By Dennis Abrams
The Bookseller reports that “UK publishers have raised concerns about Amazon’s new contractual arrangements, with the giant retailer pressing for improved terms from a number of publishers, even as its stand-off with Hachette Book Group continues in the U.S.”
Better discounts on wholesale contracts are one issue, but The Bookseller also reports that Amazon has begun introducing a number of new clauses in publisher contracts. One raising red flags is a stipulation that if a book is out of stock from its publisher, Amazon would then have the right to “supply its own copies via its print-on-demand facilities.” Publishers, according to The Bookseller, are concerned that the clause would give over to Amazon control over their own inventories.
And in a separate development, “the European Union’s Directorate is understood to have approached major UK publishers over an investigation into Most Favoured Nation (MFN) clauses – the term came under the spotlight during the inquiry into the shift to the agency model in 2010, but the EU is looking at a new review focused specifically on MFN.”
The Bookseller reports that in the UK, a number of publishers have talked to them as part of the paper’s investigation into Hachette’s dispute with Amazon, which was also now putting them under “heavy pressure.” It was reported that among Amazon’s new demands are “adjusting terms so that e-books and physical books have parity,” with the adjustment being in the direction of physical, “which traditionally attracts a higher percentage for the retailer compared with e-books. It was also reported that Amazon is “understood to be targeting academic terms, which have historically been more favorable to the publisher. The retailer also wants to impose a ceiling on the digital list price of e-books in preparation for 2015 when the retailer will have to begin imposing the standard 20% rate of VAT on digital titles.”
The new contracts are also said to include MFN clauses, meaning that books cannot be sold for a lower price than Amazon’s, even on the publisher’s own website. The Bookseller also reports that Amazon “appears to want matching terms where a publisher enters into a new business arrangement, for example with a subscription service.”
At the same time, according to The Bookseller, “the use of MFN clauses is thought to have come under the Brussels spotlight, with the same EC competition authorities which earlier investigated publishers over agency pricing. Within the last few weeks, it is understood that some publishers’ sales personnel have been summoned to meetings in Brussels, said to be ‘much more friendly’ than the meetings held while agency pricing was being investigated.”
And while it’s true that the EU has looked into MFN clauses in the past, they have never been ruled illegal. But, “under the terms of price-fixing settlements entered into by the five settling publishers in 2012, those publishers are forbidden until 2017 from entering into any agreement for e-books which contains a retail price MFN clause.”