Amazon issues statement on Hachette dispute, calls it an ordinary supplier negotiation

Amazon has finally issued a statement about the little spat going on between itself and Hachette, in the form of a post to its Kindle forum. It basically says about the same thing everyone who’s taken Amazon’s side on the blogs so far has said: Amazon is simply negotiating the prerogative of any retailer in negotiating with a supplier for better terms and deciding how to stock and sell their product based on those terms.

Unfortunately, Amazon and Hachette haven’t been able to come to mutually-acceptable terms, and Amazon is “not optimistic that this will be resolved soon.” (Not exactly a surprise. There’s still plenty of time left in Amazon’s existing contract with Hachette as far as I know, which is why there’s so much other pressure being brought to bear from one side or another; they don’t have an immediate deadline to work toward.)

Amazon also points out that the dispute affects only 1.1% of Amazon items weighted by demand, and suggests that anyone who needs an affected item quickly should purchase it from one of its competitors. Amazon also states that it has offered to fund 50% of a Hachette-allocated author pool to mitigate the effect of the dispute on author royalties, as it did with Macmillan when it removed that publisher’s “Buy” buttons during the agency pricing dispute.

And, finally, Amazon notes that some of the news coverage “has expressed a relatively narrow point of view” and links to a blog post by Martin Shepard, co-publisher of small publisher The Permanent Press, which expresses similar sentiments to those posts we’ve mentioned by David Gaughran and Joe Konrath. (So how cool is that, when Amazon links to your blog post?)

Shepard complains about the biased nature of the New York Times’s coverage, and notes that, from the Permanent Press’s perspective, Amazon has been a godsend. Unlike most stores, distributors, and wholesalers, who return from 20 to 80% of stock they order, Amazon usually returns only 1-2%, enabling them to cut down on their print runs. It makes posting reviews easy, pays great earnings on Kindle sales, and pays within 30 days. He concludes:

I always have a lingering suspicion that when one of the large publishing cartels complains they are being treated unfairly by Amazon, it’s probably good for most all of the smaller, independent presses. When the Times allows a poorly researched, inaccurate anti-Amazon screed to appear, it makes me want to stand up for Jeff Bezos and Amazon, and present a very different point of view which I hope will balance out what I consider blatant propaganda. And I would encourage other publishers who feel similarly to email me and speak out as well.

When you get right down to it, there’s not a lot in Amazon’s statement that we hadn’t already known or guessed, but in some ways it could be taken as a shot across Hachette’s bow—a reminder of how few items in Amazon’s catalog Hachette accounts for (only 11 out of 1,000 items affected—we can see who needs who more for sure), and a bit of outreach toward disgruntled Hachette authors such as Lilith Saintcrow or Charlie Stross with that 50% author pool offer.

It’s not very detailed and probably won’t change many minds (or cut down on the rhetoric from either side), but at least it’s something. We can now say we’ve heard extremely general PR statements from both Hachette and Amazon. And it’s not as if we have the right to hear more from either side. The terms of contract negotiations are supposed to be secret. (Though it’s not as if that stopped the Big Five from leaking their terms to each other during their simultaneous agency pricing negotiations with Amazon back in 2010. But then, that’s why the negotiations are being staggered now.)

4 Comments on Amazon issues statement on Hachette dispute, calls it an ordinary supplier negotiation

  1. Thanks for your reporting on this issue. It’s funny how so many people think that Amazon seems to have some sort of permanent monopoly on internet commerce. People shop there because it is good and cheap (although I normally don’t mind the “hassle” of eBay to save a bit more).

  2. Quote: ” It basically says about the same thing everyone who’s taken Amazon’s side on the blogs so far has said: Amazon is simply negotiating the prerogative of any retailer in negotiating with a supplier for better terms and deciding how to stock and sell their product based on those terms.”

    No Chris, that’s not what many of those who’ve been taking Amazon’s side have been saying. They’ve been saying that the supply issues were complex, with both sides probably at fault for the unavailability.

    The bit about “the prerogative of any retailer” is simply a platitude. Everyone agrees on that. They merely disagree about the conditions they attach. Critics of Amazon have stressed that, whatever the legality of Amazon’s actions, it demonstrates that Amazon has little concern for authors (caught in the middle) or customers (facing delays). That’s why the question of who was responsible for these shortages was so important.

    It’s the critics of Amazon like me that have been pointing out the obvious. If Amazon wanted to keep proper inventories on these popular titles and was being blocked by Hachette, it could easily fill its inventories from various wholesalers. Amazon, to its credit, is now admitting what anyone who understands book distribution already knew, that the onus for this unavailability falls exclusively on it. I also suspect that Amazon knew that no lie would stick, that Hachette could demonstrate to any interested reporter that it has remained willing to keep Amazon’s stock up.

