By Dennis Abrams
Last week we reported on Amazon’s hardball actions while in the midst of negotiating with the Hachette Group. And now Melville House reports that according to the German newspaper Frankfurter Allgemeine Zeitung, Amazon is using similar tactics against the Swedish publishing conglomerate Bonnier, which operates in 20 countries, including several German publishers (including Ullsteinhaus, Piper, Berlin, and Carlsen). Not surprisingly, Amazon is currently renegotiating its contract with Bonnier.
According to FAZ, “Amazon is reducing the number of copies of Bonnier titles they carry in their warehouses, adding long shipping delays to newly ordered books.”
Nate Hoffelder of The Digital Reader says that Amazon isn’t just seeking new terms in its contract for physical books. He writes that:
“Sources say that Amazon is seeking not just new terms for their book contract with Bonnier but also new terms for their eBook contract. The retailer is reportedly pressuring Bonnier into offering a steeper discount on eBooks. Rather than pay Bonnier the accepted industry standard 70%, Amazon wants to reduce that to only 50% to 60%.
But, as Hoffelder makes clear in his article, there is one major difference between Amazon’s dispute with Hachette and its dispute with Bonnier:
“In the US, Amazon’s fight is against a publisher which had previously conspired to raise eBook prices and restrict competition. If Amazon wins it means lower book prices in the long run, but that probably will not happen in Germany.
Germany has fixed price book laws; publishers set the retail price and retailers are not allowed to discount their books more than (I think) 10%. As a result, any money that Amazon squeezes out of a publisher ends up in Amazon’s pocket, and not in the pocket of consumers.”
Melville House’s Alex Shepherd writes that:
“…should Amazon win—and they almost always do—it’s impossible to make a populist case on Amazon’s behalf. Amazon’s revenues will increase—and remember, this is a company that barely pays taxes in Germany, or anywhere else—but book prices won’t budge…hat said, I’m not necessarily sure that an Amazon victory in its dispute with Hachette will mean “’lower book prices in the long run’…Of course, Amazon’s entire reputation is built on giving consumers the best possible deal—loss-leader pricing will do that, after all. But when you consider the company’s standing with investors at the moment, lower prices aren’t necessarily a given.”
A good question to ask is how much bad publicity like this can Amazon take? Just last week, Laura Miller at Salon wrote that she had turned her back on Amazon:
“Amazon’s business model — for bookselling, at least — rests on the impression that you can buy any title you want from them and get it pronto; no need to shop around, compare prices or open an account at another retailer. With services like Amazon Prime, the company encourages its customers to think of Amazon as the friction-free answer to all their shopping needs. Once you buy into this idea, you end up buying everything from Amazon. I know, because I used to be an Amazon Prime member myself.
“About three years ago, I let my Prime membership lapse. There are still a few items I buy from Amazon because they’re not easily available elsewhere, but I stopped buying any books, print or digital, from the company. What I knew of the predatory, proto-monopolistic practices of Amazon caused concern. I believe no single corporation should have as much control over the book market as Amazon clearly aims to seize. Books aren’t generic, interchangeable products like toothpaste or flatscreen TVs, and in the long run readers, authors and publishers all benefit most from a genuinely diverse marketplace.”
She went on, challenging publishers to stand up to Amazon:
“Occasionally I’ve asked book publishers if they’ve ever considered a turnabout: withholding their books from Amazon until Amazon makes some concessions. They always insist that they couldn’t withstand the short-term financial hit such a move would entail. They surely know the reality of their own bottom lines far better than I do, and they certainly haven’t gotten the same free pass from Wall Street that Amazon has enjoyed over the past couple of years. (Amazon made a tiny profit at the end of last year, but mostly it has lost money as its stock price soared; long-overdue outside pressure to perform better is likely behind these recent shenanigans.)
“On the other hand, publishers have always had a tendency to freeze in the headlights. Only a decade ago, it was the chain booksellers who seemed to have them perpetually over a barrel and whose tyranny they toothlessly protested. The moaning didn’t accomplish much then, and it’s even less likely to work now. The more they let Amazon push them around, the more emboldened it will be to push them around some more.”
It will be interesting to see how both Hachette and Bonnier resolve their differences with Amazon.