Amazon Screwing With Publishers Again --- So, What's New? Don't Say You Weren't Warned

Karl-Heinz Roseman says Amazon
demanding steep discounts from
 McFarland & Co. Months later,
he still has not been able to
 talk to a live Amazon employee.

I have previously posted numerous times RE Amazon's ever increasing dictatorial business practices. See relevant posts on this blog and on my Publishing/Writing: Insights, News, Intrigue Blog.

Amazon is trying to extort deeper discounts from publishers who have grown their business (and by extension Amazon's business) using Amazon as chief retailer.

Again, Amazon is trying to re-write the rules of publishing --- at the expense and utter destruction of publishers whose books helped Amazon to fulfill its mission of 'Earth's Biggest Selection.'

Amy Martinez of The Seattle Times reports:

Amazon.com trying to wring deep discounts from publishers

Amazon.com, the company that changed the way people buy books more than a decade ago, now appears poised to rewrite the rules of publishing.

The bad news came to McFarland & Co. in an email from Amazon.com. The world's largest Internet retailer wanted better wholesale terms for the small publisher's books. Starting Jan. 1, 2012 — then only 19 days away — Amazon would buy the publisher's books at 45 percent off the cover price, roughly double its current price break.

For McFarland, an independent publisher of scholarly books situated in the mountains of North Carolina, Amazon's email presented a money-losing proposition.

"It was the apocalypse," said Karl-Heinz Roseman, director of sales and marketing at McFarland, which has a long track record of giving all its retail partners the same discount.

McFarland and Amazon have shared a mutually beneficial relationship for more than a decade. A well-regarded source of books on baseball and chess, McFarland helped Amazon fulfill its mission of offering "Earth's biggest selection." And Amazon — in contrast to traditional bookstores — listed all of McFarland's titles, no matter how arcane.

Last year, Amazon generated nearly 70 percent of McFarland's retail sales and 15 percent of its entire business.

"If we made a change for Amazon, we'd have to do it for everyone, and that would jeopardize our business," Roseman said. "We couldn't exist like that."

Now, McFarland and others in the book world worry that Amazon will use its pricing pressure to crush publishers. They say Amazon's demands for deeper discounts threaten already-thin profit margins, and some warn about an Amazon monopoly.

Amazon, which declined to answer questions or discuss its relations with publishers for this story, dominates the U.S. market for print books sold online and also leads the market for electronic books. At the same time, it's working to become a big-name publisher in its own right.

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Is Amazon Shedding its Sheep's Clothing Too Early? - Could Be Their First Major Mistake

Amazon - a wolf in sheep's
clothing??

According to publishing industry insiders (some with axes to grind, mind you) Amazon has apparently declared war on the book industry!

Is this Amazon's end game coming to fruition?

Amazon, having just come off a win in the courts Re its suit against big publishers regarding the agency model - coupled with Wall Street's ignoring of Amazon's continued losses - has made an aggressive move against book publishing in general by discounting bestsellers even further below loss-leader pricing (prohibited in antitrust legislation).

How can Amazon do this? I don't really know - unless it has something to do with Wall Street ignoring their losses by not downgrading their stock, thinking they will make them up later with monopolistic pricing with no competition. Also, a certain coziness with the current Washington administration.

But, will this kind of safe haven last for Amazon? Could be Amazon has acted too quickly in showing their hand! A hand many believe has always been their end mission --- to put all other book publishing out of business completely and dominate totally.

These intriguing details from Dennis Johnson, founder of MobyLives, and the co-founder and co-publisher of Melville House:

BREAKING NEWS: Amazon “declares war” on book industry

Has the vicious end game scenario we discussed just yesterday — whereby a government-sanctioned Amazon.com makes its move to cement its position as the most colossal monopoly in publishing history, and to savor the rewards — begun unfolding, and rapidly at that?

That’s what a special weekend edition of Shelf Awareness surmises. According to a report by SA editor John Mutter, late Friday Amazon, apparently to take advantage of lessened weekend attention and the company’s upcoming endorsement from President Obama …

… quietly began discounting many bestselling hardcover titles between 50% and 65%, levels we’ve never seen in the history of Amazon or in the bricks-and-mortar price wars of the past. The books are from a range of major publishers and include, for example, Inferno by Dan Brown, which has a list price of $29.95 but is available on Amazon for $11.65, a 61% discount; And the Mountains Echoed by Khaled Hosseini, listed for $28.95, offered at $12.04, a 58% discount; Lean In by Sheryl Sandberg, listed at $24.95, available for $9.09, a 64% discount; and The Fault in Our Starsby John Green, listed at $17.99, available for $6.55, 64% off ….

The discounts are far below the usual 40%-50% range sometimes offered by Amazon, warehouse clubs and other discounters and are more typical for remainders than frontlist hardcovers. In some cases, the hardcovers are priced below the Kindle editions.

At the moment, the extreme discounting seems limited to bestsellers. Still, that’s a large category, and a vital one to brick-and-mortar retailers, such as to Barnes and Noble, which has re-made itself into a chain that now consists mostly of bestsellers and merchandise, and to numerous indies that need bestseller sales to survive … which could make this potentially a devastating blow to those businesses, to say nothing of the damage it could do to publishers already feeling their books are severely under-priced.

It’s a dramatic enough move to prompt one prominent bookseller — Jack McKeown, who runs Books & Books in Westhampton Beach, New York — to tell Mutter that “It’s an open declaration of war against the industry.”

Why now? In a closing more strongly-worded than is his habit, Mutter cites McKeown and others speculating that …

… Amazon has been “emboldened” by the Justice Department‘s victory against five major publishers in the e-book agency model case as well as Wall Street’s acceptance of continued losses by Amazon for now in the expectation of retail domination–and major profits–eventually. This last point was seen most recently on Thursday, when Amazon’s quarterly results included a net loss and were below Wall Street expectations but did not provoke the usual rush to sell, as is the case with most companies whose results are disappointing.

Another possible reason for Amazon’s boldness is its apparently cozy relationship with the Obama administration–whose Justice Department pursued the agency model case, which mainly benefited Amazon. This relationship will be highlighted this coming Tuesday, when the president will give another major speech on the economy and aiding the middle class at, of all places, the Amazon warehouse in Chattanooga, Tenn. This is roughly equivalent of going to a Wal-Mart and calling for more of the kinds of jobs it offers.

All notions that echo our Friday commentary (and we couldn’t agree more with that last point — except to say Amazon takes reckless dis-concern for its labor to a level unachieved by Wal-Mart). But as the Shelf Awarenessreport adds, if this is indeed a sign that Amazon is playing out its end game, it’s happening much more rapidly than even we speculated, and with a dramatic dose of Amazon’s famous, always-surprising (in that it’s so unnecessary) thuggish chutzpah.

But here’s something perhaps even more surprising such a move could represent: Cause for optimism. ...

Continued

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