Is Amazon UK Putting The Squeeze On Publishers?
Is Amazon UK putting the squeeze on publishers? Hachette, the largest UK publisher, certainly thinks so and has decided enough is enough. The fracas may have started when some publishers began to offer deeper discounts to customers if they bought directly from them on their websites.
I can understand how this might disconcert Amazon. They want to be the price leader and they see publishers trying to take more of the retail business. 10 years ago there was no conceivable way that publishers could sell direct to the public online. They needed Amazon if they were going to sell books on the Internet. But … things have changed.
It’s not easy, but publishers can build a customer facing website with most of the necessary bells and whistles. Many publishers see this as an easy investment decision. A small portion of business that eliminates the middleman would be a boon to revenue.
According to Tim Hely Hutchinson, Hachette CEO, Amazon already receives on average more than 50% of the recommended retail price (RRP). So you can see how selling direct would have it’s lure. If a publisher could discount and sell a RRP $20 book for $15 on its own website they’d be up $5 on that transaction versus a sale via Amazon that would net them $10. Some speculate that Amazon might try to ignore the RRP and instead base the retail price on what publisher’s charge on their own website.
So what did Amazon do? Reports are that Amazon has demanded a greater share from publishers, asking for 2 or 3 percent more of the take. In the past, publishers caved into these demands because Amazon was too great a source for sales and revenue. This time the demand also came with a threat. Give us the extra percentage points or we take the ‘buy now’ buttons off your titles. (I’m assuming they mean the Add to Shopping Basket functionality.)
Seems like that was the straw that broke the camel’s back. Hachette decided to take a stand and not give in to Amazon’s terms. Sure enough, Amazon followed through on their threat.
Here’s how a regular listing looks with the Add to Shopping Basket button.
Here’s how an affected listing looks without the Add to Shopping Basket button.
Victoria Strauss at Writer Beware Blogs! has done a great job documenting all the action and write-ups. In particular, some publishers and ancillary groups are making noise about bringing this to the attention of the Competition Commission, a governmental agency that investigates unfair competition and/or monopolies. Amazon UK would have to be deemed in a dominant position in the industry, usually pegged at 25% market share. At present they’re at about 15%, but growing.
While I understand that Amazon is irked at the apparent revolt by publishers, I find their course of action very emotional. This is business and they should get used to having a bit more competition from publishers.
Does Amazon really think that publisher direct sales is going to substantially erode their sales? Couldn’t they have found a way to perhaps negotiate some ‘exclusive’ titles from publishers, with the lure of additional promotion?
From my perspective they’ve overplayed their market position, and the negative fallout among authors, publishers, booksellers and potential customers isn’t worth the relatively low risk to their continuing business.