    Nor does the bit about Amazon “simply negotiating the prerogative of any retailer” withstand much scrutiny. If Amazon just wanted what other online retailers get, there’d be no dispute. What Amazon is attempting is obvious. It wants to use its market dominance to get substantially greater discounts than any of its competitors. Then it can slash prices for now and drive them out of business. That’s classic monopolist behavior.

    Once Amazon does that? To see what that means, you need only look to its affiliate Audible.com, which does own the audiobook market. There, prices are high. Tolkien’s The Hobbit (a mere 11 hours) costs a stiff $27.99. And, if you remember a few months back, Amazon slashed the royalties it pays to independent authors who create audiobooks. At Audible, Amazon shows its true self. It squeezes from both ends, paying authors little and charging the public much. That’s also classic monopolist behavior. It’s also classic Jeff Bezos.

    You don’t need to be a prophet to understand what Amazon is doing. All you need is eyes. What Amazon will do when it owns a market is what it is already doing in those markets it owns.

    That even works in reverse. Amazon’s CreateSpace pays me substantially better per sale than Lightning Source does for my POD titles. But that’s because Lightning Source, closely linked to the giant book wholesaler Ingram, is powerful, well-connected, and popular with publishers as well as bookstores. Lightning Source remains the best way to distribute to physical bookstores not just in the U.S. but globally.

    To give a grade-school analogy, Amazon is a typical bully. When it has the advantage, it behaves like a third-grader shaking down first-graders for their lunch money. When it meets with someone as stronger or stronger than it, say a sixth-grader, it meekly plays by the rules.

    Some years back, Amazon decided that POD publishers whose business model was helping authors get their books in print were first-graders ripe for bullying. Most were using Lightning Source to print their books, so Amazon yanked the Buy Now button from some of those and told them that situation would remain until they placed their books with CreateSpace.

    I happen to know the publisher who took them to federal court in Maine over that. Her lawyers argued that Amazon’s behavior violated federal statues about bundling. She sent me the court filings and I quickly realized that Amazon’s lawyers were still in bully mode. They didn’t see how weak their case was. Only later did Amazon realize that it was facing a court defeat and the potential for a huge damage settlement. Only then did Amazon realize that it was up against a gutsy sixth grader. It quickly settled out of court for an undisclosed amount and, more important, Amazon has not tried that nasty tactic again. In fact, as I noted above, CreateSpace is now competing in a more legit way, by offering publishers a better return.

    That illustration demonstrates that Amazon’s fanboys aren’t really helping the company. By defending it when it’s clearly in the wrong, they’re behaving like wives who serve as enablers for abusive husbands. They’re preventing Amazon from being forced to change. Ironically, as a constant critic of Amazon, I’ve been doing the company more good than they. They want Amazon the Same. I want Amazon the Reformed. Amazon can easily afford to pay ebook authors 70% of retail at all price levels. I want it to do that.

    One final note. Amazon’s offer to fund 50% of an ‘author pool’ certainly shows chutzpah, often defined as ‘someone who kills his father and mother and asks the court for mercy on the grounds that he is an orphan.” As Amazon has now confessed, it is the one responsible for these book shortages. By all that’s fair and honest, Amazon should fund 100% of that author pool. Don’t hold your breath waiting for that though.

    I might add a personal note. Now I’m about average height for a guy, but in grade school I was a scrawny little runt. A few years back, I began to wonder why I’d never been bullied. Then I realized why. If a bully had tried, I’d have fought back, including the classic David v. Goliath technique of striking without warning. Playground bullies, cowards at heart, must have sensed that.

    Authors and small publisher need to not fear Amazon and support Hachette in this dispute. If Amazon wins this one, every author, from famous to unknown, and every publisher, from giant to small, will lose. That can’t be allowed to happen.

    If you need inspiration, a book I just co-authored is the perfect place to start. It’s about a girl of about sixteen who takes on over a hundred Klansmen in a brave night ride to save her father from them. It’s a modern adaptation of an 1879 bestseller written by an eyewitness to the horrors of 1870s North Carolina. I aimed it at students and young adults, but anyone will find it a great read. Of the original, the San Francisco Chronicle said: “The night ride of young Lily Servosse is one of the finest and most thrilling incidents that has ever been told in history or romance.”

    –Michael W. Perry, Lily’s Ride: Rescuing her Father from the Ku Klux Klan

  3. @Michael W. Perry- Have you removed your books from Amazon yet?

  4. Michael: All right, then, fine! If what Amazon is doing is illegal, let someone take them to court for it, like that publisher you mention did. If Amazon is in the wrong now, as they were then, they’ll either lose at trial or settle. Surely the Big Five publishers, divisions of multi-billion-dollar megacorporations, have enough money to be able to afford even better lawyers than that small publisher who relied on POD. Let them put that money where their mouth is.

    Funny, thing is, I’ve seen a marked lack of legal action against Amazon over the last few years. But darned if there wasn’t plenty of illegal action on the part of the publishers and Apple…

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