Amazon: Still Evil After All These Years Pt 2


by - January 16th, 2011


The following is the second part of a two-part post. Click here for Part 1.

More amazing to me is the co-op payments involved in Amazon’s recommendation engine. If you’ve ever bought anything from Amazon, you’ll have seen the panel at the bottom of every screen telling you what other products people who liked this bought. I’ve always seen it as a useful way to discover books I may not have heard of, through the purchases of readers who buy similar books to me. I assumed there was some kind of mysterious Google-like search algorithm at play, and that it was designed for me to find books I want to read. Not so:

Most customers aren’t aware that the personalized book recommendations they receive are a result of paid promotions, not just purchase-derived data.

But wait – there’s more. Not only are Amazon’s explicit advertising, search and recommendation algorithms a result of publisher co-op payments – the very price you pay for a book on Amazon is determined by yet another algorithm.

Algorithms can also affect how much customers pay for books. Individual customers may get different discounts on the same book depending on their purchase history. The practice is euphemistically called “dynamic pricing.”

So, Amazon is certainly not the benign dictator I kidded myself into thinking they were. But here in Australia, where we don’t have a homegrown Amazon distribution network, and people still have to pay exorbitant shipping fees to get their books out here, one has to assume they have far less sway.

That is until ebooks really take off. Despite the fact that we don’t have a local Amazon presence, this makes absolutely no difference whatsoever for Australian ebooks. And Australian ebook sales are overwhelmingly dominated by the Kindle, and are likely to remain so for some time. At the moment, it’s unlikely Amazon is charging these kind of co-op fees for ebook promotion, because very few publishers are making enough money out of ebooks to justify payments. But you can guarantee they will.

So my question for you today – what do you think of Amazon’s bully boy tactics? Is this just the new reality and publishers should simply get used to it? Or should they be fighting the web behemoth every step of the way? Does information like this make you less likely to buy from Amazon? Does it even come as a surprise? Sound off in the comments and let me know.


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Joel Naoum (113 Posts)

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8 Responses to “Amazon: Still Evil After All These Years Pt 2”

  1. The Smell of Books » Amazon: Still Evil After All These Years Pt 1 Says:

    […] Computing & information technology » show all categories « Amazon: Still Evil After All These Years Pt 2 […]

  2. Sophia Khan Says:

    I love amazon, in a very undiscriminating, ‘cheap, available books, reliable not-too-bad postage’ kind of way. Product placement irritates me but I never buy books like that, although I do like the ‘other people who bought this book also bought…’ list. Sometimes it gives me ideas, so it’s annoying that this is actually selective. What REALLY shocked me though, was different discounts for different customers! Is that really true? Does that mean if you want book 2 in a series you will be paying more than someone else because they know you want it because you already bought the first one? It had better not. It had better mean they have figured out that I am really cheap and won’t buy anything unless it’s cheap as chips.

  3. Joel Blacklock Says:

    Well, we don’t know for sure how they use it, but the issue is that there’s nothing technically stopping them from doing just what you fear. And seeing as there’s no disclosure from Amazon about what they are doing, we can’t assume they’ve drawn an ethical line in the sand. Having said that, it would be a risky proposition to use the algorithm to increase prices for some consumers (or for sequels – so evil!) – the backlash would be terrible if it ever came out.

  4. Simon Says:

    I have to say some of what you said rings true. In a recent book-buying frenzy of mine, in order to get the cheapest version of classic publications (Bronte, Defoe, Verne etc.) I found myself having to search using ISBN or the full title and publisher (Wordsworth Classics) in order to find them. And these weren’t old editions either. The only difference being they were a quarter of the price of the Penguin editions (£2 v £8 – both RRP). Crazy to pay more when you’re paying for the same text.

    But while it was hard to find the cheaper options on Amazon, the high street retailers were being even less helpful. None of them stocked the Wordsworth Classics editions, only Penguin. Why? I can only assume they don’t want the piddly commission on a £2 sale and would prefer the customer pay £8 for the words of centuries dead writers. I’m all for writers and artists getting their royalties but who’s reaping the rewards for the work of a 300 year old, coffin-dwelling writer?

    For this reason, despite making it difficult to find, Amazon were the only retails offering the alternative! I thought they were my friends by giving me the choice. And then I read this……. my friends are sounding dodgy.

  5. Joel Blacklock Says:

    Indeed. It certainly puts paid to the idea that Amazon is all about providing customers with the lowest possible price. Clearly when it suits them they will advocate this position, but there are other times, like you’ve mentioned, that they don’t. I guess you could at least get the book you wanted!

  6. Tony Park Says:

    My goodness.

  7. kypt Says:

    Sounds somewhat similar to our produce supply chain. The two major supermarkets retail something like 70-80% of Australian produce, and are in the powerful position of being able to play hardball with growers/market vendors and manipulating the expectations of consumers regarding price, quality, and supply.

    I find the tailored pricing interesting. After all, how much of a profit margin is reasonable? In a way, it makes perfect business sense that people pay more if they value something more. Must be pretty fancy stats tho. How does Amazon know asking me to pay more for something that my history says I really want (like a sequel) won’t just put me off? Does that mean the more I look up a book and don’t buy, my prices will drop? That’d be neat.

  8. Joel Blacklock Says:

    It would be neat. Though it could be they’re dropping the price of the sequel of a series in order to entice you to buy it. They could be raising it. The sad fact is – we don’t know. And that is what makes this system of ‘dynamic pricing’ a bit shifty, in my opinion. Amazon doesn’t disclose that this happens, and they don’t explain the system behind it. It’s completely opaque to consumers, some of whom rely entirely on Amazon for their books. For all Amazon’s arguments about pricing low – we have no idea whether they’re up-pricing or down in these situations, because the price differences aren’t publicly known.