Big Six publishers decline to renew contract with Amazon over unfavorable terms

Salon Magazine has an extremely lengthy story looking at Amazon, and bringing up a couple of points I hadn’t heard about before. In main, the article looks at Amazon’s habit of making quiet but substantial grants to various small independent publishing organizations, totaling about $1 million per year. Is it done to support indie publishing, or silence Amazon’s most strident critics? The Salon piece is more even-handed than the last article I covered on this theme.

But the really interesting part is actually buried in the second section of the article, which mentions something I hadn’t heard elsewhere: Salon claims that the Big Six publishers are taking a page from the Independent Publishers Group’s book and declining to renew their contract with Amazon over what they see as an Amazon price gouge.

Amazon is picking up its literary largess during an especially charged season in the company’s relationships with the rest of the book world. For the first time, the “Big Six” publishers — HarperCollins, Random House, Hachette, Simon & Schuster, Penguin and Macmillan — have refused to sign Amazon’s latest annual contract. The main sticking point is exorbitant increases in “co-op promotional fees” for e-books that the publishers see as an illegal gouge by another name. One person familiar with the details of the proposed 2012 contracts that Amazon has submitted to major New York publishers described them as “stupifyingly draconian.” In some cases, he said, Amazon has raised promotional fees by 30 times their 2011 cost. In saying no, the big publishers are following in the footsteps of the Independent Publishing Group (sic), a major indie distributor representing dozens of small presses that refused Amazon’s increases earlier this winter and soon saw the “Buy” buttons on more than 4,000 of their titles promptly delinked.

If the contracts are permitted to expire the way IPG’s was, will Amazon delist the Big Six publishers’ e-books the way it did IPG’s? That would be something to see. And of course this comes right when the publishers and Apple are under antitrust investigation for the agency pricing scheme they forced onto Amazon.

The rest of the article is long and very interesting, tackling the ambivalence organizations feel toward Amazon’s grants and the way that very few people are willing to go on the record either for or against Amazon’s grants (though plenty of people are willing to say bad things anonymously!) because they don’t want to upset either Amazon who offers them money or their own anti-Amazon compatriots. Even one publisher who does speak out largely does so alone.

[Melville House Books publisher Dennis] Johnson’s long crusade against Amazon has for the most part been a lonely one. “I admire Dennis’ rebel spirit,” said one small publisher who declined to go on the record. “It’s very brave. You can’t really speak out publicly against them. They’ll hear. It’s amazing. You say something in a short blog interview, and they know.”

So is Amazon making the grants with nefarious goals in mind? In the end, it may not really matter. Amazon is doing a lot of good with its grants…but it’s also helping to create the system where those organizations need the grants to keep going. And compared to the overall scale of its profits, $1 million a year is basically what Amazon finds going through the sofa cushions.

18 Comments on Big Six publishers decline to renew contract with Amazon over unfavorable terms

  1. “…the Big Six publishers are taking a page from the Independent Publishing Group’s book…”

    I know that the original article gets it wrong too, but please: as a former employee and serious partisan on the subject, it’s INDEPENDENT PUBLISHERS GROUP. Not “publishing.” PublishERS.

  2. The industry psychopathic hatred of Amazon is so over the top, irrational and out of control.
    Thankfully the public love Amazon and non one outside these idiotic people’s little hate club care much anymore.

    The possible withdrawal of publishers from Amazon is a major concern for authors, I submit. And it is yet another FLAG to authors signing contract with publishers.

    Authors should ensure that Publishers do not have the right to block sales through channels that they chose, to the detriment of the authors whose sales will automatically suffer. Authors should have a veto on this or trigger automatic reversion of rights.

  3. The issue is not that publisher “hatred of Amazon” or the “public love” of Amazon. What concerns me the most is that a very large organization is trying to use its large market presence to drive competition out of business. Once it corners the book market, I submit the public will cease to love them quite so much; prices will rise and the pro-consumer stance will disappear. That is not “pathological,” but rather economic common sense.

  4. Well Dennis what concerns me is that this psychopathic hatred of Amazon is represented by people who claim that “What concerns me the most is that a very large organization is trying to use its large market presence to drive competition out of business.” without any scintilla of evidence. The truth as I see it is that Amazon is stimulating and increasing competition and does nothing whatsoever to attack competitors other than by competing with them in the great tradition of the marketplace. of course establishment business do not like upstarts who have the temerity to compete with them, and to out compete with them. Hence the hatred.

  5. Im a little confused, cause it seems to me a key point was this “And of course this comes right when the publishers and Apple are under antitrust investigation for the agency pricing scheme they forced onto Amazon.” seems to me Apple is trying to force Amazon out of the market cause apple wants more dosh for the books. So im trying to see why Amazon is at fault here.

  6. “Howard”, you are kidding yourself. This is not about good or bad or love or hatred. It’s about business. The big six have engaged in less than admirable, oligopolistic practices because they dominated the market for a while, and while you dominate a market oligopolistic practices are good for the bottom line. It’s just that simple. To think that Amazon does not or will not do the same is not just naiive, it’s delusional.

  7. Snake Nation Press has been trying to boycott Amazon for years.

  8. I just can’t understand why everyone is so angry at Amazon for “delisting” IPG’s titles. The contract expired, so there was no way for Amazon to continue selling their books – it was just not covered by anything. So, yes, if the contracts with big6 expire, Amazon will delist their books too – not out of hatred or to prove a point, but just because there is no contract anymore.

    Also: I don’t quite get how “making quiet but substantial grants” can be done in order to silence the critics.. If you’re doing something exclusively for good publicity, it’s a terrible idea to do it quietly and unnoticed.

