Amazon wants co-op payments, and also concessions in the UK
June 24, 2014 | 4:02 am
So, thanks to a leak, we’ve finally found out what the Amazon/Hachette spat is over. The New York Times reported a couple of days ago that an anonymous source within Hachette says that Amazon wants to extract extra fees for a number of services, including the pre-order button, placement in personalized recommendations, and so on.
It looks kind of skeevy at first glance, but it’s really the same kind of “co-op” promotional payment Barnes & Noble extracts for prominent placement of books in its stores. You know how you sometimes see displays dedicated to a single book. or some books with their covers faced outward on the shelves rather than just the spine? Every time that happens, it’s because the publisher slipped Barnes & Noble a little money under the table for it. Only it’s not so much “under the table” because this kind of payola is considered legit in the book trade. It’s only verboten in radio stations, apparently.
So if you’re going to get upset at Amazon for nickel and diming, you should be sure to save some ire for Barnes & Noble doing the same thing. Or is it all right for them to do because Barnes & Noble’s in trouble and Amazon’s evil?
But Amazon/publisher contract negotiations aren’t just happening in America, and don’t just concern Hachette, either. The Bookseller notes that Amazon is seeking some new contract concessions from UK publishers, too. Among those concessions Amazon wants are the right to use print-on-demand to supply copies of out-of-stock books quickly rather than having to wait for an order from the publisher to come in, parity on terms for e-books and paper books, and a ceiling on the digital list price of e-books in order to be ready for 2015 when changes in the tax laws take effect, closing Amazon’s Luxembourg loophole and requiring it to charge the standard 20% value-added tax on e-books.
Amazon also wants to impose a Most Favored Nation clause stating that they can price-match lower prices elsewhere. MFN clauses had not been seen for a while, since the agency pricing anti-trust investigation. but seem to be making a comeback. It doesn’t seem to be the best time for Amazon to be asking for them, given that the EU’s Directorate General for Competition is starting an investigation into such clauses. And the publishers who settled the anti-trust case in 2012 aren’t allowed to enter into contracts that include MFN clauses until 2017.
Publishers are concerned about losing control of their stock to Amazon’s print-on-demand systems, which is probably the main reason POD technology simply hasn’t taken off yet. When you get right down to it, now that we have the technology to do small print runs at the point of sale, it’s really rather ridiculous that publisher continue to cleave to a system whereby they print more books than they’ll ever need, send them all out, get a large number sent back to them, and then either destroy them or sell them to remainder dealers to compete directly with the full-priced editions on the shelves.
Why continue to waste so much material and fuel when there’s a better way? It’s bad for the environment, and bad for the bottom line. If Amazon wants to bear printing costs and still pay publishers money for the books it sells, why not let them? Let’s get this new technology into use and stop wasting money!
Some authors are concerned about what that will mean in terms of whether their book is still “in print” where rights reversion clauses are concerned—but e-books first raised the question of what “in print” means in a digital world over fifteen years ago. Surely most publishing contracts have better criteria for rights reversion by now.
But all these negotiations don’t necessarily have to be contentious. Remember that Warner Brothers spat that affected pre-orders of The LEGO Movie? The Wall Street Journal reports (paywalled; google the headline to read the whole thing) that Amazon and Warner Brothers have come to an agreement, and the pre-order buttons are back on Warner Brothers titles. Whatever terms Amazon is seeking, they seem to be more acceptable to Warner Brothers than to Hachette—but then, Warner probably doesn’t have to worry about setting precedent for an entire industry.
And the beat goes on…