image from the prnewswire
Michael Pietsch (rhymes with "beach"), the CEO of the Hachette Book Group, is in a battle with Amazon over pricing and availability issues regarding manipulation of the market for books. All of the other book publishers are waiting to see what happens. Other publishers have been afraid to take a stand against Amazon, because of Amazon's tremendous clout. Amazon has huge volume and it is willing to sacrifice profits in pursuit of market share. Not every publisher can afford to pursue that strategy.
But Pietsch seems willing to get the issues on the table in order to not lose everything in the long run. Unfortunately, because Amazon and Hachette have signed confidentiality agreements, the nitty-gritty details of their dispute remain secret. Nevertheless, other publishers guess that Amazon is trying to sell Hachette e-books at bargain prices, and Hachette is trying to maintain their profit margins. One tactic that Amazon is using to prevail in this fight is to deliver this message to potential customers wanting to buy a Hachette title:
Image from Amazon...when they are trying to delay
shipping your book, whether they have it or not...
This is a risky strategy for Amazon, because delays tend to annoy customers. Amazon's "branding" includes being customer-friendly, so any delay tactic might tarnish their image. Nevertheless, it also thwarts sales of Hachette titles--especially for those customers who are loyal to Amazon via their Amazon Prime relationship, or those who have an Amazon gift card to spend. Other customers take the bait and switch to another title recommended by Amazon when they are on a Hachette author's pages.
The "currently unavailable" strategy is also used by Amazon in dealing with independent, single-book-inventory booksellers (who know they have delivered inventory to Amazon's warehouses). Even if the titles are somewhere in Amazon's inventory, Amazon can put these low volume items on the back burner without tarnishing their reputation for delivery within two days...if they say the title is "currently unavailable."
The roots of this dispute go back to before the 2012 Justice Department anti-trust lawsuit against book publishers. Five publishers were found to have conspired to raise e-book prices. They'd banded together to try to maintain their profits in the face of the Amazon undercutting of prices. [See: "Can eBooks get past the price-fixing scandal?"] The settlement included a two-year period where Amazon was allowed to discount e-book prices.
That agreement has expired, and now Hachette is stepping up and bargaining on principle. Pietsch insists that books are a special kind of product and cannot be treated like some of the other mass-produced items sold by Amazon. A major Hachette author, James Patterson, supports Pietsch and has said, "Amazon also, as you know, wants to control bookselling, book buying, and even book publishing, and that is a national tragedy.”
Other booksellers may want Hachette to win, but like scared schoolchildren in the face of a bully, they are standing quietly on the sidelines, fearful of the retaliation that has already been directed at Hachette. Meanwhile, some customers are upset by Amazon's policies. "If Amazon thinks I don't care about its silence, it's wrong. I take it personally that the company doesn't think it owes me even a half-baked explanation for why I can't buy some books from it," complained Jack Shafer, writing for Reuters.In addition, some legal observers think that Amazon is risking government anti-trust action.
Who will "win" in the long run?
Source: "Hachette Chief Leads Book Publishers in Amazon Fight" by Jonathan Mahler, the New York Times, June 1, 2014.
"Amazon Absorbing Price Fight Punches," by David Carr, the New York Times, June 1, 2014.
- Read the articles and previous post linked above. In hindsight, do you think that the anti-trust suit brought against the publishers in 2012 may have had the unintended consequence of creating a better environment for an Amazon monopoly? Give your reasons.
- What do some established authors think are the risks of this stand-off? How might this affect sales?
- What are the marketing and potential sales issues for Amazon, and for the publishing industry as a whole?