My friends and I joke that race and ethnicity will give way to mega-corp loyalty. People will self-identify as Google or Apple or Amazon. It is becoming difficult to not have some business with these companies. If you are a reader, Amazon is the default bookstore. I have a Prime account so I buy all sorts of other junk through them as well as books. Google has your email and personal information, which they share with the state. Apple is a weird cult of people who fashion themselves tech-savvy so they insist on products requiring zero technical skill.

Anyway, lost in it all is Amazon is not a healthy business. By the standards of finance, the stock is over priced by a factor of 24. That’s right. They have a P/E of 487 as of right now. For a bio-tech startup, that’s OK, but for a mature business it is staggeringly high. That stock price would have to fall to $13 for the stock to be prized at a typical P/E.

From the story:

Amazon’s power over the publishing and bookselling industries is unrivaled in the modern era. Now it has started wielding its might in a more brazen way than ever before.

Seeking ever-higher payments from publishers to bolster its anemic bottom line, Amazon is holding books and authors hostage on two continents by delaying shipments and raising prices. The literary community is fearful and outraged — and practically begging for government intervention.

This is the sort of thing a business does when they have run out of other options. They have squeezed every cent from their supply chain. They have automated everything that can be automated. They have baffled the markets with their drone bullshit, but no one is buying that much longer. They either start posting better results or there will be a rush for the exists.

“How is this not extortion? You know, the thing that is illegal when the Mafia does it,” asked Dennis Loy Johnson of Melville House, echoing remarks being made across social media.

Amazon is, as usual, staying mum. “We talk when we have something to say,” Jeffrey P. Bezos, the founder and chief executive, said at the company’s annual meeting this week.

The battle is being waged largely over physical books. In the United States, Amazon has been discouraging customers from buying titles from Hachette, the fourth-largest publisher by market share. Late Thursday, it escalated the dispute by making it impossible to order Hachette titles being issued this summer and fall. It is using some of the same tactics against the Bonnier Media Group in Germany.

One of the under discussed facts about the “new” economy is these tech giants are mostly skimming operations and rentiers. A book from Amazon is the same as a book from Fred’s book shop. You’re not saving money or getting anything extra from Amazon. They make their money from convenience and that has a small premium. Much of their success depends on using networks developed by other firms, for which Amazon pays nothing.

That’s what’s coming next for Amazon and NetFlix. The ISP’s will begin throttling their services unless they pay for their usage. Those costs will not be passed to the customers of these services instead of financed by everyone else. Similarly, Facebook would go out of business in a week if they had to pay the ISP’s for their bandwidth. Socialism works until it runs out of new people to tax.

But the real prize is control of e-books, the future of publishing.

Publishers tried to rein in Amazon once, and got slapped with a federal antitrust suit for their efforts. Amazon was not directly a party to the case but has reaped the rewards in increased market power. Now it wants to increase its share of the digital proceeds. The publishers, weighing a slide into irrelevance if not nonexistence, are trying to hold the line.

Late Friday afternoon, Hachette made by far its strongest comment on the conflict.

“We are determined to protect the value of our authors’ books and our own work in editing, distributing and marketing them,” said Sophie Cottrell, a Hachette senior vice president. “We hope this difficult situation will not last a long time, but we are sparing no effort and exploring all options.”

The Authors Guild accused the retailer of acting illegally.

“Amazon clearly has substantial market power and is abusing that market power to maintain and increase its dominance, which likely violates Section 2 of the Sherman Antitrust Act,” said Jan Constantine, the Guild’s general counsel.

I’m an Amazon user and I hope they can survive, but not if it means crushing independent publishing. That’s bad for humanity. The destruction of independent music producers and stations killed pop music. It will be worse for publishing since it takes greater intellectual prowess.