  9. Prices have already doubled here – hardly going to get any higher.

    Lovely smell of hypocrisy – ok to use own monopoly to raise your prices but cry when someone does it to you.

  10. finrind: Amazon is Amazon, and therefore by definition evil. IPG are a publisher, and therefore by definition any action they take is automatically good, plus they have the word “independent” in their name, making them double plus good. When Amazon makes a move in their own economic best interests, they’re enemies of intellectual freedom; when publishers make moves in *their* economic interests that’s always and only in the service of the public good; if authors or readers dare to make tentative steps to serve their economic interests, they’re traitors who should be stood up against a wall and shot.

    Clearer now?

  11. What I find most interesting here is that the big6´s seems to have ‘coincidentially’ threateneing to not renew the contract the very same year?

    If this doesn´t smell of cartel, I don´t know what does?

    AND: This is one of the main reasons, why more and more Authors decide to go Indie. Why would you go into a Publishers stable, if this meant, you couldn´t use any and all retailers?

  12. The publishers are always free to choose not to sell books to a particular store, this includes Amazon.

    However, if they choose to do this, nothing stops an enterprising small bookstore from making MASSIVE purchases of books from the publishers and then turning around and selling them to Amazon for wholesale + shipping + 1% (with the shipping address being set to be an Amazon warehouse even)

    and with the Feds starting Anti-Trust investigations of the publishers, all of them opting to not sell to the largest bookstore around will be “interesting”

    It’s also really hard to understand how choosing not to sell books through the biggest bookstore helps either the consumer or the writer.

    Like any company, Amazon is going to try and get the lowest possible price for the things that they buy, and there are real savings in selling to Amazon as opposed to selling the same number of books to many different retail stores


    shipping is cheaper (a small number of massive shipments to warehouses is substantially cheaper to a large number of smaller shipments to retail stores)

    the rate of returns from Amazon is probably substantially lower than from retail stores (you don’t have books damaged by people browsing them), and Amazon is not limited by shelf space, so they don’t have the pressure to ship books back because they haven’t sold in a short time, they can just sit in the warehouse until someone decides to buy them

    Now if Amazon really demands wholesale prices that are so low that the publisher would not make a profit, then the publisher would be silly to agree to sell them at that price.

    But at the same time Amazon would be silly to try and get a price that would cause the publisher to loose money (which would put the publisher out of business and cause Amazon to loose them as a supplier)

    You should also remember that at least one publisher was quoted as admitting that the change to “agency” pricing resulted in the publishers making less money than what they were making before that point.

  13. What most people don’t get is that right now Amazon IS a monopoly with over 90% of the market (their bragging). If you eliminate the big players for the direct-sale market–that is, the big players CAN’T get people to buy their books because Amazon is listing them BELOW the cost of the publisher to develop and print the books (the situation before the so-called Agency Model), then you are at the mercy of Amazon’s CEO.

    I had a similar situation in CafePress almost 10 years ago. CafePress solicits designs from artists and puts them on various merchandise (cups, mugs, tshirts, sweaters, clocks, buttons, etc.). Ten years ago the artists could set up a “CafePress shop” where their designs were show-cased. The artists were offered the merchandise at a set price (say $11.99 for a t-shirt) which they could ten sell at the price they wanted (say $19.99). Someone searching through the CP marketplace would see the design, an buy it from CP. CP would make the item, collect the money, and ship the item to the customer. The artists got to keep the spread between the cost and the price (19.99-11.99=$8.00).

    Then, five years ago (about), they changed everything. They decided that they would set the price and pay the artists 10%. At the same time they jacked up the prices because they said it cost so much money to maintain and advertise the Marketplace. Thus, today, if you search the Marketplace and find a t-shirt design you like, you pay $19.99, and the artist gets $1.99.

    What is to prevent Amazon from doing this in the future? If you print books and want to sell them you MUST list on Amazon, they are 90% of the market! They already make a 30% markup, what’s to prevent them from simply telling the publishers: “Your books will sell for $9.99 and we will pay you $1.00. Take it or leave it.”? There are many, many, small-presses that would simply fold.

  14. Melinda Jade Shaw // July 15, 2012 at 8:32 pm //

    Amazon might carry product/act as a distribution arm by/for mainstream publishers, but they are also engaging in “one of”/ on demand publishing/printing and distribution… of out of print and in the public domain product… (downloaded from the Guttenberg Project) all in the name of profit!

    So, they’re talking out of both sides of their head.. when it comes to them saying, they’re “pro independents and small presses”…

    Like Microsoft, they want to be the: “we do it all/we’re the only ones” providers for hard copy/eMedia content!

    Also, many of the Major publishing houses, have their own: “on demand” online providers; which “try to compete” with Amazon… on price and delivery!

  15. I once was a voice crying in the wilderness the first time I had to ship to Amazon. A real no win for small press. Ahh…. but we still fight on.

  16. All companies need to stop working for Amazon or doing business with them.”
    I live in a town that is so fuckn dumb.We are at 15% unemployment and Amazon is bring in people from other state to work. Their own workers at 18 hrs week and can’t pay rent. Our food banks have triple.Two truck came in today to feet them all. Amazon need to be closed down.
    Like · · Share · 3 hours ago near Fernley, NV ·

    Monica Princefam that’s crazy
    2 hours ago · Like
    Alex Mora Amazon also pays this peoples rent and will not help their own workers.
    4 minutes ago · Like
    Alex Mora Oh just await the people coming in are living in motors that worst more than my home and bigger.
    3 minutes ago · Like
    This is some of thing they are doing to their own people.

  17. If Amazon disappeared today it would be too soon. They ruined all the book stores and threw thousands of people out of work. Good riddence to them before they make any more trouble.

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