Amazon Confirms Hachette Spat Is To "Get a Better Deal"

tlhIngan (30335) writes "Last week we heard that Amazon was withdrawing Hachette books from its virtual shelves including allowing preorders of the new JK Rowling book. Amazon has responded to these allegations, and confirms that yes, they are purposefully preventing pre-orders and lowering stock in order to get a better deal from Hachette. Amazon recommends that in the meantime, customers either buy a used or new copy from their zShops or buy from a competitor. Amazon admits there is nothing wrong with Hachette's business dealings and that they are a generally good supplier." Here's Hachette's response to the Amazon statement.

Comments

Books aren't special

[Enigma2175]

FTFA:

Amazon indicates that it considers books to be like any other consumer good. They are not.

My rebuttal: Yes they are.

Re:Books aren't special

[Charliemopps]

FTFA:

Amazon indicates that it considers books to be like any other consumer good. They are not.

My rebuttal: Yes they are.

The entire reason we have a first sale doctrine is because a publisher was trying to artificially inflate the price of a book.

Re:Books aren't special

[Anonymous Coward]

Hachette's response was no more elaborate. Why do you hold him to a higher standard then the publisher? That indicates you aren't interested in the answer, but are just trolling.

Re:Books aren't special

[LocalH]

But things that are considered consumer goods, like many technologies, are not completely fungible by that standard. Sure, you have devices that can serve the same purpose, but in most cases they're not really interchangeable without some major changes in what you're doing. You can't really replace a Wii U with an Xbox One and consider them "completely fungible".

Re:Books aren't special

[lgw]

A Hyundai and a Ferrari are both cars, like any other consumer good, but few would consider them fungible.

Nothing wrong with Amazon playing hardball in negotiations. They're still far from a monopoly.

Re:Books aren't special

[fuzzyfuzzyfungus]

Arguably they aren't like any other consumer good: they share a pretty easily identified, and salient, set of characteristics with certain other 'culture products', music, movies, and similar: marginal cost of production is essentially zero, different ones are partial substitutes for one another; but rather weakly compared to other consumer goods, 'brand' affinity follows individual producers (or nominal producers, as in the case of certain heavily-managed tween-pop-to-order acts) rather than companies, and so forth.

Books aren't some Unique And Sacred Category Unto Themselves; but the characteristics listed above are pretty significantly unlike those of, say, consumer appliances(where marginal cost of production is comparatively high, different ones are nearly perfect substitutes, brand affinity, if any, follows companies while individual designers are unknown, etc.)

What isn't clear to me (any authors in the house?) is whether the traditional big publishers are, by reason of a certain gentlemanly ossification, allies to the otherwise scattered and helotized writers, or whether this is basically a spat between two would-be-exploiters of authors over who gets the profits.

Amazon sure as hell isn't in this out of the goodness of their hearts; but they are also not going to waste a penny more than necessary on quaint traditional supply chains, 'remaindered' or 'stripped' books, and anything of the like; but they also aren't going to let any mere customs hold them back when it comes to contractual matters.

The incumbent publishers are definitely more tradition-bound; but I don't know how much this just makes them inefficient, and how much it makes them act more nicely than good old sociopathic 'homo economicus' would.

Re:Books aren't special

[Anonymous Coward]

Your argument is that books aren't like other consumer goods because they're not fungible. Your debate partner pointed out that other items which are generally considered consumer goods are also not fungible. This implies that whether or not an item is fungible isn't sufficient for defining whether or not an item is a consumer good. Generally, this is the point were you would offer up another criteria to distinguish between non-fungible consumer goods and books.

Re:Books aren't special

[phantomfive]

Amazon sure as hell isn't in this out of the goodness of their hearts;

And lets be honest, neither are publishers. And if we really dig deep, we might find that authors sometimes write mainly for profit as well.

Re: Books aren't special

[LocalH]

Spot on. I take issue with Amazon's handling of this not because of anything to do with whether books are a "consumer good" or not, which they clearly are in the first place (they're sold at retail, buyer gains first sale rights concerning the physical object, sounds pretty much like a good to me). It's because it's anti-consumer. It punishes people who dare to buy from vendors or publishers which the marketplace provider has some sort of issue with. It's exactly like the fights between cable/satellite providers and distributors. The only thing they do is punish the people who enjoy the things they air. Exactly like those situations, we have public communication from each entity blaming the other and confusing the average person. I half-expect Amazon to start putting a little ad-size box on pages for Hachette books "explaining" to the potential buyer why they shouldn't even buy the book in the first place, and Hachette adding extra pages into Amazon-destined copies explaining how shitty Amazon is.

