Are Amazon chiefs alienating the books industry?

26 June 2014 -

Online retailer under fire from publishing bosses as reports accuse it of adopting a ruthless approach to suppliers

Jermaine Haughton

Leading voices in the UK publishing industry have raised concerns over Amazon’s negotiating tactics towards new contractual terms with publishers. A number of fresh clauses have been cited as having the potential to weaken the role of publishing firms, posing some serious questions about how the online mega-market is conducting its relationships with the rest of the sector. According to specialist journal the Bookseller, Amazon is putting “heavy pressure” on publishers to deliver improved discounts on wholesale contracts, and wants to be able to issue customers with its own “print-on-demand” versions of titles that run out of stock – and then charge publishers for doing so.

The new terms also allegedly contain Most Favoured Nation (MFN) agreements, preventing publishers from selling books elsewhere for lower prices than they are sold for on Amazon. Although that practice is not illegal, the European Union has probed it on antitrust grounds in the past. In fact, five settling publishers agreed in 2012 not to enter into any e-books contract that contains a retail-price MFN clause until 2017 (See a Word doc of the Commission’s settlement announcement here).

Bookseller editor Philip Jones blogged that, given the trajectory of the ongoing negotiations, Amazon could end up with “a sizeable control over both a publisher’s inventory and its marketing”, and that publishers who have spoken anonymously to the journal “have every right to be concerned. This is a form of assisted suicide for the book business, driven by the idea that publishers are a sickly lot unable to run even the most basic operations efficiently”.

In the US, Amazon is also at loggerheads with publisher Hachette. At the end of May, Hachette Livre chief Arnaud Nourry accused the seller of trying to “dramatically change terms”. A New York Times article reported that Amazon is seeking payment for a range of services to boost the profile of specific titles, in schemes that the paper described as “similar to so-called co-op arrangements … like paying Barnes & Noble for placing a book in the front of the store”.

For Jones, the negotiations represent a bigger problem in the tech world in which disruption is caused to existing industries with little thought to its impact: “As Brian Appleyard noted in [a recent] New Statesman piece, the giant tech companies are playing by new rules they have already loaded in their favour: in other words, they ‘enforce rather than merely predict the future by rigging the entire game’. In short, the more Amazon dominates the book business, the more it will be best placed to take advantage of the markets it has created.”

He added that the issue was not solely related to Amazon. “In the music business,” he wrote, “YouTube is holding small music labels to ransom by withholding their music from the channel unless they sign up for YouTube’s new subscription service. One clause reported … is the ability of YouTube to reduce the rate of royalties paid to independents, should a major label cut a lower deal.”

Amazon has yet to respond.

Image of Amazon parcel courtesy of Julie Clopper / Shutterstock

Sounds like Amazon may not be doing enough to show it values creative talent. For more on that subject, visit the homepage for CMI and RSA's Valuing your Talent initiative.