Amazon CEO jeff Bezos D6

Asa Mathat

Commerce


Amazon finally issued a public response to the festering battle with book publisher Hachette, claiming that the negotiating tactics it has pursued in contract talks are commonplace, justified and aimed at giving better long-term value to Amazon shoppers.

In a post in the Kindle forum, Amazon admitted that it is “currently buying less [print] inventory and ‘safety stock’ on titles from … Hachette,” and “no longer taking pre-orders.”

“These changes are related to the contract and terms between Hachette and Amazon,” the post said.

And though it said that “Hachette has operated in good faith” — whatever that means — Amazon does not see a resolution coming soon. So it recommends that customers looking for Hachette titles should shop at competitors or third-party sellers on Amazon.

The gist of the post focused on Amazon defending its tactics.

“Suppliers get to decide the terms under which they are willing to sell to a retailer,” the post said. “It’s reciprocally the right of a retailer to determine whether the terms on offer are acceptable and to stock items accordingly. A retailer can feature a supplier’s items in its advertising and promotional circulars, ‘stack it high’ in the front of the store, keep small quantities on hand in the back aisle, or not carry the item at all, and bookstores and other retailers do these every day. When we negotiate with suppliers, we are doing so on behalf of customers. Negotiating for acceptable terms is an essential business practice that is critical to keeping service and value high for customers in the medium and long term.”

Here’s where you might expect a company to apologize to its customers for the inconvenience. But that’s not necessarily the Amazon way. The closest it gets to a “we’re sorry” is a passing mention of regretting “the inconvenience.”

Nonetheless, Amazon also touches on the other side of this equation — how it impacts the authors whose work is being held hostage — and said it is trying to limit the negative effect.

“We’ve offered to Hachette to fund 50% of an author pool — to be allocated by Hachette — to mitigate the impact of this dispute on author royalties, if Hachette funds the other 50%,” the company said. “We did this with the publisher Macmillan some years ago. We hope Hachette takes us up on it.”

In summary, if you were expecting Amazon to express significant remorse or concede that it’s at fault, you’ll be disappointed. But if you follow Amazon at all, you knew not to expect that anyway.



3 comments
TechCheck
TechCheck

1. Be first on the scene
2. Undercut newcomers to establish a near-monopoly. If competitor has innovative offering, then complain to government.
3. Hit up publishers to fund this business practice.
4. Financially blackmail and damage publishers using near-monopoly until they concede.

This isn't a little bookshop choosing who to promote - this is a massive company with a huge lobbying effort in Washington who somehow have escaped anti-competitive scrutiny.

A myopic consumer may think they're getting a good deal due to a few short term sales, but the end result is lack of choice and higher prices outside of the sale period.

Just look at what Amazon have done to Comixology, it's now a byzantine process to purchase comics with no benefit to consumers.

hello
hello

 I love Amazon.

J. S. Greenfield
J. S. Greenfield

@TechCheck You miss the underlying point. Publishers have seen a huge windfall from ebooks.  The cost of production is a small fraction of hardcopy books, and yet publishers price them essentially the same, and simply pocket the greatly increased margins.  Furthermore, customers have no opportunity to recoup their costs by selling their copy once they are done with it, and have limited or no ability to lend their copy to others.

Despite greatly reduced costs, and significantly reduced utility, publishers have passed none of the savings on to consumers.


In fact, large publishers actually violated antitrust laws, conspiring with Apple to fix prices, and to force Amazon to sell ebooks at prices higher than Amazon had been, and intended to continue doing.


Amazon has not merely offered "a few short term sales."  Amazon has consistently acted to drive consumer costs down.  At the end of the day, their interests are well-aligned with consumers.  And what's more, though Amazon does have a very powerful market position, it does have significant ebook competition, and so ultimately cannot simply pocket the entire savings, itself.  i.e., this is not merely two large companies fighting over how to divide profits between them.  It is two large companies fighting over how to divide the savings of ebooks between themselves, <i>and consumers, as well</i>

Amazon certainly wields sufficient market power to be cause for watching what they do carefully.  But what we've seen to this point, and what we are seeing in this case, is Amazon wielding its power to the benefit of consumers.  And there's nothing wrong with that.