It's all a big dick-waving contest and doesn't help anyone but the one with the biggest dick.

Re:Books aren't special

[s.petry]

Did you mean to say "Amazon's zeal for maximizing profits, even when it pisses off consumers costing them bottom line and is of questionable legality"?

The price fixing game on ebooks has been crazy, and with the advent of "e-books" we would assume that the costs of books goes down because distribution is so cheap. At least that's what we would think if the economy was working normally.

Instead, we have a few E-book vendors charging people the same money for an ebook as for the hardback in many cases. I can usually find paperbacks cheaper than ebooks, and I'm not shopping at the 2nd hand book store.

This stuff should have been fixed long ago in court, and instead publishers were slapped down because.. you know.. tech company monopolies are valuable (look at Microsoft's history for that one). Heaven forbid we punish Apple, Google, and Amazon for admitted price fixing.. *gah!*, I won't continue on that rant.

The solution is obviously for consumers to boycott and spend their money elsewhere. I personally prefer a physical book over an ebook, and see ebooks as beneficial only when traveling. If you really need an ebook though (my mom does due to her eyes going bad) then buy it from a different service. And the next time you go to buy a book, remember that Amazon intentionally delayed shipments and removed products from their web site without informing anyone. They did this for profits and didn't care about what you paid for or wanted.

I really wish more consumers had long term memory on these types of things, because that's the safety net in a Capitalist economy.

Re:Books aren't special

[mwvdlee]

They were more elaborate. Here's the entire paragraph ouf of which' context the sensence was taken

Authors, with whom we at Hachette have been partners for nearly two centuries, engage in a complex and difficult mission to communicate with readers. In addition to royalties, they are concerned with audience, career, culture, education, art, entertainment, and connection. By preventing its customers from connecting with these authors’ books, Amazon indicates that it considers books to be like any other consumer good. They are not.

You may agree of disagree, but do not hide behind lies.

Re:Books aren't special

[ranton]

They were more elaborate. Here's the entire paragraph ouf of which' context the sensence was taken

Authors, with whom we at Hachette have been partners for nearly two centuries, engage in a complex and difficult mission to communicate with readers. In addition to royalties, they are concerned with audience, career, culture, education, art, entertainment, and connection. By preventing its customers from connecting with these authors’ books, Amazon indicates that it considers books to be like any other consumer good. They are not.

You may agree of disagree, but do not hide behind lies.

You could come up with any number of reasons why a certain consumer good is unique. Take this for example:

Microwave oven manufacturers, with whom we at [generic distribution company] have been partners for nearly 60 years, engage in a complex and difficult mission to provide food to humanity. They provide a way to reuse food in a way that helps cut down on food waste, thus reducing the amount of land that is necessary to feed to world. By preventing its customers from purchasing these microwaves, Amazon indicates that it considers microwaves to be like any other consumer good. They are not.

Nothing they said backs up their claim that books are not just another consumer good. They are just explaining why this particular consumer good exists.

Re:Books aren't special

[tlhIngan]

The price fixing game on ebooks has been crazy, and with the advent of "e-books" we would assume that the costs of books goes down because distribution is so cheap. At least that's what we would think if the economy was working normally.

Except distribution is cheap. It averages under 10% the price of a book on average.

The real costs with publishing is the bunch of work that goes into transforming an author's lump of words into what people generally call a book.

First, you need an editor. You'd think authors would use spell check and stuff, but they don't. Then there are the ones that rely on it a bit TOO much (I read a self-published one that routinely mixed up "censor" with "sensor"). This is not an easy job - an editor who does too much can be accused of tampering with the author's work, so they usually err on the side of caution and try to find/fix/review the most egregious errors (who knows if the author intended for some to be deliberate?)

Second, you need a typesetter. That lump of words may be split up into chapters, but you can bet the styles aren't properly set, so they need to be re-set using a style template, text re-flowed and all that (yes, many people still hit "return" at the end of a line rather than rely on word wrap). Plus images need to be laid out and referenced properly. And foot/end notes properly set up. In a technical work, there may be stylesheets available, but even then some areas just do not follow.

