February 1, 2010

Amazon capitulates, reveals why they act that way: They don’t know what “monopoly” means

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First, in a move that was obviously well-and-long-planned and executed in the dead of a Friday night but that nonetheless stunned the book industry, its own customers and — one has to think — the Justice Department and the Fair Trade Commission, the protection racket known as Amazon.com pulled the buy buttons off all books published by Macmillan (including those of its imprints such as Henry Holt, Tor, Farrar, Straus and Giroux, Picador, and St. Martin’s). In a further move reminiscent — as per this earlier MobyLives report — of the company’s removal of bought-and-paid-for books by George Orwell from the Kindles of unsuspecting customers, Amazon went into customer accounts and removed all Macmillan books from customer wishlists.

Then, all hell broke out, with agents crying censorship, other publishers crying blackmail, and just about everyone expressing outrage at seeing a large corporation behave like an thuggish monopoly, as this MobyLives report detailed.

It all culminated in Macmillan head John Sargent calmly explaining his side of the story in a public letter that was the model of restraint.

Now, Amazon has responded with a letter of its own that capitulates, no doubt due to pressure from its own legal team … but not without some nasty and dishonest rhetoric, such as the stupefying claim that Macmillan, not Amazon — a company that essentially controls online booksales and whose most recent quarterly statement indicates, as per this MobyLives report, that it made more money in one quarter than Macmillan has made in the last several years — constitutes a “monopoly.”

The letter was not made public in ads as was the letter from Sargent, but rather it was simply posted as a note on Amazon’s Kindle Forum late Sunday. It was also unlike the Macmillan letter in that the head of the company, Jeff Bezos, did not take responsibility and sign the statement. In fact Bezos has not been heard from throughout the brouhaha.

Here is the letter in its entirety:

Dear Customers:

Macmillan, one of the “big six” publishers, has clearly communicated to us that, regardless of our viewpoint, they are committed to switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers and most hardcover releases.

We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles. We want you to know that ultimately, however, we will have to capitulate and accept Macmillan’s terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books. Amazon customers will at that point decide for themselves whether they believe it’s reasonable to pay $14.99 for a bestselling e-book. We don’t believe that all of the major publishers will take the same route as Macmillan. And we know for sure that many independent presses and self-published authors will see this as an opportunity to provide attractively priced e-books as an alternative.

Kindle is a business for Amazon, and it is also a mission. We never expected it to be easy!

Thank you for being a customer.

With other companies about to issue statements of solidarity with Macmillan and follow suit in its implementation of the agency model for pricing — whereby the publisher helps set pricing and works within an agreed-upon range — Amazon may have simply read the writing upon the wall, although the rashness of the act does seem to have overlooked any fear of penalty for violation of anti-trust laws and other laws governing monopolistic behavior. To be sure, those other companies are going to act now, and one would think the government has been put in a position of having to react. It could just be that Amazon’s nasty reaction is an instance of a hit dog, howling.

It ain’t over yet.

Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House. Follow him on Twitter at @mobylives

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