May 20, 2014

Amazon is also bullying European publisher Bonnier


bonnierJust over a week after David Streitfeld revealed that Amazon was bullying Hachette in an effort to secure a better contract, the German newspaper Frankfurter Allgemeine Zeitung has reported that the retailer is using similar tactics against the Swedish publishing conglomerate Bonnier, which operates in 20 countries, including Germany.Amazon is also renegotiating its contract with Bonnier.

According to The Digital Reader‘s Nate Hoffelder, “Amazon is reducing the number of copies of Bonnier titles they carry in their warehouses, adding long shipping delays to newly ordered books.” Say what you will about Amazon, but this is a company that was almost named Relentless—in fact, they still the domain name redirects to Amazon’s website. They negotiate relentlessly—and ruthlessly.

According to Hoffelder, Amazon isn’t just playing hardball with physical books, but is also looking to secure more advantageous terms on ebooks:

Sources say that Amazon is seeking not just new terms for their book contract with Bonnier but also new terms for their ebook contract. The retailer is reportedly pressuring Bonnier into offering a steeper discount on ebooks. Rather than pay Bonnier the accepted industry standard 70%, Amazon wants to reduce that to only 50% to 60%.

As Hoffelder notes in his piece, there is one key difference between the Amazon/Hachette dispute and the Amazon/Bonnier dispute:

In the US, Amazon’s fight is against a publisher which had previously conspired to raise ebook prices and restrict competition. If Amazon wins it means means lower book prices in the long run, but that probably will not happen in Germany.

Germany has fixed price book laws; publishers set the retail price and retailers are not allowed to discount their books more than (I think) 10%. As a result, any money that Amazon squeezes out of a publisher ends up in Amazon’s pocket, and not in the pocket of consumers.

The second paragraph is spot on: should Amazon win—and they almost always do—it’s impossible to make a populist case on Amazon’s behalf. Amazon’s revenues will increase—and remember, this is a company that barely pays taxes in Germany, or anywhere else—but book prices won’t budge. That said, I’m not necessarily sure that an Amazon victory in its dispute with Hachette will mean “lower book prices in the long run.” In Streitfeld’s initial report, he—albeit subtly—raised the possibility that the tough negotiations with Hachette were related to investors growing frustrated with the notoriously unprofitable company: “Publishers say the bookseller, whose shares have tumbled 25 percent this year as investors itch for profits, is determined to squeeze as much margin out of its suppliers as possible.” Of course, Amazon’s entire reputation is built on giving consumers the best possible deal—loss-leader pricing will do that, after all. But when you consider the company’s standing with investors at the moment, lower prices aren’t necessarily a given.

The report from Frankfurter Allgemeine Zeitung does not indicate if the paper requested a comment from Amazon. The retailer did, however, give one to Bonnier: “Amazon confirmed a Bonnier inquiry about the hold-up being related to the ongoing negotiations, Ullstein [a German subsidiary of Bonnier] publisher Siv Bublitz told the FAZ.”

Alex Shephard is the director of digital media for Melville House, and a former bookseller.