Amazon wants co-op payments, and also concessions in the UK

So, thanks to a leak, we’ve finally found out what the Amazon/Hachette spat is over. The New York Times reported a couple of days ago that an anonymous source within Hachette says that Amazon wants to extract extra fees for a number of services, including the pre-order button, placement in personalized recommendations, and so on.

It looks kind of skeevy at first glance, but it’s really the same kind of “co-op” promotional payment Barnes & Noble extracts for prominent placement of books in its stores. You know how you sometimes see displays dedicated to a single book. or some books with their covers faced outward on the shelves rather than just the spine? Every time that happens, it’s because the publisher slipped Barnes & Noble a little money under the table for it. Only it’s not so much “under the table” because this kind of payola is considered legit in the book trade. It’s only verboten in radio stations, apparently.

So if you’re going to get upset at Amazon for nickel and diming, you should be sure to save some ire for Barnes & Noble doing the same thing. Or is it all right for them to do because Barnes & Noble’s in trouble and Amazon’s evil?

But Amazon/publisher contract negotiations aren’t just happening in America, and don’t just concern Hachette, either. The Bookseller notes that Amazon is seeking some new contract concessions from UK publishers, too. Among those concessions Amazon wants are the right to use print-on-demand to supply copies of out-of-stock books quickly rather than having to wait for an order from the publisher to come in, parity on terms for e-books and paper books, and a ceiling on the digital list price of e-books in order to be ready for 2015 when changes in the tax laws take effect, closing Amazon’s Luxembourg loophole and requiring it to charge the standard 20% value-added tax on e-books.

Amazon also wants to impose a Most Favored Nation clause stating that they can price-match lower prices elsewhere. MFN clauses had not been seen for a while, since the agency pricing anti-trust investigation. but seem to be making a comeback. It doesn’t seem to be the best time for Amazon to be asking for them, given that the EU’s Directorate General for Competition is starting an investigation into such clauses. And the publishers who settled the anti-trust case in 2012 aren’t allowed to enter into contracts that include MFN clauses until 2017.

Publishers are concerned about losing control of their stock to Amazon’s print-on-demand systems, which is probably the main reason POD technology simply hasn’t taken off yet. When you get right down to it, now that we have the technology to do small print runs at the point of sale, it’s really rather ridiculous that publisher continue to cleave to a system whereby they print more books than they’ll ever need, send them all out, get a large number sent back to them, and then either destroy them or sell them to remainder dealers to compete directly with the full-priced editions on the shelves.

Why continue to waste so much material and fuel when there’s a better way? It’s bad for the environment, and bad for the bottom line. If Amazon wants to bear printing costs and still pay publishers money for the books it sells, why not let them? Let’s get this new technology into use and stop wasting money!

Some authors are concerned about what that will mean in terms of whether their book is still “in print” where rights reversion clauses are concerned—but e-books first raised the question of what “in print” means in a digital world over fifteen years ago. Surely most publishing contracts have better criteria for rights reversion by now.

But all these negotiations don’t necessarily have to be contentious. Remember that Warner Brothers spat that affected pre-orders of The LEGO Movie? The Wall Street Journal reports (paywalled; google the headline to read the whole thing) that Amazon and Warner Brothers have come to an agreement, and the pre-order buttons are back on Warner Brothers titles. Whatever terms Amazon is seeking, they seem to be more acceptable to Warner Brothers than to Hachette—but then, Warner probably doesn’t have to worry about setting precedent for an entire industry.

And the beat goes on…

3 Comments on Amazon wants co-op payments, and also concessions in the UK

  1. It’s seldom that a dispute about just one thing. We just know what the anonymous Hachette mole has decided to leak. Since they’re violating a non disclosure agreement to do it they’re not a reliable source.

    I guess that written agreements aren’t binding for big publishers and we’re all free to ignore them.

  2. Quote: “So if you’re going to get upset at Amazon for nickel and diming, you should be sure to save some ire for Barnes & Noble doing the same thing. ”

    Except that it’s not really the same thing. In B&N stores, there’s only so much space for displays at the front and that scarce resource can be sold to the highest bidder. Setup by B&N employees is also involved, so a cost by B&N is being met by a payment from a publisher.

    With Amazon, the equivalent is not a scarce resource. Every single visitor to Amazon could be given a different book display based their preferences and no employee-labor is involved. Amazon’s already got the spy-in-a-server code in place that knows what books each customer likes. Remember, it’s already a major advantage to Amazon to target customers that way and get more sales for itself. Why should it charge publishers for something’s that’s free and already profit-making for it.

    That’s best illustrated by the contrast between spine display and cover display, something a publisher might be willing to pay for in a physical bookstore but not one that makes sense at Amazon even in Jeff Bezos’ most fevered imagination.

