In case you haven’t heard about Amazon’s latest dispute, the online retailer is taking on Hachette, the world’s fourth-largest book publisher. The two companies are currently at odds over pricing, specifically, how much Amazon can charge for Hachette’s ebooks. According to CNET, online booksellers such as Amazon will typically charge 30% on top of the publisher’s price. Amazon also charges a promotional fee for making the books available on its site.
At some point, contract renewals negotiations with Hachette got off track, and now the two companies are engaged in a dispute. Until they resolve their differences, customers will have difficulty purchasing Hachette books through Amazon. Here are further details about the dispute, as well as how the negotiations affect you as a customer.
A Questionable Negotiation Tactic
To speed up contract negotiations, Amazon is restricting the sale of Hachette books on its site. It’s not like you can’t buy Hachette books at all, but if you really want a book right away you may be better off purchasing it elsewhere. Amazon said it’s taking in less inventory from the publisher, so some titles may take longer to ship. If you order a Hachette title today from Amazon, it could be a month or more before you actually receive it in the mail.
In addition, Amazon is no longer accepting pre-orders for upcoming titles, like Robert Galbraith’s The Silkworm. Amazon did say it would send customers an e-mail reminder when it’s released, though. Although the negotiation tactic may seem a little questionable, Amazon defended by saying it’s the seller’s right to dictate terms of distribution.
One Giant, One Supergiant?
It’s safe to say Hachette is pretty big in the publishing world. The company had a $3 billion profit last year, according to PC Magazine, which is more than significant in a market where some publishers are either going under or selling. Amazon, however, is on a whole other level in terms of sales — the retailer took home over $75 billion in 2013 and has about 65 percent of the ebook market.
When you search for just about anything, Amazon almost always shows up as one of the first search results. Say you search for a forestry machines book on Google. After the ads, Amazon is second to only YouTube. Listings from actual publishers, such as Oxford, show up later:
Given Amazon’s size and influence, could it be that Hachette will eventually have no other choice than to comply with Amazon’s demands? That’s what a lot it people are probably wondering, though it’s possible the two companies could eventually meet halfway. This isn’t the first time Amazon has had difficulty with publisher contract renewals.
In 2010, Amazon was in a dispute with Macmillan, and for a time it did not sell the publisher’s books on the site. The exact agreement was not disclosed, but in a later statement it was revealed that Macmillan and Amazon met in the middle — each put up half of the amount needed to offset author royalties. Hopefully Amazon and Hachette will eventually reach a similar arrangement, though it won’t likely be soon. Both Amazon and Hachette have warned customers not to expect a speedy resolution.
On Behalf of the Customers
Amazon claims its contract negotiations with Hachette are ultimately on behalf of customers. The company alleges when it works to drive prices down, buyers win as they have to pay less for the books. While this is true, Amazon does not 100% seem to have the customer at heart in the negotiations. Part of the reason Amazon has been so successful as a company is it has been dedicated to delivering customers their products in a timely and reliable manner. Does the retailer’s latest negotiation tactic offset this commitment?
Do you think Amazon’s negotiations for lower ebook prices make up for the delay in shipping Hachette’s books?
Image by Claudio Toledo