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.