The editor has to check the typeset work as well to make sure the typesetter didn't make mistakes, too.

Then there's all the other matter pages that need to be created - tables of contents, figures, indices and such (no, authors rarely provide those).

And then there's the cover artist, the author's bio and other materials that have to be added, marketing plans if you're well known, etc.

The only thing ebooks save on are the actual printing, shipping and warehousing. In fact, typesetting is particularly important on ebooks because the auto-typesetter on most readers generally stink, so you need to properly typeset the book to help it out and have the content at least appear somewhat half-decent. Nothing worse than a inline image suddenly causing the text to not flow properly around it, so you end up with an image and several pages of text where the lines are barely a word wide.

Same goes for the cover art - if you're reading on a tablet, you have full color available. If you're reading on an e-ink screen, you generally only have 4 level (black, dark grey, light grey, white) shading to go with it, and relying on the auto-scaler and shader can mean you get a black blob instead of a nice cover.

Re:Books aren't special

[rochrist]

Are you deliberately being obtuse? If I want a book by, say, Charlie Stross, a book by Stephanie Meyer is not going to do. If I want a microware, I don't give a fuck whether it's from Samsung, Panasonic, Sharp or Whirlpool. Books are not widgets. Each one is a unique, bespoke item.

Time to become a better shopper

[careysb]

Guess I'll be broadening my shopping horizons.

Re:Time to become a better shopper

[TWX]

See, I'm not necessarily upset at Amazon for doing this, as they're being seemingly open and honest about it.

This is also one of the few things that I don't get upset at Walmart for. Their intentionally under-pricing their goods at a loss to force competitors in small markets to go under before raising their prices is what upsets me.

Re:Time to become a better shopper

[Charliemopps]

Guess I'll be broadening my shopping horizons.

This is how all major contact negotiations work. I'm involved with them all the time and this is almost assuredly the publishers fault.

The rule is, you have the contract done and signed before the previous one expires. If you don't, it puts you in a precarious situation... like this. If the previous contract was still in place, Amazon couldn't do what they're doing. All of the pricing, etc... is set in the contract. It's very very precise language. Once the contract runs out, if they haven't come to an agreement yet, it's standard for the one or both of the companies involved to flex their muscle, just like amazon did here. The message is clear "You have no leverage over us. We can just stop selling your product, we still keep making money, oh look at your stock price..." etc... If Hachett doesn't like it, they can stop doing business with amazon, or agree to the terms.

And before you get all sad for Hatchett, you should know they're a $2 billion company, that contain parts of the publishing of CBS, Disney and Time Warner. They are not the friendly do-good book publisher you think they are.

Re:Time to become a better shopper

[Frosty Piss]

See, I'm not necessarily upset at Amazon for doing this, as they're being seemingly open and honest about it.

Sure they are. But that doesn't make it right.

Cheap books now, but in the long run, fewer choices.

Re:Time to become a better shopper

[c]

The rule is, you have the contract done and signed before the previous one expires.

I expect that there's also a very applicable rule about how any contract negotiation after getting caught in anti-trust collusion against one of the largest retailers of your goods will probably involve you making more concessions that you might like.

Re:Time to become a better shopper

[lgw]

Except Wal-Mart's prices are damn low over time. They can sustain lower prices than just about anyone else because they have the best logistics chain in the world - really amazing tech there. Also partly because they sell low-quality versions of familiar products, of course, but apparently consumers are just fine with that.

Face it: hatred for Wal-Mart is a tribal identification thing, not a rational economic argument.

The interesting fight is yet to come. Eventually, Wal-Mart and Amazon will be in direct competition. Bring popcorn.

Re:Time to become a better shopper

[I'm New Around Here]

The interesting fight is yet to come. Eventually, Wal-Mart and Amazon will be in direct competition. Bring popcorn.

Like we'll be able to afford popcorn when the only two suppliers of it are WalMart and Amazon.

Re:Time to become a better shopper

[Bill, Shooter of Bul]

Wait, what? Lowering the quality of goods is just as bad as raising the prices to me.

Take product A It costs $10 and lasts five years.
Walmart modifies product A to create Product B, which costs $7 and lasts two years.

