Hardball, Amazon Style

Posted by Victoria Strauss for Writer Beware

Amazon has been paying hardball lately. In February, Amazon and major publisher Macmillan went head-to-head over ebook pricing, with Amazon wanting to keep the wholesale pricing model that has till now been the norm for both ebooks and print books, under which retailers can discount book prices as much they like; and Macmillan insisting on the newer agency model, under which pricing is controlled by the publisher (a system that does not allow for discounting). When Macmillan refused to give in, Amazon turned off the buy buttons for Macmillan's books--all books, not just ebooks. Ultimately, Amazon capitulated, admitting that it wanted to carry ebooks from Macmillan, even at higher prices. But who really won that face-off? Though Amazon bowed to Macmillan on the matter of pricing, the dispute allowed it to demonstrate the power of the buy button shutoff--and it now appears to be using this as a negotiating tool. Last week, the New York Times reported that, while agreeing that other major publishers will be able to control prices for their ebooks, Amazon is threatening to shut off buy buttons for those that don't offer concessions in return, including a guarantee that no competitor (i.e., Apple and its iBooks ebookstore) would receive lower prices or better terms. Now the European Amazons (Amazon.co.uk, Amazon.de, and Amazon.fr), are leaning on Marketplace sellers in much the same way. The Bookseller reports that Amazon is demanding price parity beginning March 31:

In order to offer customers the best possible experience on Amazon.co.uk, beginning 31st March, Amazon will require price parity for all sellers selling under the Amazon.co.uk marketplace Participation Agreement. Price parity for these sellers means that the item price and total price (total amount payable, excluding taxes) of each product a seller offers on Amazon.co.uk must generally be the same or lower than on the seller's other non-physical sales channels.

What happens if sellers don't comply? Like the publishers, they can be shut down:

Sellers who are not willing to offer parity should remove their listings, as Sellers that do not comply with our terms and conditions will lose their selling privileges.

Amazon's Marketplace is used not just by individuals, but by bookshops, and for many shops, Amazon represents a major chunk of their online business. Because of the commissions Amazon charges Marketplace sellers, the shops often offer books on their own websites for less than they charge at Amazon--but Amazon's new price parity policy would make that impossible. Infuriated at what they call Amazon's "bullying," up to a dozen Scottish booksellers have complained to the UK's Office of Fair Trading that Amazon's new policy unfairly restricts their ability to sell at the prices they choose (pretty ironic, given that this was basically Amazon's beef with Macmillan). The OFT is considering the complaint. This latest round of disputes is far from the first time that Amazon has used its dominant position in the market to pressure its suppliers. In 2008, it sparked widespread criticism, and also a lawsuit, when it decreed that it would direct-sell no POD books that hadn't been printed by its own POD subsidiary, BookSurge (now CreateSpace). That same year, it locked horns with several UK publishers, trying to force them to offer deeper discounts, and to penalize them for selling discounted books on their own websites. (The buy button turn-off tactic was briefly used in one of those disputes.) Amazon's major concern right now has to be competition from Apple, and it's clearly taking action to protect its giant share (some would say monopoly) of the online bookselling business. It obviously doesn't care what its critics think--as with the BookSurge firestorm, all it has to do is sit tight, and hold fast, and people will soon move on to the next crisis. But how long can it throw its weight around (or not throw its weight around; it appears to be doing nothing about the lynch mobs that are smearing authors with 1-star reviews to protest publishers' ebook policies) without a backlash? Dennis Johnson of MobyLives believes that may already be happening. Surveying recent press coverage and commentary about Amazon's hardball tactics, he observes: "[W]hat’s gaining, it seems, is a consensus that the company is, well, out of control."