Thursday, June 5, 2014

Amazon Ebook Dispute With Hachette Threatens All Commerce

The fight between Hachette and AMAZON could dictate the future of publishing and even online commerce.

AMAZON is a monster that has been allowed to get too big for its own good. Consumers may love the cheap prices and convenience of using the world’s largest online retailer but it poses a grave threat to jobs, consumer prices, fair competition and choice in the marketplace. Further, it has cast a shadow over book publishing that darkens daily.

What’s so bad about AMAZON? Well, let’s first acknowledge the good. They do sell a lot of books and have done a great job to market books. They created the whole ebook revolution, and they offer the best prices. But in doing so, they are destroying publishing, threatening the existence of bookstores, and changing how books get discovered.

They should be able to negotiate with Hachette rather than use their muscle to stop selling any Hachette titles, including printed books. They went a step further and pushed competing titles when consumers looked to purchase a Hachette title.

AMAZON reminds me of a deadly little boy on The Twilight Zone, the 1960’s science fiction show. There was an episode about a kid who had the power to think people away. If you made him mad, he just wished you to the corn fields, dead on arrival. All of the adults, including his parents, were afraid to try to rein him in; concerned he’d turn on them. Well, AMAZON is that bully right now. The other publishers privately want to contain AMAZON and support Hachette but publicly they stay off the dispute.

AMAZON should be a leading partner in the book industry, instead of using its size to injure an industry that is important to America’s well-being. Books represent ideas, information, history, and the unlimited landscape of the imagination. How can any company do something to endanger the free flow of books? Shame on AMAZON.

AMAZON grew in the 1990s not just because it was ushering in the whole online shopping experience, but because publishers wanted another outlet to sell books. AMAZON doesn’t have issues with returns the way publishers have with brick and mortar stores. Further, AMAZON is available globally – publishers got access to selling overseas without having to go over there and convince stores to carry their books. It seemed like a good idea.

Then AMAZON started selling ebooks for their own device and since then it has become apparent they can one day crush an industry it once helped to grow.

Now AMAZON, through its own publishing arm and through its self-publishing division (Create Space), can further influence and control who gets published and sold. Authors could be the ones to stop the madness.

If authors stopped publishing or self-publishing with AMAZON, that would be a start. If they stopped showing links to AMAZON on their sites and social media, that would be better. If authors negotiated a contact with a publisher not to do a kindle version or to sell to AMAZON, that would be awesome.

AMAZON doesn’t have to be used by authors to find success. Consumers should boycott AMAZON and assert themselves as the real powerhouse here. If publishers and authors can’t or won’t try to stop AMAZON, consumers can.

The status quo won’t do. Action must be taken now while we still have alternative vendors to sell books and a diverse publishing industry to publish what it values – not what AMAZON dictates. That boy on The Twilight Zone will only grow stronger. I wouldn’t want to run into him – or AMAZON – in a few years.

AMAZON is publishing’s Titanic. It thinks it’s the ship that won’t sink, but the publishing industry may drown staying aboard it. AMAZON, according to Publishers Weekly, sells 41% of all new books that are sold in America. It also sells 65% of all books purchased online, whether digital or print.

What AMAZON wants to do next seems up for grabs but I would expect it to eventually buy one of the Big 5 – perhaps after there are more mergers, and it gets down to the Big 3. Or maybe it’ll open up physical stores, especially in states it has decided to charge sales tax in.

AMAZON is not a good corporate citizen. It replaces humans in its companies with robots. It fails to charge sales tax in many states, even though other online retailers do. It practices predatory pricing, which hurts competitors and suppliers, causing job losses.

So AMAZON has a private dispute with Hachette on ebook pricing, and rather than hammering out a fair deal, it tried to force the No. 5 publisher by understocking Hachette print titles, delaying shipping and refusing to accept pre-orders on future titles. Is this how adults should behave?

Publishers should sell books directly to consumers. They need to brand their lines and develop a direct marketing channel. They don’t need AMAZON at all. But publishers should also encourage the existence of physical stores, to showcase titles and stimulate a book community.

AMAZON could get stopped another way. It would require Wall Street to stop recommending AMAZON stock. The company’s share price is way overpriced beyond any sane price-to-earnings ratio that is used to benchmark Apple and other leading companies. Once Wall Street wisens up that AMAZON produces a profit that is a fraction of what it takes in – all to the detriment of the greater economy – the publishing world may be able to see signs of hope.

Until then, the industry is just rearranging chairs on the deck of the Titanic.

Brian Feinblum’s views, opinions, and ideas expressed in this blog are his alone and not that of his employer, Media Connect, the nation’s largest book promoter. You can follow him on Twitter @theprexpert and email him at He feels more important when discussed in the third-person. This is copyrighted by BookMarketingBuzzBlog © 2014

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