To me that is worse than a $2 rise in product A.

How is that not an economic argument?

Re: Time to become a better shopper

[matunos]

Amazon stock doesn't pay dividends.

Re:Time to become a better shopper

[Aighearach]

Their current prices are at break-even level, and they don't want to increase prices, so they'll cut their costs.

The dispute is about ebook pricing. You should probably find a link, any link, to information comparing ebook and printed book profit margins.

You might find that whatever assumptions you were making were totally off-base, and that the margins involved are epic compared to other products amazon sells.

Much analysis has amazon actually wanting the margins to be narrower, because their focus is volume and low retail prices.

Once you see the ebook publisher margins and the retail prices, it becomes obvious that amazon isn't trying to keep anybody out.

Re:Time to become a better shopper

[Accordion Noir]

I'd say that WalMart is getting close to a monopoly in towns I've visited where a few years before there were hardware stores, grocery stores, fabric stores etc, and a somewhat functional downtown, and now there is ... Walmart. It's not the only place you can buy things in the country, but it has pretty much driven some whole towns out of business.

There's anecdotal evidence for you.

Re:Time to become a better shopper

[ArmoredDragon]

This is quite false, and in many respects is a red herring.

The first problem with this argument is that there is no set time period for how much something will last. The second is that at the same time, marginal reductions in production cost don't necessarily equate to reduced durability. Generally when they refer to lower quality, at least in the case of Wal-Mart, they're referring to a substitute for a cheaper material in all or part of the product, which generally results in lower aesthetics and has nothing to do with durability.

Take for example, substituting leather for vinyl. Vinyl actually carries a few advantages over leather (for example, it is far more tolerant of getting wet, more tolerant of direct sunlight exposure, and less likely to crack or fade.) It also carries a few disadvantages in that it generally feels somehow rubbery/artificial and not as "soft," in addition to being more likely to cause you to sweat if it sits against your skin. The cheaper "quality" product will be made with vinyl rather than leather, but as for which one expires sooner depends on how the product ends up being used. In a more wet environment, the vinyl product is guaranteed to last longer.

Indeed, the defining characteristics of modern manufacturing are for cheaper products while having fewer defects. This is called Lean Principles. Arguably by cutting out some of the more expensive manufacturing processes, you also reduce the chances for error, simultaneously reducing cost as well as increasing quality. Historically (over the last 60 years) this argument has proven to be accurate. Yes there are some products that are so horribly built that they have poor endurance, however that has more to do with poor manufacturing techniques than cost of production. I've seen plenty of expensive products have the same characteristic, take for example the mac mini's which are often built from notoriously bad parts (meanwhile Apple fans tend to praise them anyways.)

Re:Time to become a better shopper

[JDAustin]

Was hatred of Standard Oil irrational?

Actually, it was somewhat.

In 1865, the price of kerosene was 58 cents/gallon and Standard oil had almost no share of the market. By 1870, Standard Oil had a 4% share of the market and kerosene prices were at 26cents/gallon. In 1880, Standard had a 90% share of the market. Kerosene prices were now at 9cents a gallon. After a decade of 90% market share, kerosene prices were down to 7cents/gallon.

Why? Efficiency.

Rockefeller did such things as purchasing entire forests so he could make his own barrels. The result is a barrel price drop from $3 to $1. Rockefeller also offered guaranteed daily traffic to the railroads using Standard-owned cars, loaded and unloaded in Standard owned facilities. The result was a lowering of transport costs from $900k per trip to $300k per trip.

When it came to take-overs of competitors, Rockefeller opened the books and made a reasonable offer as he wanted talent and assets. If they refused, then he would start undercutting on price (while still turning a profit).

Now Standard Oil wasn't broken up until 1911, but due to competitors copying Rockefellers methods, its market share was at 65% and falling. Standard Oil didn't stop competition, it only forced them to become better.

Fight for consumers

[Koby77]

It's good to see a big company actually fight for better prices for customers. I wish my cable company was like that. And before anyone gets me started, remember that monopolies are only abusive if they use their power to screw over the consumers; there is no antitrust protection for businesses to profit.

Re:Fight for consumers

[just_another_sean]

Than how is OK for Novel to go after Microsoft? Wasn't that solely about anti-competitive behavior as opposed to Apple going after Sony over patents?