    In addition, although what passes for a press in this country (general and trade) seems unwilling to explore the topic, Amazon engages is quite a bit of deceit in its display of search results. For the most part, it uses that to simply show more profitable items and hide those less profitable. I had an Amazon lawyer admit that to me. When I lived in Seattle, I had an Amazon software developer tell me to never trust his company’s search results.

    Just a few weeks ago, I searched for a Bluetooth headset by maker and part number. All the search results put the price in the $120 price range. Playing a few tricks to get around Amazon search engine, I found that same headset from other third-party vendors for around $80, including the manufacturer.

    That’s nastiness that Amazon could exploit. Pay us and you get preferential treatment in search results. Pay us a lot, and we’ll favor you so much your competitors operate at a disadvantage. They disappear from search results.

    And needless to say, all this paying and playing, should it become a standard part of Amazon’s contract with publishers, will hurt small publishers and independent authors who can’t afford to pay and, from Amazon’s perspective, aren’t worth bothering with.

    I can illustrate that to near perfection. There’s a marvelous book from the 1890s called Across Asia on a Bicycle that’s about the Asian leg of the second trip around the world by bicycle and the first to go the difficult Central Asian route. My edition is, I think, the best on the market. It’s newly typeset and includes additional material, including a new chapter by the authors from a magazine in that era. For a Google search, my edition is often the #1 hit on Google. It’s that popular.

    And yet there was a time when searching Amazon for “Across Asia on a Bicycle” would NOT turn up my book–not on the first page, not on the second, not on any page. Yet that same listing would show used, early editions that were unavailable. Why was Amazon listing what it could not even sell. To hide from customers the fact that it wasn’t showing all the available editions.

    They hide my edition because someone else had an over-priced paperback replica edition, so overpriced it cost more than my hardback edition, much less my paperback, which was selling for only about $12. Amazon, curse their deceitful heart, was making my edition invisible so they could rip off their more naive customers. That’s one reason I howl with laughter every time I read a clueless reporter who claims that Amazon has excellent customer service. No it doesn’t.

    Amazon already engages in the deceitful of search results if it directly makes more money from hiding a better price. That’s a given. It’s something they’ve been doing for over a dozen years. It’s something one of their lawyers defended to me as legitimate.

    But now add pay-to-play to that mix. Suppose Amazon agrees to ‘favor’ Giant Publisher A’s title’s in search results for the proper fee. Yes, Giant Publisher B may be able to step in and say, “Yes, but here’s money so you don’t disfavor us when you favor A.”

    Who then becomes the loser and a host of major publishers each grab for special treatment for their titles? Who gets their titles pushed further and further down the search results until they fall out of sight. Do authors really want to see their book not appear AT ALL when a potential customer searches by the book’s exactly title? Do they want those who might buy their book instead presented with a string of similarly themed books from those who’re paying for special treatment.

    And yes, technically a publisher could pay B&N employees a kickback for pushing certain titles. Computer retailers do that all the time. But what employee is going to be so great a jerk that when asked to show a customer where “Murder at Midnight” is, will take that customer to a Hachette display of other mystery novels.

    You can force a flesh-and-blood employee to be honest with you easily. You can’t force that relentlessly lying Amazon search result to do the same. You have to know certain tricks to get around it. For books, the ISBN usually works, at least for print editions. For other items, you have to keep clicking on Amazon’s bought instead links and eventually you’ll find your way to what Amazon should have showed you at first. That, incidentally, was the defense Amazon’s lawyer offered for their deceptive search results. Click here, then click there, then click again and eventually you’re looking at what Amazon should have shown you at the top of that first search result. Oh how I loathe lawyers! And if you look at Amazon’s upper ranks, you’ll find it’s stuffed with lawyers.

    In short, Amazon is already engaging in quite a bit of deceit of its customers when the only incentive is its own markup. Inject in co-op payments and the situation will get even nastier.

    Keep in mind that most such schemes don’t create book sales out of thin air. They create them by favoring one author/publisher over another. Your book won’t be selling because some publisher has paid Amazon co-op fees to, in effect, hide it. That’s why, in this battle between Amazon and Hachette, it’s to every publisher and authors advantage to side with Hatchette.

  3. Yeah….
    Any reader that counts on Amazon for recommendations isn’t a serious reader. I rely on Goodreads, Blogs and Twitter for new book info, information on new indies, etc. I’ve found that Amazon recommends books that I have already purchased from them for godssake.

    I don’t see Amazon as any better or worse than any other company, and yes, I DO think they have great Customer Service. Unlike my bank, cable company, internet provider, local grocery store and local retailers, they’ve dealt with me honestly and met my expectations whenever I had a problem or dispute.

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