Friday, June 06, 2008

Victoria Strauss -- Amazon Flexes UK Muscle

Over the past few months, the blogosphere has been abuzz over Amazon's recent policy change requiring POD-based publishers and self-publishing services to either use its BookSurge subsidiary for printing if they want their books to be orderable from Amazon's US website, or, as a less convenient alternative, to sell their books via Amazon's Advantage program. I blogged about the policy change in March.

To date, the change affects only Amazon USA. BookSurge isn't available in the UK, and Amazon UK hasn't implemented any similar policy. Amazon UK has, however, been flexing its muscle in other ways--and in the preoccupation with BookSurge, these have so far gotten little blogger attention.

In late March and early April, Publishing News and the Times reported a possible Amazon UK move against UK publishers selling books directly on their websites. Apparently angry over the fact that some of the publishers were attempting to undercut Amazon by offering discounts, Amazon threatened to retaliate by deeming the discounted price to be the actual retail price, and applying its trading terms to that. As explained by Publishing News, "...if Amazon receives a 50% discount from Penguin, for example, but Penguin is selling a £20 book for £15 on its website, Amazon will only give Penguin £7.50, rather than £10."

An Amazon spokesman, quoted in the Times, dismissed these reports as "speculation." But a number of publishers confirmed the threats, and several publishers' and writers' groups weighed in. (While this story was correctly reported on a few blogs, among them O'Reilly Media's TOC and Richard Curtis's Ereads, much of the very minimal blog coverage it received inaccurately suggested that US as well as UK publishers were affected.)

Then, in late May, came news that the Hachette Group, the UK's largest publisher, was locked in battle with Amazon over a different discount issue. According to the Bookseller, the "Buy New" buttons on a selection of Hachette's frontlist and backlist books had been disabled, in apparent retaliation for Hachette's refusal to agree to Amazon's demand for deeper discounts. (A similar dispute with Bloomsbury in January apparently was resolved, though I could find no details as to how.) Amazon, once again, refused to confirm the dispute. Hachette would only say that "there is a negotiation that needs to take place."

This week, Hachette took a more aggressive stance. Both the Bookseller and Richard Curtis report that they have seen letters sent to major Hachette authors from Hachette CEO Tim Hely Hutchinson. The letter describes Amazon's recent pressure tactics, and affirms Hachette's determination not to yield to the demand for deeper discounts.

Meanwhile, concern about Amazon's retail dominance is growing, as evidenced by recent spate of articles and reports. Among fears cited by publishers: that Amazon will use the popularity of the Kindle to force further reductions in retail prices, and that its growing involvement with original content makes it inevitable that it will eventually bypass publishers entirely, and sign major authors directly. Publishers may have good reason to be nervous: according to PW, "in Amazon's 10-k filing with the Securities and Exchange Commission, the company lists among its many competitors not just bookstores but also publishers."

17 comments:

Anonymous said...

Amazon.com is flexing it's muscle, but the effect is that they are coming across as bullies. Their actions are damaging to book sellers and book buyers. It takes little imagination to consider going to other on-line services.

-- Tav

Anonymous said...

Amazon are greedy money wolves. Deeper discounts mean less money for the author, who - in the end - does the most important job. Without them, they'd have nothing to sell. A little more respect Amazon!

Victoria Strauss said...

One of the more peculiar artifacts of the furore over BookSurge, in my opinion, is the notion that Amazon's actions have a negative impact on writers and book buyers.

Deeper discounts don't mean less money for writers (unless they're with the kind of sleazy or amateur publishers that pass most of their costs on to their authors)--author royalties are fixed by contract, and if Amazon pays less for the books it buys, it's the publisher that eats the difference.

As for book buyers, the appeal of Amazon's discounting should be obvious. The very fact of its growing retail dominance demonstrates that it pleases its customers.

Publishers and bricks-and-mortar booksellers do have reason to worry, and authors and readers should be concerned about the long-term implications of that. But the primary impact of Amazon's recent policy changes, at least in the short term, does not fall on authors and readers.

Jill Elaine Hughes said...

"Deeper discounts don't mean less money for writers (unless they're with the kind of sleazy or amateur publishers that pass most of their costs on to their authors)--author royalties are fixed by contract, and if Amazon pays less for the books it buys, it's the publisher that eats the difference."

---Not true. Many mainstream publishers are now building clauses into their contracts that reduce author royalties on discounted sales (i.e., the percentage the author gets remains fixed, but that percentage is tied to the actual sales price, not the list price). Agents are finding it harder and harder to negotiate these clauses out of contracts, especially given that most major book retailers (B&N, Borders, Amazon, Wal-Mart, Target) now sell books at a discount to actual list price.

Amazon is increasingly engaging in monopolistic practices that should probably be investigated by the federal government for antitrust violations.

Victoria Strauss said...

Jill, thanks for your comment. You're absolutely right.

I will point out, though, that deep discount clauses aren't new (I just checked a contract I signed in 1982, and it has one--though back then, "deep" meant 50% or more), and would only be triggered if whatever discount increase Amazon was demanding exceeded the threshold defined in the contract.

My current Harper contract switches my royalties from list to net for books sold "at discounts higher than the publisher's announced discounts for wholesale and retail accounts," which would seem to protect me if the discounts officially changed. In my previous contract, signed in 1997 when Amazon was still just a glimmer on the retail horizon, royalty reductions were triggered at discounts of 60% or more.