And my suspicion is that Amazon could care less about consumers other than their impact to their bottom line. I don't believe for a minute that once they have most/all of the publishing industry under their thumb they won't slowly but surely raise prices. Their not doing this for you or me, just themselves. We might benefit in the short term but I doubt that it will last if they succeed.

Re:Fight for consumers

[Frosty Piss]

It's good to see a big company actually fight for better prices for customers.

No, that's not the Amazon plan. In fact, they are trying to drive publishers out of business and force authors to deal directly with them, as the only choice. As the de facto monopoly, they can dictate to the authors what they will pay, and it ain't going to be pretty.

Re:Fight for consumers

[xigxag]

Even if they drove all the publishers out of business, they still wouldn't be a monopoly because there are plenty of other bookstores, both online and off. If writers who are not represented by publishers don't like the terms Amazon offers, they can contract with another storefront and get better terms. Say Amazon wants to sell your book for $5, but bn.com is willing to sell it for $10. Why bother with Amazon? You're going to go to bn.com exclusively, as would any other writer. Amazon would then be forced to raise prices to compete with Barnes & Noble (or other retailer). That is, unless you wind up staying with Amazon because your gross income from Amazon is higher despite lower royalties, because of their much greater market share. If that's the case, and you're making more money from Amazon, then what's your complaint about their terms?

Or perhaps people don't want to buy your book for $10 at bn.com because Amazon has conditioned people into thinking that the proper price for a book is about $5. If that's the case, if people are willing to give up so easily on one author to buy from less expensive authors, then all that stuff about books being "non-fungible" isn't quite true, after all.

Finally, I simply don't believe that the author will make less money if the publishers are out of business. Getting rid of publishers will remove a whole class of people sucking the author's teats. With no publisher to pay off, Amazon could easily lower the price and still give a higher royalty to the writer.

Re:Fight for consumers

[Frosty Piss]

Even if they drove all the publishers out of business, they still wouldn't be a monopoly because there are plenty of other bookstores, both online and off.

Even if Microsoft drove all the software companies out of business, they still wouldn't be a monopoly because there is plenty of free software...

Re:Fight for consumers

[bdam]

Full Disclosure: I work for a small publisher. In terms of actual stores dedicated to selling books, there are fewer and fewer of them as time goes by. And it's not just the small guys, Borders got taken out too. To be clear, there's an economic argument to be made that this is a good thing but let's at least be clear about one thing: Amazon has a very real monopoly on print and electronic books. While publishers will come and go over time the idea that authors will publish their own books shows a lack of experience actually dealing with real authors. Sure, some have the talent, desire, and resources to do so. However, that vast majority of authors we deal with do not want to prepare their books for market and then have to deal with retailers. Further, publishers are partially in the business of risk taking by offering up payment upfront to authors for works they haven't completed yet. Authors tend to be comforted knowing that they'll get $X now for signing the contracts and $Y later when they deliver the manuscript regardless of actually making a single sale. Again, some authors are willing to take that risk and it will pay off but not many. So sure, Amazon could take on those roles but that doesn't just magically remove teat suckers. Unless you want unedited and un-styled walls of text someone's going to have to edit the damn thing and someone with an eye for a design needs to make it look half-way appealing. Those people aren't likely to do so for free. I'm sure Amazon could come into the market though and push those costs down and economically that'd be great. However, speaking long term, how long is that going to last? If Amazon has a monopoly on publishing in addition to distribution then what makes you think they'll continue with razor-thin margins?

Antitrust investigation?

[manu0601]

Shouldn't this fuel an antitrust investigation? The mere fact they can pressure a publisher by not listing their books means free market failed.

Re:Antitrust investigation?

[Anonymous Coward]

no, being able to put preassure on someone by deciding to buy from someone else is not showing that the free market failed, it is the free market in operation.

Re:Antitrust investigation?

[Arker]

"it is the free market in operation"

Except the only free market in books tolerated is in reprints of books originally published in prior millenia. This is not a free market on either end or in any way.

Here

[Charliemopps]

I'll just leave this here...

http://booksprung.com/dear-hac...

Thanks Amazon ;-)

I recommend...

[Frosty Piss]

...that consumers dump Amazon in favor of Powell's Books.

Re:I recommend...

