Everyone is paying attention to the e-book pricing fight against Amazon right now, but Bloomberg Businessweek reports there’s another disagreement going on between Amazon and the publishers behind the scenes that nobody has really noticed: the question of print on demand.

Amazon already offers its own print on demand services, used for mainly for small independent or self-publishing, and the technology has gotten a lot better over the fifteen years since it was introduced—print-on-demand titles are by now largely indistinguishable from large-print-run paperbacks.

The rub is that Amazon would like to expand its print-on-demand operations so that it can print copies of mainstream publishers’ backlist titles and cut down on the inventory costs of storing printed copies of those books in its warehouses for the consumers who do still want to read in paper. But publishers aren’t having it.

Asking publishers to move to print on demand “is largely about taking control of the business,” says Mike Shatzkin, founder of Idea Logical, a consultant to book publishers on digital issues. “It adds some profit margin, but it also weakens the rest of the publishing universe.”

As Bloomberg points out, publishers have spent a fortune on building infrastructure for storing and shipping printed books. If they were to move to print-on-demand, it would cause a significant upheaval in their business model. We’ve already seen how consumers think e-books should cost less than printed books because they don’t have physical items to be made, stored, and shipped. If publishers used POD to reduce infrastructure costs, there is little doubt consumers would demand printed books cost less, too.

And Amazon isn’t the only outfit seeing problems from this. The Espresso Book Machine’s POD bookstore, On Demand Books, has only been able to get HarperCollins of the Big Six to let it add some backlist titles to its catalog.

“The catalog is huge, but it’s overwhelmingly public domain,” says On Demand Books Chief Executive Officer Dane Neller, referring to older books no longer under copyright. “That’s a function of publishers’ reluctance to upset their existing supply chain, though we hope and believe that will change.”

But small publishers such as O’Reilly Media are seeing significant cost savings from moving to POD, freeing up cash flow to invest in R&D or other aspects instead.

And so it is that big publisher reluctance to cede Amazon control, or otherwise to change the way they currently do business, is tying up money supporting legacy infrastructure. This increases the costs to publishers and Amazon alike, and keeps costs higher for consumers. With print on demand, paper books could see a lot of the same benefits as paper books, but publishers would rather keep on doing things the way they’ve always done them.

Is it any wonder we’re reading the point where they need to adapt or perish?

(Found via The Passive Voice.)