Amazon throws its weight around in the e-books market – how should publishers respond?
It’s hard to believe that Amazon was founded twenty-one years ago. Since their establishment in 1994, they have diversified into innumerable categories; but it is their impact on book publishing that is interesting to us. Amazon has disrupted the landscape that held solid for many years, and they haven’t done it gently.
Last year, Keith Gessan wrote in Vanity Fair that “all the publishers feel bullied by Amazon, and Amazon, in turn, feels misunderstood.” The implication that Amazon is the unwitting playground bully doesn’t, unfortunately, distract from the fact that they used their size and their far reaching power to the detriment of others by undercutting prices.
This strategy of Amazon’s, which basically cuts out the ‘middle man’ that is the traditional retailer, is having a hugely negative impact on the industry. Last year, while Amazon was busy falling out with Hachette, Steve Dent of Engadget UK wrote that “Amazon grinds suppliers to keep its competitive edge and publishers are no exception.” Amazon argues that it is looking out for the ‘little guy’ by saying that “we will never give up our fight for reasonable e-book prices”, but these protests seem hollow.
Negotiations on prices for e-books have largely failed, and have led to accusations that the company is using that figleaf to cover up its continuing efforts to under-price print books. Alexander Alter of the New York Times reported recently that the “paperback editions of some popular titles, like “The Goldfinch” by Donna Tartt, [were] several dollars cheaper than their digital counterparts.”
Of course, some of the responsibility for this has to be shared with the publishers themselves. Their collective unhappiness about online pricing is reminiscent of the Net Book Agreement dispute from the 1990’s, just as Amazon drew its first breath. And it is arguable that Amazon deserves a larger share of the e-book market because it is chiefly responsible for creating it in the first place with the invention of the Kindle.
As Amazon does not report their sales figures, it is difficult to gather a consensus on just how much e-books are thriving in monetary terms. We do know though, that the e-book market is prosperous and the traditional publisher only has around a third of the market share.
More worrying for publishers – and retailers – is Amazon’s share of the print market, and its pricing policy in that area. Amazon’s second-hand market, in particular, is troublesome; advertised on the same page as new editions, publishers do not get a penny from the sale of used books. One third of a monetisable e-book market is much better than three-quarters of a non-paying second-hand print market.
So perhaps patience with the playground bully is – after all – the best strategy. Despite difficulties arising from the Apple price-fixing case, publishers should focus on getting a better deal from Amazon on the electronic market, and seek to curb their prominence as a print reseller.