[Frosty Piss]

No. Although they do have a huge retail place and a separate Technical Books store, they actually do most of their business on-line.

Re:What? Companies negotiate over wholesale prices

[meerling]

Of course it's not news for nerds, everyone knows nerds are illiterate and so don't read anything. All those books they have on their shelves, kindles, and talk about were given to them by friends and family as decorations, and they heard a synopsis of it on a podcast, youtube, or downloaded the movie.

Now that the sarcasm-spasm is over, we don't have enough information about what the heck the real fight is over, we just have their P.R. statements.
So far it could be Amazon trying to squeeze out extra profit or special favors, or it could be Hachette trying to raise it's book prices or trying to get special favors.
All we really know is they are having a dispute, and both of them are trying to sway the public with sugar coated press releases.

Punish Apple!

[SuperKendall]

Amazon behaving badly in a market where they have a monopoly? Time to get out the Apple Beatin' Stick again! Got to keep down those competitors with government sanctioned punishments for even trying.

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[account_deleted]

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To Summarize

[matunos]

Both parties admit they're in contract renegotiations. So the current public spat appears to be about whether a retailer should be obliged to continue to stock the goods under negotiation for resale without a contract, because... authors?

Re: To Summarize

[matunos]

From what I can tell, Amazon is still offering the products for sale, but not stocking it as they don't have a contract with the publisher. So if you buy one of the books not in stock, they have to order it from the publisher on demand.

I don't see why a retailer should unilaterally compromise their business (stocking large quantities of books without a contract from the supplier) in order to serve customers just because the publisher doesn't accept the proposed terms.

Both companies are playing hardball maybe, but the fact is there's no supplier contract and that's what's they need to agree upon for business to proceed as usual. In the meantime, there's plenty of other places one can buy Hachette's books from.

It is more subtle than thatRe:Books aren't special

[Camembert]

There was a good article in The New Yorker a few months ago about the Amazon business practices.
Their very tough negotiation position typically forces the publisher to give big discounts, and even extra money to be listed high enough in the sales results.
Amazon books are usually cheaper than in many other stores so from a consumer level, this seems like a win for the capitalist philosophy.
However, it turns out that these huge discounts have a snowball effect towards the authors: they now typically get lower royalties per book, sometimes much lower. I had this confirmed by a few authors I know.
The danger for the general culture is that authors would write far less as they (except the most popular ones) will have to do more other work to have a normal standard of living. Most of the midlist authors, and those are in my opinion often the most interesting ones, already had to combine writing with other professional activities. In essence there is nothing wrong with that, but when at one point they have little time left to write, books will come much slower.
In some European countries there are fixed price laws regarding books, these are exactly there to ensure that writers can focus enough on their craft, it is seen as a matter of national culture that should be stimulated, not necessarily mercantilised.
I do agree that a purely capitalist attitude in this matter can be detrimental to culture over the longer term.
Discuss.

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[account_deleted]

Comment removed based on user account deletion

Isn't this classic anti-trust fodder

[robbiedo]

E-books are not books. They are not retail sales of merchandise. An e-book purchase is only a license. Amazon is using monopolistic behavior in e-book licensing to control pricing from publishers to extract monopolistic profits, to secure market share, and to reduce competition where Amazon is able to dictate access to customers who they control through their locked ecosystem. Amazon's ultimate goal is to bypass the publishers altogether, and control the licensing of books from authorship to consumer.

Re:Isn't this classic anti-trust fodder

[Rande]

Except there's nothing stopping the publishers from opening up their own website to sell ebooks.
The barrier to entry isn't that high.
Offer them for less than Amazon, with a good user experience and people will flock to it.
ie. Pile 'em high and sell 'em cheap.

Or are you saying that Amazon has forced them into 'Most favoured nation' clauses where they aren't allowed to sell for lower than Amazon? (Like Apple did, which _was_ anticompetitive)

Be cautious with labels

[s.petry]

I agree with most of your points, but take issue with this statement. "Amazon books are usually cheaper than in many other stores so from a consumer level, this seems like a win for the capitalist philosophy.".

The cheapest price for a consumer is not "Capitalist Philosophy". Capitalist Philosophy, according to Adam Smith requires evaluating the economy as a whole. Consumers and regulators need to remove bad players from the system and diminishing those too large, or Capitalism will fail just like Mercantilism he warns. (We would probably agree that Amazon at least has too much power).

