Amazon ebook controvery persists: update

Lynne Kiesling

A quick update on the Amazon ebook controversy that continues to roil since my earlier posts on resale price maintenance and on price discrimination. This Technology Review article covers much of the same territory that I did in those posts, with some links to additional author sources, and Simon Owens at Bloggasm has some interviews with Tor Publishing authors on the impact this situation will have on their incomes and their abilities to continue writing. Tor author John Scalzi has an extremely funny satirical screenplay post on the situation (see if you catch the joke in the name of one character!). Kenneth Anderson at Volokh Conspiracy asks several of the same questions I did, and the discussion in the comments is particularly insightful. One of the commenters raised the question of whether Amazon’s market power is sufficient to constitute a monopoly, and that they could therefore be prosecuted under antitrust law for removing Macmillan’s books from their offerings (the consensus seems to be no, correctly). If you are following this story, I encourage you to check them out.

Speaking of Amazon’s market power … from the Technology Review article:

On Sunday, Amazon agreed to accept Macmillan’s new pricing model and said it would once again make the publisher’s titles available through its site.

However, I just checked Amazon’s listing for Hilary Mantel’s Wolf Hall (which is my test book for this story), and it still only lists availability for third-party sellers; there is still no listing for a direct purchase from Amazon, or for a Kindle ebook version of the book. It seems that John Scalzi is engaging in the same research as I am, finding that his Tor titles are listed similarly to Wolf Hall. He’s also landed in the same place as I have in terms of how I will spend my money from here on out:

Q: Do you hate Amazon?

A: My Amazon Prime account suggests that I really don’t. But, you know, look. What this is about to me, and what it’s always been about for me, is the fact that Amazon is punishing authors — a lot of them — for something that fundamentally doesn’t have anything to do with them, that being top-level trade negotiations between two corporate entities. Amazon can choose to do whatever it likes under the law, but admitting “Amazon has a right to do this” doesn’t mean I can’t say “and it’s being dicks to a lot of innocent writers” as well. Both statements are true. As for me, it’s pretty simple: When Amazon reinstates the “buy” buttons to all the Macmillan titles it’s stripped them from, I’ll consider buying something from it again. Until then, I’m taking my personal business elsewhere. I’m not suggesting others have to follow my example. But this is where I’m at.

Yep, me too. I’ve got hundreds of dollars worth of books and other merchandise in my Amazon wish list and shopping cart, and I plan on shopping for them elsewhere for as long as Amazon refuses to have direct links to the Macmillan books. I have been planning on buying several new hardcover books (such as The Enlightened Economy and The Invention of Enterprise), and now I’m going to do so elsewhere, as you can tell from the links that I’ve chosen. In fact, I also canceled my American Airlines MasterCard last November and got an Amazon Visa card instead, which is also now going to lie fallow in my wallet unless absolutely necessary.

I’ll be shopping for books at the online and “meatspace” locations of Barnes and Noble and Powell’s, and I’ll continue buying books from Abe Books. I’ll also shop elsewhere for housewares and electronics, high-priced products that I used to buy with great alacrity through Amazon.

Oh, and by the way, if you want an ebook version of Wolf Hall, Abe Books has one from Bargain Electronic Books in pdf format for $9.49.

The networked grid: 100 movers and shakers

Lynne Kiesling

I am pleased and honored to be included among Greentech Media’s 100 movers and shakers in smart grid, thank you very much! This is a list of wonderful people, with many of whom I’ve worked over the past five years during the development of smart grid interoperability principles — including economic market design principles and the potential value creation from a transactive, interconnected network of diverse, heterogeneous producers and consumers. I think the Greentech folks nailed it for me with this observation:

If you ever wondered who is looking out for the consumer in smart grid, fighting in the trenches to ensure that we get the participatory end-user experience (and the market to go with it!) that many of us are envisioning — the answer is Lynne Keisling.

Yep, that’s part of what gets me out of bed in the morning! Thanks again to Greentech Media for the recognition, which I really appreciate (although it’s Kiesling, not Keisling, like the wine but with a K instead of an R …).

Why is Idaho Power paying its customers?

Lynne Kiesling

KP readers know the answer to that question: reducing peak demand, load shifting across time, better capacity utilization. But there’s a bit more to it, as you can see in the New York Times article on Idaho Power’s rebates to their customers for reducing their irrigation during peak hours, as well as allowing for direct load control cycling of air conditioners. First, although I am glad to see such “programs” in a largely agricultural and rural customer base, the “energy efficiency program” focus of their strategy shows very little innovative thinking, and does not go far enough; there is no concept of dynamic pricing here, or even of time-of-use pricing, so the retail choices available to customers are not novel or innovative at all. In particular, note this passage:

“It’s clearly iconic in terms of a utility that’s turned the corner,” says Tom Eckman, the manager of conservation resources with the Northwest Power and Conservation Council, a planning group created by Congress. “They have gone from pretty much ground zero to a fairly aggressive program level.”

The company’s efforts are especially striking given that the push for energy efficiency is generally associated with coastal states like California and Massachusetts, not with a state whose electric rates are among the lowest in the country.

But the concept has rung true for Idaho’s farmers, anglers and snowbirds — outdoor types who have helped keep the state nearly free of coal plants. They have been largely receptive to the utility’s arguments that it is cheaper to save energy than to build new power plants.

While these “programs” make economic sense for the reasons we’ve discussed here frequently, note how embedded the entire concept of “energy efficiency programs” is in the traditional business model and culture of the regulated utility. This “energy efficiency program” framing of the retail space is what I would call a top-down sledgehammer approach. There is no concept of dynamic pricing here; this is just an implementation of direct load control (customer gives utility right to control devices, like air conditioner), so I don’t see it as being as innovative as Eckman does in his quote.

Second, the way such programs are being implemented in this industry are still embedded in the regulatory, cost recovery model, consequently with no concept of the fact that reducing costs and increasing sustainability is a way for companies like Idaho Power to increase their profits. You can see this from the fact that the regulators and Idaho Power still view energy efficiency as a cost center, a “program” that will reduce their revenue, so as a regulated firm they have to be paid to do that. The way Idaho Power is implementing this is under a regulatory mandate from the state PUC, and they are charging a monthly “energy efficiency fee” to their customers. This fee is intended to defray some of the revenue loss that might occur when they pay customers to reduce peak demand … but isn’t that reduction supposed to help Idaho Power reduce costs, so why charge customers for it? Welcome to the incongruous world of the incentives facing the regulated utility!

So, for better and for worse, this article gives you some insights into the current, evolving state of play in the electricity industry, and particularly the perverse embedded incentives for cost recovery and risk aversion that are a direct consequence of the economic regulation of electricity distribution companies and their government-granted monopoly in the retail market.