Saturday, August 23, 2014

Amazon vs. Hachette

Glenn Fleishman:

In May 2014, presumably to increase negotiating pressure on Hachette, Amazon removed pre-order buttons on Hachette books, eliminated discounts on Hachette books, and delayed shipments of Hachette books to purchasers. Amazon did the same with Warner Brothers DVDs around the same time for several weeks, and a few days ago pulled pre-orders for physical versions of Disney movies. Amazon is also engaged in a similar action against Bonnier Media in Germany, where antitrust laws are stronger and more strictly enforced.

[…]

The precise details of why Amazon and Hachette are at loggerheads remain unknown, although it appears the primary disagreement — at least according to insiders and public statements by both companies — is that Amazon wants to price all ebooks at no more than $9.99 while still making a profit from them, and Hachette is resisting. Under the antitrust consent degree to which Hachette agreed, Amazon was free to set retail prices for two years. That period is over, and Hachette now wants to set the retail price for ebooks, offering Amazon a percentage of the retail price. In essence, Hachette is looking to use the agency model, which gives pricing control to the publisher, whereas Amazon wants to stick with the wholesale model, in which resellers pay a fixed wholesale price and set whatever retail price they want. In many cases, the agency model provides a higher profit to a bookseller.

Christopher Wright (via John Gruber):

Amazon has pointed out that charging huge prices for ebooks—prices that, cost-wise, make them indistinguishable from paperbacks—is stupid. My apologies to all the publishers and writers who will be offended by this, but Amazon is right. They are absolutely making self-serving statements, but those self-serving statements are, from the perspective of a reader who likes buying books, and prefers buying more books with the same amount of money, 100% indisputably true. Their vision advances the market in a way that is better for customers. They have a position that has a solution.

Hachette’s position is “Amazon is trying to control the market.” Well, I actually agree with that position. But they haven’t offered a solution to that argument. They have no vision on how to create a market that effectively competes with Amazon that answers any of the claims Amazon has made about how their vision is better for consumers, or about how their vision is better for other publishers, like me. Sure, Amazon is opening the market wide only until they can sew it back up again, putting a nice little monogramed “Amazon” on the side of the duffel bag that will store the severed heads of all the publishers who dare cross them in the future, but their vision includes a description of how this change will make everything better while Hachette’s vision includes a description of how everything will remain exactly the same.

Siding with Hachette, in other words, doesn’t stop Amazon from being a monopoly.

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