BuffySquirrel said...

Some of my writer friends were deeply hurt by Amazon stopping selling ebooks some six months before rolling out their proprietary format for the Kindle. They lost access to a major part of their market.

But I guess ebook authors don't count.

micheleleesbooklove said...

I'm far more inclined to think that this move with push toward one "person"/entity determining what is available for reader to buy. Without smaller presses to push the boundaries and take the chances change would be even slower in the publishing world. In a vicious circle amazon putting small, micro and medium presses out of business would make the publishing environment more desperate and could push more people into self publishing. And hey, guess who happens to own a self publishing company?

Pam Halter said...

Jill said: "Amazon is increasingly engaging in monopolistic practices that should probably be investigated by the federal government for antitrust violations."

I was just wondering the same thing. Who do we contact to ask about this?

Amelia said...

Lurking around the Snarkives I found this little gem:

http://www.thenextbigwriter.com/

Look under "writing successes" on the bottom right, for May '08 - one of their writers was "selected" to be published in Immortal Verses! The honor!

Jill Elaine Hughes said...

The AUthors Guild has already lobbied the federal government to investigate Amazon. (And the Authors Guild counts several Congressmen among its members). I believe the Washington State attorney general is also looking into it.

Shawn James said...

Asa POD self-published author I feel it's time we writers starterd flexing our muscle. we should all just stop lising our books with Amazon on our blogs and websites. Change your links to bn.com, target or one of the other online retailers. They have just as much pull and popularity as amazon and would love to cut into their market share. You'll still get the same royalties and the same online foot traffic from another retailer.

Amazon knows its purchase of booksurge was a mistake and now they're trying to force that POD retailer down everyone's throat to get back some of the losses. No one in their right mind who publishes POD would spend $1000-$5000 to self publish. That's almost as much as the vanities were charging years ago.

Most POD authors like myself operate on a limited budget; this is going to keep our titles off the shelf. I don't have $1000-$5000to self-publish; if I'm lucky I'll have $1000 to puhblish and promote one titlr. Amazon is screwing itself long-term; writers who are smart won't trust them, and customers who hear about thid practice will take their business elsewhere.

paul maurice martin said...

Shawn, your feelings are widely shared. The problem I think is that Amazon is so big and sells books to customers so cheaply and efficiently, that if your book isn't there, it's probably going to reduce your online sales.

Janny said...

Maybe the time has come to educate our individual public better--i.e., the average reader out there who buys our books and doesn't give a rat's patootey where the book comes from or how much we get paid for it, as long as they can get it inexpensively. It's true that if you sell enough books, even inexpensively, you'll make some money...but Amazon's just being plain ol' fashioned greedy. They're not the first giant company to engage in this kind of bullying, nor will they be the last--but until and unless it's perceived as a monopolistic approach, readers will continue to operate with gratitude to Amazon and puzzlement that so many of us are starting to consider that company name a dirty word. :-)

Here's hoping the legal challenges and investigations have real TEETH.

JB

Shawn James said...

We all forget that it was US the customers that made amazon the giant that it is. If enough people pull out, the giant's legs will fall under it.

It was also US the writers who made amazon a giant through POD and word of mouth. Let's all not forget it's word of mouth that sells books POD or otherwise, not amazon. Most people who hear about books word of mouth go to Barnes and Noble, Borders or whatever local bookstore to make their purchases.
My first book Isis is POD and it's listed with Target, Booksamillion, Borders, buy.com and Barnes and Noble. Most of my sales came from word of mouth and an ad in my alumni newsletter. Some bought through the publisher, others through B&N, some through Amazon.

On my blog I have B&N and the publisher listed as a link, not just amazon. I like to give customers a choice of who they feel comfortable dealing with. On my next POD book I plan on linking to every major site who sells it in the links section. Royalties are going to be the same regardless.

Amazon is not the giant we think it is. It can fall Microsoft was a giant until Google started offering freeware. From what I hear on the web, Windows Vista is a laughingstock. Now I hear more people switching to Macs. AOL was king of the internet until it merged with Time Warner and lost 90% of its market share. All it takes is ONE wrong move to topple a giant.

This may be the one blow to kill Amazon.com.

Remember the first three words of the Constitution of the United states are: We the People. We have the power to make Jeff Bezos rich and we have the same power to put him out of business.

Victoria Strauss said...

More coverage of the Hachette/Amazon dispute from the Sunday Herald.

Victoria Strauss said...

And still more coverage, from PN:

Hachette's dispute with Amazon is being watched closely by the entire industry and, in particular, by other publishers who admire the stance being taken by Hachette Livre UK CEO Tim Hely Hutchinson...

One senior publisher also said: “[Amazon] should be aware, too, that if the OFT [Office of Fair Trading] were to take Internet bookselling as a separate and distinct market, it would be seen that Amazon has way in excess of the 25% that can trigger an investigation.” A spokesman for the OFT said: “If there are complaints about a particular market, the OFT can decide to launch an investigation, particularly if a market has developed in such a way that it has become uncompetitive.”>

Victoria Strauss said...

June 2009 reports from the Bookseller: Hachette UK has reached an agreement with Amazon.