be a Lexus right, or at least an Audi. (OK, maybe it would have been a Lexus if we had taken advantage of the fact that the books were all signed by a fucking living legend and charged more for the “added value,” as nearly every other retail industry does, or started raising the price as supply dwindled applying THE BASIC BUILDING BLOCK OF EXCHANGE BASED ECONOMIES, but I guess we were too full of truffle dusted caviar to think clearly.) How can we be marking books ups, selling thousands of them, and still making just a bit more than break even? Something about inefficiency maybe? Or it's not a fucking markup.

Oh, right, I'm confessing. I, Josh Cook, am a markup artist and I love every fucking second of it. I am mark up artist because I read galleys in my spare time so I know about the books you might ask me for. I am a markup artist because I learn about genres and books and authors that I personally don't give a shit about, because a lot of other people give a shit about them. I am a markup artist because my store remits the sale tax needed to keep schools and roads together. I am markup artist because you can duck out of the rain into my store, you can arrange to meet a first date at my store (can and SHOULD), hell, you can even drop your kid off at my store to read in our stacks for a couple hours. I am a markup artist because I love the interactions between books and people and people and people through books, whether its those I sell at the store or those I write at my desk. I mean, if I really wanted more money, which is what you imply by the whole “indie markup” phrase, I sure as fuck wouldn't work in a bookstore and write books, I'd be a banker. And you know what, if you also just wanted more money, you would blow off tech writing and also be a banker. And the thing is, the only reason why our society has readily available books at prices affordable to a wide range of members, is because, at virtually every level of the publishing process, someone decides to work with books instead of make more money.

My name is Josh Cook. This is the end of my confession and open letter to Farhad Manjoo, who is probably an OK guy with the exception of this one inexplicable persistent mistake. I am a writer, a bookseller at an independent bookstore, and therefore, a motherfucking badass markup artist.

Monday, May 19, 2014

A Total Absence of Surprise: On Amazon & Hachette

How do you transfer market share to profit? The most direct way is to charge higher prices for whatever you sell in the regions where you dominate the market. But what if the way you gained that market share was not through the highest quality products and services at fair market prices, but by underselling all of your competition? What if your whole rasison d'etre is low prices? What if your entire public persona is based on the idea of “putting the customer first?”

For it's entire life, Amazon's business model has focused entirely around infinite growth of market share. Relentlessly, obsessively, ruthlessly, using low prices to gain retail market share, first in the book world (because the ISBN metadata of books is perfect for online databases) and then, in every aspect of the retail, and now, media world it can. It has been able to sustain itself on razor thin profit margins through the extra sales generated by blatant but technically legal tax avoidance, low pay and poor treatment of its warehouse workers, and Wall Street confidence in its ability to some day, some how, any-day-now-even-though-we've-been-waiting-for-fifteen-years, start turning a profit. (A compliant Department of Justice and a disturbingly sympathetic federal judge helped too.)

If money were infinite, there would be no poor people.
But now, the tax loophole that was a basic building block of Amazon's business model, is being closed, state by state, with the likelihood of federal tax fairness increasing by the year. In the UK, awareness is being raised and pressure is being put on Amazon over how much tax they DON'T pay, by technically basing their European division in Luxembourg. And people have noticed how awful Amazon treats its workers, including the workers suing Amazon over the lost break time in America, and organizing the hell out of shit in Germany. And Wall Street is finally starting to notice that Amazon isn't making any money. Not enough to do anything meaningful yet, but the Stock Market has the emotional stability of a 13-year-old, so the risk is always there that one day Amazon will wake up no longer allowed to sit with the cool kids.

Wait. That's what "communism" means?

No matter how efficient your business is, there is an overhead floor. There is a cost to doing business and even Amazon must pay it to keep doing business. So if they can't raise their prices how do they meet that floor? The same way Walmart does, by pressuring its vendors for more advantageous contracts. Hachette just happens to be, for whatever reason, the latest vendor to feel Amazon's pressure. To anyone following Amazon's progress to “Walmart of the Internet” this should not be a surprise. To anyone with a basic understanding of retail economics, this should not be a surprise. Really, anyone who takes a second to think about Amazon's discounts, shouldn't be surprised either. If there is anything surprising at all about this most recent conflict its that the public hasn't heard about more of them. This is the natural consequence of a business model based entirely on market share with unsustainably low prices. The result is like milfoil in a pond; Amazon is sucking the money publishing needs to survive out of publishing.

Sorry, today is my day off from crippling cynicism.
But that money goes to the consumer right? And if it's good for the customer, it's good for the economy, right? You'll spend the money you save through cheap books on Amazon, elsewhere, right? When Amazon pays its vendors less, everyone downstream makes less. (Have you heard about the shrinking author advance?) When Amazon pays its employees less, every economy impacted by those employees has less wealth. Though you personally might economically benefit from Amazon's low prices in the short term, and might reinvest those savings in other aspects of your local economy, that money came from somewhere. At best, Amazon's (and Walmart's) cheap prices are a zero sum gain for the economy, but more realistically, they starve states and municipalities of tax dollars, pull money out of the economy into Bezos' space alien death laser compound, and deprive a primary, fundamental, vital mechanism of human expression the resources needed to publicize and distribute that human expression.

Unless something changes, Hachette will not be the last publisher stressed by Amazon. Even if Hachette “wins” this particular conflict, Amazon will just pressure some other publisher when that contract comes up. How would something change? Ideally, Amazon would start acting like it is a member of society, but I don't see that happening any time soon. Even less likely, is the use of existing federal anti-trust regulation to stop Amazon's predatory pricing. So, again, it comes down to readers thinking in the slightly-longer-than-short-term and shopping elsewhere, at least some of the time. Now seems like a pretty good opportunity to start. If Amazon is telling you there is a three-week wait time on a popular book, go to IndieBound and buy it from an independent bookstore. You'll get the book faster, you'll buy it from a company that acts like its a member of human society, and you'll help support the publishing industry as a whole. Of course, the whole success of this strategy is based on readers thinking through the consequences of their actions more than one step removed. Readers are still people, and if our attitude towards human driven climate change is any indication, even just one step removed is apparently too much to ask.