This story is getting a lot of attention. Negotiations between Amazon and its publishing vendors are always tough. This year they promise to be even tougher. Bob Garfield interviews Brad Stone, author of The Everything Store (published by Hachette) on On the Media (listen here). Stone concludes “they’ll soon kiss and make up”, which is no doubt true — you just can’t go on without your biggest outlet. Amazon has apparently resorted to some strong-arming, including disallowing pre-ordering of Hachette books, and showing extended delivery dates. As Stone (among others) points out, this is uncharacteristically Amazonian: their whole focus has always been on “the customer”. Preventing your customer from buying something they might like, is not what one imagines Amazon to be all about. Walmart has allegedly picked up sales of Hachette books. Still, of course, Amazon has done this sort of thing before. They do indeed have “the right to seek the best prices from its vendors”: but maybe monopsony might be mentioned. Sonia Sotomayor has described monopsony as the opposite of monopoly. Under monopoly conditions a company can unlawfully manipulate its prices. Under monopsony it can unlawfully fix its purchase prices, because its market power allows it dictate to its vendors. In March Amazon sold 41% of all new books sold, and 65% of all on-line book sales, print and digital. Maybe this isn’t enough for a monopoly: I really don’t know. It’s certainly substantial. (The Digital Reader assures us that Amazon doesn’t reach the monopoly level.)

The New York Times ran three different articles* on Saturday 31 May about the struggle between Hachette and Amazon, and two more on Monday. Nobody outside the two main contestants knows what exactly they are fighting over. Stone hypothesizes that it’s to do with e-book pricing, and as the status quo period mandated by the judge in the Apple/publisher lawsuit is coming to an end soon, this is not an unreasonable guess. He seems fixated on royalty rates, but that is not surely something which would be up for discussion — that would be fixed by the contract negotiations between author and publisher — but royalty payments might well be at stake: the less the item sells for, the less the author’s take will be, and (at least in some contracts) sales at greater than x discount may actually be royalty-exempt. However The Times does say “While a traditional publisher like Macmillan needs an author’s consent to change the terms of his or her publishing agreement, Amazon reserves the right to change any provision of its agreement with any author at any time for any reason.” Not quite sure what this means or exactly how it would apply, but maybe Brad Stone has a point.

Here’s a Digital Reader post about the Amazon response.

Dennis Loy Johnson of Melville House, a long-time non-friend of Amazon, is quoted in Joe Nocera’s Times article as saying “How is this not extortion? . . . You know, that thing that is illegal when the Mafia does it.” Joe Nocera just appeared on WNYC’s Brian Lehrer show on Monday morning 2 June, ending up inconclusively on the fence. The most interesting article in The Times, to my mind, is the one by Bob Kohn, who introduces the monopsony concept. Sounds like an important point. Is Amazon risking overstepping? One is so used to them being “right” — shrewd, ruthless, and right — that one hesitates to say that they have taken one step too far. Of course Amazon is in good with our government. The Justice Department’s lawsuit against Apple and the Big Five publishers was hugely in Amazon’s interest, and had the direct effect of cementing their privileged position in the e-book market. Joe Nocera’s Times piece concludes “No matter what you think of Amazon’t tactics, they surely don’t violate any laws”. Maybe.

The Economist also has a piece on the negotiations, entitled “Burying the Hachette”, in their issue of 31 May. They too mention monopsony.

I can’t help wondering what would happen if publishers all started selling direct from their websites. Lots of them do already do this, and if Amazon causes too much grief, surely it wouldn’t take too much to start aggressively promoting this option. One of the inhibitors is of course the knowledge that by pushing direct sales publishers would probably be dooming the remaining bookshops to a lingering death. But publishers and bookshops are in the same boat in this: the Amazon wave is threatening to swamp them both. I dare say booksellers would argue that if they are in the same boat as publishers, they are in steerage, while the publishers are lounging around in first class. Still when the ship goes down, all end up in the same water grasping for the same life belts. One could envisage an overall web portal in which customers would search for a book. The portal would then redirect them to the individual publisher’s site, where the sale could be completed. I guess if the customer wanted  books from more than one publisher, consolidated shipping would not be available (but neither is it always with Amazon, depending on the location of their inventory). But by avoiding paying the large discount publishers have to give to Amazon, they could certainly afford to offer free shipping on direct sales. With e-books, the situation would be slightly different. The Kindle uses a proprietary software. But I wonder whether an Amazon law suit against publishers for applying MOBI to their own EPUB files (if that would be enough to be readable on a Kindle without Amazon’s DRM add-on) might not be seen as a suit in defense of monopoly. Monopoly, monopsony — these would surely be waters which Amazon might prefer not to have to test.

Talk of the end of publishing, something the mediarati love to reach for, is surely way overstated. I remain of the opinion that the age of big media company consolidation in book publishing is over. Books really just don’t suit themselves to big business. The product is too varied — how many businesses have more products than they can expect to sell of each individual one? Sure the odd book hits, but most just plod along. There are so few barriers to entry into the business (and Amazon isn’t one of them) that there will always be lots of new publishers ready to jump in.

* You may not be able to link to these articles. The New York Times does charge for access. If so, I apologize for my links. Of course if you have a subscription, you’ll have no trouble.

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