In Defense Of Amazon

Clay Shirky believes critics of the company are misguided:

I’d always aspired to be a traitor to my class (though I’d hoped it would be for something a bit more momentous than retail book pricing), but treason is as treason does, so here goes:  The reason my fellow elites hate the people who run Amazon is that they refuse to flatter our pretensions. In my tribe, this is a crime more heinous even than eating one’s salad with one’s dessert fork. The threat Amazon poses to our collective self-regard is the usual American one: The market is optimized for availability rather than respect. The surface argument is about price, but the deep argument is about prestige. If Amazon gets its way, saying, “I published a book” will generate no more cultural capital than saying “I spoke into a microphone.”

Given their deep ambivalence about expanded participation in the making and selling books, it’s worth noting some scenarios Amazon’s critics aren’t afraid of: They aren’t afraid that books will become less accessible. They aren’t afraid that there will be fewer readers. They aren’t afraid that fewer books will be published. Bezos understands that running a great bookstore is more like running a great grocery store than running a great opera company; it enrages my people that he’s unwilling to pretend otherwise.

Meanwhile, Joshua Gans asks, “When Amazon provides the world’s largest bookstore – and it is getting larger and larger – how do authors compete in the market for attention?”

Specifically, while it is nice to believe, as Shirky appears to do, that just “getting it out there” will let the cream rise to the top, Amazon doesn’t provide a platform that quite does that. Instead, Amazon provides a rating platform and, when there are small numbers involved (as they must to have a long tail work out), then we get distortions creeping in. Put simply, people who hate the concept of a particular book, need not have read it to give it one star and distort the picture. [Craig] Mod argues that Amazon can surely do better with its data and I would argue it surely has an interest to do better.

But how to do so is not that obvious. The standard in terms of how to start has been shown to us by researchers at eBay. As I noted a few months ago, Chris Nosko and Steve Tadelis were able to theorise about a better rating system and then also test that it would improve outcomes for consumers. So while we can praise Amazon for putting a competitive wind into an old and rigid industry, we must also be careful to continue to hold them to the fire of accountability for the efficiency of the platform in attention they are creating. It is only if they do so that the old gatekeepers and ‘standard bearers’ will face the challenge Shirky is hoping for.

(Full disclosure: The Dish has an informal business relationship to Amazon through its affiliate revenue program, which virtually anyone can join. The program only generates about 3% of our annual revenue, just about enough to pay and provide health insurance for our interns. And if there’s any doubt that the Dish has long aired criticism of the company, see here, here, here, here, herehere and here. We will continue to do so.)