“Up Against Amazon”

There is an article in the August 2014 issue of Independent, the journal of the Independent Book Publishers Association that I’d like to share with you.   It is written by Karen Christensen, who is a publisher, author, journalist and blogger.  She wrote:

“Amazon doesn’t just take orders.  It is used to barking orders at publishers and getting us to salute.  But bullying only goes so far, and I’m thankful that a single large publisher, Hachette, stood up to it and that the New York Times ran an editorial about its strong arm tactics.

“I’ve been sitting on my own Amazon story for a while after receiving a threatening phone call from its legal department when I refused to agree to a unilateral change of terms.  But with all the publicity and debate about Hachette, I thought other publishers, as well as Berkshire Publishing’s (the author’s publishing company) friends, colleagues and customers might like to know about our experiences and why I believe that Amazon is destroying healthy competition in the publishing world.

“I am and academic publisher as well as an environmental author (with one book publisher by Hachette, in fact).  My company is very small. Amazon has a market cap of $US 141 billion.  “They have infinite resources,” said a friend when I told him that I had received an angry phone call from Amazon.com’s legal department.  The telephone call wasn’t to discuss terms, but to threaten me for “telling lies about Amazon”.  What I had written was that if we had to stop supplying Amazon I would have to write to all my customers, authors and colleagues to tell them why.

“My fight with Amazon began when it decided to go after traditional “short discount” publishers (academic presses as well as presses like Berkshire Publishing) with a unilaterally imposed change in business terms announced only in a “case note” within their order processing platform.  This platform is normally used to inquire about the availability of certain books and is used by customer service staff.

“A colleague of mine whose staff was puzzled enough to pass the “case note” along to him asked Amazon to contact him directly by telephone or email, saying that business terms were a matter for our company’s executive team.  Amazon refused to talk – communication would take place through the “case”.

“Berkshire Publishing had sold print through Amazon since 2006.  Although it originally demanded a 40% discount – four times our standard – I decided we should make books available through any major platform that individual readers and libraries use. Out authors like knowing that their books are readily available worldwide.  And we reach some people who wold never otherwise know about our titles.  In fact, I was recently at a meeting in Beijing and showed a copy of our book This is China: The first 5000 Years.  Two of the people there started whispering and giggling, and finally one spoke up, “I have that book.  I ordered it from Amazon!”

“Amazon’s demand in 2012 was for a an additional 5% bringing the discount to 45% (some academic presses had been at 25%, so the change to 45% meant a reduction of 80% in their net income from Amazon sales).  Bookstores generally get a discount of 30-40%.  Amazon has been getting 50-55% from big trade presses, and the current battles are part over further discounts that Amazon is demanding to increase its marginal profits.

“It is not only publishers who are affected (who, after all, really feels sorry for publishers?); independent bookstores cannot compete with this kind of pricing.  Amazon discounting also affects authors, because may book contracts specify a lower royalty percentage if the discount is 50% or higher.

“In the end it is readers – students, professionals and those who read for pleasure – who will suffer because innovative writers won’t get the chance they deserve and hard-working midlist authors won’t be able to afford the time they need to write.

“And who says cut-rate pricing will continue after Amazon’s market dominance is assured?  Publishers, including self-publishers love the 70% Amazon pays them on e-books now, but the split was 70% for Amazon until after agency pricing, and the contract allows Amazon to change it at any time.  There is no reason to think that the company won’t impose changes on any group of suppliers (which is what we authors and publishers are).

“Amazon, by the way, does not necessarily pass those discounts on to the customer.  Most Berkshire books are educational reference works that sell for hundreds of dollars; Amazon has generally sold them at full price, keeping that substantial “discount” as its profit, which is far greater than our profit on our own books.

“Amazon is destroying competition and innovation because it is not letting the market determine winners and losers, but is instead making the selection itself, deciding arbitrarily where to take its pound of flesh and shore up its feeble margins.  Publishers (and authors) would be fine if they were actually competing with one another for sales without Amazon sucking the life out of every transaction.

“Finally, what happened?  Are Berkshire Publishing  titles available through Amazon?  Dear reader, I capitulated after four months.  It wasn’t fair; it wasn’t good for anyone but Amazon, but I was losing sales that I needed and I gave in.  Amazon made one change, too: it hired its first small-press liaison, and I met her at BookExpo last year.  I didn’t her from her this year and have no idea if that department of one still exists, but I hope that in the future we will be able too discuss and agree on terms that make sense.  “Hurray” for Hachette and for everyone else who is now standing up to Amazon.”

 

I’ll cover the Hachette – Amazon dispute in a later blog, but I have some comments on Ms Christensen’s article.  Certainly, as a small publisher one has to have some real sympathy for her: she has a very tough business.  It is unconscionable that a giant purchaser like Amazon tried to slip in a major change in its terms of business without proper notice or discussion.  That is the worst kind of arrogance.   She is also correct that Amazon’s pressure for large discounts affects authors.  In my particular case, for every additional increment of discount which Amazon takes, I lose half of that increment in royalties. Who consults me about that?  No one.

It seems to me that the Amazon business model is designed to weaken, if not to destroy, independent bookstores.  Their discounting structure makes it difficult for small bookstores to compete.  I’m sure that Amazon would deny that their discounting is predatory.  They would say that they have the title that the buyer wants in stock, so that the buyer can have a copy as quickly as the following day, instead of having to wait a week, or more.  They would also point out that they don’t have the option of returning unsold books to the publisher for full credit, as bookstores do.  And, they would point to a number of value added features on their website, including descriptions, reviews, and copious author information.

Still, it’s Amazon’s apparent ‘might makes right’ attitude which is troubling.  From Ozymandias to his modern day counterparts, arrogance invariably destroys its owner.

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