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An online price war for books has broken out, pitching Amazon against some of Britain’s biggest publishers.
Amazon is angry that Penguin, Bloomsbury and others are discounting titles on their websites, encouraging customers to buy direct instead of using the online retailer.
Penguin’s online store has reduced a boxed set of 20 Penguin Epics from £100 to £55. Amazon sells the collection at £98.64. Bloomsbury offers a 25 per cent discount on all its books, with free postage and packing on British deliveries over £20.
There are fears that Amazon may retaliate by regarding a publisher’s online price as the recommended retail price and applying its trading terms to that. If a publisher discounts a £20 book to £15 online and Amazon has a contract for a 50 per cent discount on the full price, Amazon would pay the company £7.50 instead of £10. Publishers say that this would be unfair and could ultimately drive up prices.
Amazon also faces increased competition from high-street booksellers, including Waterstone’s and Borders, who are stepping up their online activities. Such is the power of Amazon that several publishers did not feel able to talk on the record yesterday. One senior executive said: “It’s very serious. I can’t believe they’d be allowed to get away with it under competition law. Forcing people to increase prices seems to me entirely wrong.”
Others accused Amazon of having become particularly aggressive lately. One source claimed that the online seller recently removed the “buy buttons” from a book on its website to prevent users from being able to purchase it. “They then went to the publisher and said, ‘Give us an extra 2 or 3 per cent or we won’t put the buy buttons back’,” the source said.
An Amazon spokesman said: “It is speculation. We never talk about discussions with suppliers.” He declined to comment further.
Discounters have brought huge price advantages to book buyers but the discount businesses do not have to bear the risks associated with investing in new authors or new titles by established authors. Until the Net Book Agreement was scrapped in 1995, it offered some protection to publishers by ensuring that retailers sold books at the recommended price.
Roger Tagholm, of the trade paper Publishing News, believes that Amazon sees publishers as manufacturers, who should not be setting prices.
But Simon Juden, chief executive of the Publishers Association, which represents up to 140 publishers, felt that Amazon was on shaky legal ground. He said: “Terms of trade will have been set up upfront when contracts were signed. Neither side can unilaterally change those. In my view, Amazon would be in breach of contract if they tried to do this.”
Ursula Mackenzie, chief executive officer and publisher of Little, Brown and chair of the Trade Publishers Council, said: “Our discount to Amazon is based on a notional RRP [recommended retail price], an agreed formula that we work to. For them suddenly to decide they will take a different view of what that RRP was means that the price on the publisher’s website effectively becomes the RRP. They can’t do that unilaterally. What is going to exercise people is that we can all see the growth of Amazon, which is startling and rapid, so they will increasingly have considerable power and there is no real competition to them. That’s the concern.”
There are fears that the latest development could affect authors and independent booksellers. Mark Le Fanu, of the Society of Authors, said: “Discounts demanded by the big retailers have been rising relentlessly, squeezing authors’ royalties. We hope that publishers will resist any pressure to increase discounts still further.”
One publisher was found to be broadly supportive of Amazon, although he also preferred to speak off the record. “I can’t see that it’s a major problem. Amazon sell their books at all sorts of discounts. That’s the nature of the market. They’re free to sell them at whatever price they like.”
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"Publishers have no right in law to specify how much Amazon may discount on retail prices nor take action against Amazon if they are unhappy with its resale prices."
True, but completely irrelevant to the issue at hand.
Paul, Hewitt, New Jersey, USA
Susan Singleton wrote:
> Publishers have no right in law to specify how
> much Amazon may discount on retail prices nor
> take action against Amazon if they are unhappy
> with its resale prices.
I think you have misunderstood the situation, Susan. Publishers are NOT specifying how much Amazon may discount. They are specifying how much Amazon will pay them, and asserting their own right to charge consumers what they will.
The article above makes it clear that when Publishers charged consumers LESS than Amazon does, Amazon retaliated by saying it wil pay publishers less than the agreed on cost.
Its as simple as that.
In my view, this is a clear case of Amazon trying to assert its market power to force publishers to charge consumers more.
Is there any doubt that such behavior is anti-competitive?
Kent, New York, New York, USA
Publishers have no right in law to specify how much Amazon may discount on retail prices nor take action against Amazon if they are unhappy with its resale prices. Vertical price fixing can lead to fines of 10% of worldwide group turnover for publishers.
However if (but only if) Amazon is in a dominant market position, imposition of unfair terms on publishers may itself conversely be a breach of competition law. Sounds like both sides need good competition lawyers.
Susan Singleton, London, UK
Amazon allegedly aspires to be the most customer-centric organisation on the planet but are acting as if motivated by pure greed.
As for print on demand, I don't know if there's a link but the day after Amazon's deadline for pod publishers to capitulate to its demands, an agreement was signed between On Demand Books, developers of the Espresso Book machine that prints and binds books in 15 minutes, and Lightning Source, the principle rival to Amazon's BookSurge pod printer.
Being able to walk into a book shop and order a copy of any book is now closer than ever.
It could be that Amazon is beginning to feel threatened and is trying to make as much money out of the sales of hard copy books while it can.
Bob Blackman, Liskeard, UK
Well, I'm in America, a small publisher with a new book out printed by Lightning Source which supplies Amazon. We (the small and self-publishing community) have been in shock with Amazon's tactics in trying to force us to use Book Surge or Create Space, which are Amazon's own POD (print on demand) operations. A minor revolt is brewing as small publishers are more dependent on Amazon since most brick and mortar stores will not stock niche books. Some will not accept POD books at all although the technical quality of POD has improved vastly over the old days. In the meantime my book is in limbo--the buy buttons are there but it says "out of stock."
Barbara Hudgins, Basking Ridge, NJ, NJ, USA
"Roger Tagholm, of the trade paper Publishing News, believes that Amazon sees publishers as manufacturers, who should not be setting prices."
Funny comment, this - Amazon is itself acting as a manufacturer.
It has recently been removing the shopping cart ('buy button') from independent publishers who use the latest print-on-demand publishing method, unless the publishers switch to having their books printed by Amazon.
Rather like not being allowed to search the Internet unless you use Google.
It is pretty ripe that Amazon complains about publishers offering books at a discount on their web sites when Amazon discounts aggressively on its own website and has been one of the forces responsible for the decimation of independent bookstores!
- Citiria Books
Clive, Monterrey ,