Adam Smith was very clear that monopolies were detrimental to any economy, including Capitalism. He also stated that large companies would require extensive regulation or could easily turn into predatory monopolies. Lastly, he stated that if the Government fails to act on these monopolies it was up to consumers to boycott and remove their power by removing their revenue. He credits the failure of mercantilism, and it's predecessors, primarily to unchecked monopolization.

I highly recommend that people curious about Economics read Adam Smith's complete works, followed by Milton Friedman (just don't purchase them from Amazon :P ).

Re:Information isn't matter, symbols are one encod

[Shazback]

"Mathematics, Fashion, Automotive industries have no copyrights or design patents and yet are very profitable"

You might have been lured in by a very bad TEDx talk (http://www.ted.com/talks/johanna_blakley_lessons_from_fashion_s_free_culture) but this is pretty much entirely false.

Mathematics is not profitable, by pretty much any metric imaginable. Lots of things that use mathematics are very profitable (pretty much the entire IT sector and any heavily engineered business), but mathematics itself isn't. In order to translate mathematics into goods and services, a significant amount of work is required, and whilst the mathematics itself can't be protected under IP laws, the product of the work put into making the service or good can. Programs can be copyrighted, goods or services that leverage mathematical properties can be patented if they meet the required criteria, and so forth.

The automotive industry is a hot-bed of IP protection. Ford alone has been assigned over 6 000 patents in the US, looking only at the records from 1979 onwards (http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&u=%2Fnetahtml%2FPTO%2Fsearch-adv.htm&r=0&f=S&l=50&d=PTXT&RS=AN%2FFord&Refine=Refine+Search&Refine=Refine+Search&Query=AN%2FFord+and+Global+and+Technologies). Toyota, VW and all the other major automobile manufacturers have similarly huge patent stashes that they guard preciously. In the past decades they have been more aggressive with design patents in order to stop aftermarket parts makers from successfully entering the replacement parts market. Design patents are ubiquitous, and pretty much every single car since the 70s has a few... Porsche (http://patft.uspto.gov/netacgi/nph-Parser?Sect2=PTO1&Sect2=HITOFF&p=1&u=/netahtml/PTO/search-bool.html&r=1&f=G&l=50&d=PALL&RefSrch=yes&Query=PN/D673484), Toyota(http://patft.uspto.gov/netacgi/nph-Parser?Sect2=PTO1&Sect2=HITOFF&p=1&u=/netahtml/PTO/search-bool.html&r=1&f=G&l=50&d=PALL&RefSrch=yes&Query=PN/D688160), Ford (http://patft.uspto.gov/netacgi/nph-Parser?Sect2=PTO1&Sect2=HITOFF&p=1&u=/netahtml/PTO/search-bool.html&r=1&f=G&l=50&d=PALL&RefSrch=yes&Query=PN/D488405) just to name one in each major market.

As for fashion, well it's hardly a brilliant example of a "beneficiary" industry when it is the sector that pursues the most aggressive out-sourcing and mechanisation strategies. Buying things made in the USA isn't always easy, but for clothes it's almost impossible. A few companies that are pushing the high end of the market manage it, but that's hardly a ringing endorsement of a sector that is in great health.

But beyond the obvious financial difficulties that many fashion companies have had over the past decade or two, a more potent criticism is the actual lack of innovation that fashion has brought over the past century or even two. In 1930 IT didn't even exist as a sector, and pretty much every aspect of our lives have been transformed. Cooking has seen the meteoric rise of the microwave oven and the freezer, whilst fridges became basic home appliances. Communications went from the radio to TV and online broadcasting, whilst telephones have become mobile personal assistants. Cars have seen vast transformations in performance, variety and ease of use. Air travel has gone from a luxury reserved to a prestigious and wealthy elite to a popular mode of transport. Electricity has definitively finished its transformation from a convenient novelty to a base necessity of achieving any decent standard of living. Plastics have gone from being synonymous with bakelite to a whole group of materials with ever more varied properties...

The changes in pretty much every facet of life have been huge thanks to sustained innovation over the past century. What has fashion (or even apparel in a larger sense) brought to the table? Very little I fear. New materials have been brought to the ma