Wednesday, November 19, 2014

Amazon v. The United States

Doug Preston, best-selling author and organizer of a group of authors and those in publishing that are united against Amazon, helped shed a spotlight on Hachette’s recent battle with Amazon. He just issued this statement to all authors:

“By now you have probably heard that Amazon and Hachette have come to an agreement. The deal, as I understand it, is not unreasonable, and similar to the one Simon & Schuster made with Amazon last month.

“I want to thank all of you for your courage in facing down Amazon. Each one of you risked retaliation and potential damage to your career to sign our letters. As a Hachette author, I want especially to thank those many non-Hachette authors who had little to gain and a great deal to lose by taking a public stand.

“From the press reports it is clear that our efforts played a role in bringing this to a resolution. We hope Amazon now realizes that using authors and their books as pawns in a negotiation is not a wise business strategy.

“This settlement, while a great relief, doesn't change the basic problem: that one corporation now controls more than 50% of the book market in the United States -- a corporation, moreover, that in our view used its market dominance in an irresponsible and destructive way.

“There are still many open questions about Amazon's market power. Those questions are best explored, not in an atmosphere of confrontation and high emotion, as we have just passed through, but in a reflective way that considers the long-term economic health of the book industry and the ability of authors to earn a living -- as well as the larger issues of freedom of speech, diversity and healthy competition in the marketplace. For this reason, we believe it is vital to continue our effort to persuade the Antitrust Division of the Justice Department to look into Amazon's market practices. Our letter, and our behind-the-scenes work, is well in process and we feel it makes sense to see it through. I hope you will continue to support us. When the time comes (and it may be a while yet) you will have a chance to see the DoJ submission and decide if you want to sign or not.”

The Amazon Giant Gets Bigger Beyond Books
In 2007, according to a Wall Street Journal article today, Amazon accounted for 6% of all North American sales online. Now, in 2014, just seven years later, its market share has tripled to reflect 18% of the e-commerce market. Think about it. Almost one in five dollars spent online comes through Amazon.  Of course, in the book industry it’s more like three and a half dollars out of every five spent online for books is processed through Amazon.  In the past year, Amazon rang up 52 billion dollars in sales – and lost money. Yes, you read that correctly.

Amazon Taxation Not Enforced
The federal government has allowed many purchases online to go untaxed. Amazon has only recently come around to making deals about collecting sales taxes on a limited, state by state basis, spread out over a number of years before they take effect. Overall, the tax disadvantage to physical retail stores is unfair, especially for bookstores. The government needs to close the loophole and make sure everyone pays sales taxes on their purchases, regardless of whether they were done online or in a store. Some companies complain they can’t keep track and fill out paperwork to deal with 9800 local tax-collecting municipalities in the US. I can understand that. The federal government should just levy a sales tax across the board on online purchases and then divide the fees amongst the states based on some type of fair formula.

Online Commerce Growing Fast, Faster For Books
A decade ago, online commerce accounted for 2% of all retail transactions. Now it makes up 10%,, when you remove things from the equation that don’t have an online equivalent, such as restaurants and gas stations. As the online world grows, there are many winners and losers. But the book industry has lost thousands of bookstores over the past decade and that is never a good thing. Further, gross book sales have flattened out, in large part due to the low-priced e-book proliferation.  

Amazon Takes Over .Book

So, what do we do with Amazon? How is the book industry to get along with a company that is becoming responsible for the majority of its sales? How will this play out in 2015 and beyond? Expect more of the same unless something alters the landscape and makes Amazon change the way it does business.

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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