Saturday, April 05, 2008

Amazon hits the non publishing press

There is not much to report re Amazon, as one would expect at the weekend, except for an interesting discussion on my favourite writers forum, My Writers Circle, which has dragged me back into this in some ways. It is difficult not to get too involved in this, and start getting angry all over again, but I can't help but feel that Amazon have made a big mistake that will come back to haunt them in the night.

Marion Webb de Sisto feels the same way, as she sent me an email today with a link to The Times website which she entitled Karma for Amazon. Marion, like me, is a spiritual writer, so she knows about these things. The article, which is written by reporter Dalya Alberge, the Arts correspondent is entitled Amazon furious after publishers undercut its book prices online. Personally I say tough titties - they publish these books and bore the financial risk, so they are damned well entitled to charge any price that they like. If Amazon don't like it then tough !

Dalya reports as follows:

"An online price war for books has broken out, pitching Amazon against some of Britain’s biggest publishers.

Amazon is angry that Penguin, Bloomsbury and others are discounting titles on their websites, encouraging customers to buy direct instead of using the online retailer.

Penguin’s online store has reduced a boxed set of 20 Penguin Epics from £100 to £55. Amazon sells the collection at £98.64. Bloomsbury offers a 25 per cent discount on all its books, with free postage and packing on British deliveries over £20.

There are fears that Amazon may retaliate by regarding a publisher’s online price as the recommended retail price and applying its trading terms to that. If a publisher discounts a £20 book to £15 online and Amazon has a contract for a 50 per cent discount on the full price, Amazon would pay the company £7.50 instead of £10. Publishers say that this would be unfair and could ultimately drive up prices.

Amazon also faces increased competition from high-street booksellers, including Waterstones and Borders, who are stepping up their online activities. Such is the power of Amazon that several publishers did not feel able to talk on the record yesterday. One senior executive said: “It’s very serious. I can’t believe they’d be allowed to get away with it under competition law. Forcing people to increase prices seems to me entirely wrong.”

Others accused Amazon of having become particularly aggressive lately. One source claimed that the online seller recently removed the “buy buttons” from a book on its website to prevent users from being able to purchase it. “They then went to the publisher and said, ‘Give us an extra 2 or 3 per cent or we won’t put the buy buttons back’,” the source said.

An Amazon spokesman said: “It is speculation. We never talk about discussions with suppliers.” He declined to comment further.

Discounters have brought huge price advantages to book buyers, but the discount businesses do not have to bear the risks associated with investing in new authors or new titles by established authors. Until the Net Book Agreement was scrapped in 1995, it offered some protection to publishers, by ensuring that retailers sold books at the recommended price.

Roger Tagholm, of the trade paper Publishing News, believes that Amazon sees publishers as manufacturers, who should not be setting prices.

But Simon Juden, chief executive of the Publishers Association, which represents up to 140 publishers, felt that Amazon was on shaky legal ground. He said: “Terms of trade will have been set up upfront, when contracts were signed. Neither side can unilaterally change those. In my view, Amazon would be in breach of contract if they tried to do this.”

Ursula Mackenzie, chief executive officer and publisher of Little, Brown and chair of the Trade Publishers Council, said: “Our discount to Amazon is based on a notional RRP (recommended retail price), an agreed formula that we work to. For them to suddenly decide they will take a different view of what that RRP was means that the price on the publisher’s website effectively becomes the RRP. They can’t do that unilaterally. What is going to exercise people is that we can all see the growth of Amazon, which is startling and rapid, so they will increasingly have considerable power and there is no real competition to them. That’s the concern.”

There are fears that the latest development could affect authors and independent booksellers. Mark Le Fanu, of the Society of Authors, said: “Discounts demanded by the big retailers have been rising relentlessly, squeezing authors’ royalties. We hope that publishers will resist any pressure to increase discounts still further.”

One publisher was found to be broadly supportive of Amazon, although he also preferred to speak off the record. “I can’t see that it’s a major problem. Amazon sell their books at all sorts of discounts. That’s the nature of the market. They’re free to sell them at whatever price they like.”

I still find it very interesting how this is forcing the commercial presses into the equation, so that they have to look at how their own arguably equally aggressive slant on pricing and discounting comes back to haunt them. They may not be directly involved in setting such policy, and to some extent the abolition of the net book price agreement has rendered them powerless, but they have been complicit in allowing discounts to become greater each year by stealth, and many of them as well remain hostile towards self published books issued via print on demand, while at the same using the technology for their own ends. This is a double standard. Understand that this is more of an observation than a criticism, as like I said yesterday, I have to try and remain detached from this situation and not get too emotionally involved.

Nadine Laman from My Writers Circle sent me an interesting link to the Finance pages on AOL, which keeps track of Amazon's share price. Nothing much seems to be happening at the moment, but there is also a link on that page to some comments written by former hedge fund manager, television presenter and and self publisher Timothy Sykes. Timothy says that Amazon have proved through their actions that they care little for those who helped make their billions, which let's face facts- are the readers, writers and publishers.

The article states:

"Amazon bullying raises monopoly and business concerns

In the last few days, book selling giant Inc (NASDAQ: AMZN) has made a few more enemies in the publishing world by forcing the little-known group of print-on-demand (POD) publishers to either submit to using its POD subsidiary, Booksurge, or risk being prohibited from selling on its industry-leading website. No matter the cost and complications of breaking off relationships with other vendors, re-formatting books and a host of other problems, Amazon laid down the law, saying convert - and do it quickly - or face the consequences.

What's more disconcerting is that an official press release was made public only after smaller publishers like Angela Hoy of started writing publicly about blackmail-type phone calls from Booksurge representatives. Fearful of losing their businesses literally overnight, many POD publishers such as iUniverse and Lulu have capitulated while strong willed publisher PublishAmerica refused to give in - and was quickly made an example of when Amazon disabled the buy buttons on their book titles!

As an author selling my own critically-acclaimed POD book An American Hedge Fund on Amazon, outrage has compelled me to write about how unethical and more importantly, monopolistic this all is.

In a short-term business sense, Amazon is right to use its massive size to gain market share for Booksurge and squeeze out the smaller players, but the problem is this goes against what made it great - offering the lowest prices and widest selection, basically like an online Wal-Mart Stores Inc (NYSE: WMT). To authors and publishers, Booksurge is known for its poor product quality and high cost structure, supremely inferior on both fronts to rival Lightning Source (LS) -- trust me, I did the research and that's why I chose LS - the POD subsidiary of Ingram Industries, the leading book wholesaler and the company on which Amazon has clearly declared war.

So, by making Booksurge the only POD option, relegating quality-loving publishers and authors to much smaller websites of Borders Group (NYSE: BGP) and Barnes & Noble Inc (NYSE: BKS), Amazon proves it no longer cares about its customers getting the widest selection at the cheapest prices - oh yes, even publishers that give into Amazon's demands will be forced to raise their prices - it cares more about its own profits.

Until this latest development, I believed Amazon was the future of book selling. It was making money, as were the publishers and customers who received the cost/quality benefits, but when a company happily alienates its suppliers whose hardships will inevitably be felt by the company's customers, I cry foul. Authors, readers, consumers and businesspeople unite! Sign THIS petition and let Amazon know what it is doing is wrong. That it is only a retail giant because we, the consumers, say so. We, not it, have the power here. While POD publishing is just a tiny niche, it's a slippery slope; if you let Amazon get away with this, it might be your business and industry it comes after next."
Amen to that.

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