Friday, March 27, 2009

Amazon Bullying UK Publishers Again

Publishers Lunch had a story on Thursday about the UK branch of Amazon: is offering publishers participating in its Advantage scheme an "early payment" option of 15 days, in exchange for an extra 2% on top of the current discount given by publishers.

The catch is that publishers who do not offer the extra discount will see their payments made on Amazon's "standard terms"--effectively 60 days. This means a publisher who sells a book through Amazon in April would not be paid until the end of June. Under the revised terms, a publisher would be paid on 15th May--a full 45 days earlier . . .
Book Brunch, a UK blog, broke the story:
Amazon has aroused reactions ranging from fury to stoicism with its latest move over terms for its consignment-based Advantage programme. One senior trade figure condemned the demands as "utterly outrageous" and "thuggery". . .

The changes will be effective from 1 April, and members are required to make their choice known to Amazon by that date. The email outlining the new terms arrived this week, giving publishers just days to reply.
This isn't the first time Amazon has flexed its muscle against British publishers. Exactly a year ago today, the Scottish Sunday Herald reported:
A MAJOR battle has erupted between Amazon and the UK's biggest publisher in the most public fallout yet between the powerful online retailer and the book world.

Amazon has removed several key Hachette Livre UK titles from sale on its British website in an effort to pressurise the publisher to give it a greater percentage of its profits, according to Hachette's group chief executive.
At the same time Amazon was pushing on British publishers overseas, they were giving a hard time to small American publishers. The Wall Street Journal reported on March 28, 2008: Inc., flexing its muscles as a major book retailer, notified publishers who print books on demand that they will have to use its on-demand printing facilities if they want their books directly sold on Amazon's Web site.
On May 16th last year I quoted an excerpt from Mike Shatzkin's speech at the London Book Fair:
About three weeks ago, Amazon declared a new policy that they would no longer ship as Amazon-sold product books printed on demand by another supplier . . . The legality of this approach is not yet clear, but many of the marketplace implications certainly are. Amazon has a commanding position among online book purchasers and they can use that as leverage to compel publishers to conform to their desires . . . This latest policy is a shot across Ingram’s bow -- at the very least; maybe it is a missile into the wheelhouse -- but it is also a sober reminder to publishers that their now second-largest vendor has a whip hand and will use it.
On June 8th last year, I likened Amazon's heavy-handed techniques to the "same tactics that Wal-Mart used to gain its position of hegemony in retailing."

Amazon continued to emulate Wal-Mart. On July 24, 2008, The Bookseller reported on (which Amazon had announced they would be acquiring seven months earlier):
Audible UK is standing by its business model and the level of discounts it demands, despite a number of audiobook publishers claiming they have been embroiled in long-term negotiations with the download specialist over unfavourable terms.

Certain publishers have argued that they accepted the high initial discounts Audible demanded as covering costs during the early stages of Audible's existence, and while the proportion of revenue from downloads was relatively small. But, as the medium grows in popularity, firms are increasingly calling for the business to rethink its remuneration structure.
Last year I quoted Tim O'Reilly's blog:
As Amazon's market power increases, it needs to be mindful of whether its moves, even those that may be good for the company in the short term, are ultimately destructive of the ecosystem on which they depend. I believe that they are heading in that direction, and if they succeed with some of their initiatives, they will wake up one day to discover that they've sown the seeds of their own destruction, just as Microsoft did in the 1990s."
A year later and Amazon is still not listening.

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