January 30, 2010

Breaking news: Amazon pulls all books from Macmillan over pricing dispute and Apple alignment; other booksellers rally in support; will government respond?

by

MobyLives has filed numerous reports on how the word “negotiation” is not in the lexicon of the folks at Amazon, and how disagreeing with the behemoth from Seattle often leads to a thuggish response — and how that response is a dangerous kind of censorship. The most recent case in point just shows the company knows no bounds: All books published by Macmillan, one of the five Big Six houses to contest Amazon’s cut-rate pricing of its books, have been pulled from the website. That’s right: the most diligent search will not find any books from Macmillan or its imprints, such as Henry Holt, Tor, Farrar, Straus and Giroux, and St. Martin’s, on Amazon, save for offerings from third party vendors.

A New York Times report by Brad Stone cites an inside source saying

the disappearance is the result of a disagreement between Amazon.com and book publishers that has been brewing for the last year. Macmillan, like other publishers, has asked Amazon to raise the price of electronic books from $9.99 to around $15. Amazon is expressing its strong disagreement by temporarily removing Macmillan books, said this person, who did not want to be quoted by name because of the sensitivity of the matter.Amazon is expressing its strong disagreement by temporarily removing Macmillan books….

In other words, the company that used to brag it had every book in the world available for sale now seems to be trading in some of its stock for cement overshoes. Macmillan head John Sargent has responded in a public letter explaining the course of events, saying,

Our disagreement is not about short-term profitability but rather about the long-term viability and stability of the digital book market … the action they chose to take last night clearly defines the importance they attribute to their view. We hold our view equally strongly. I hope you agree with us.

It’s notable that the group of five Big Sixers trying to negotiate with Amazon to stop its drastic price reductions (the other publishers in the group are HarperCollins, Hatchette, Simon & Schuster, and Pearson/Penguin — but notably not Random House) were each also announced this week as being in partnership with Apple over ebook pricing for the new iPad; this move thus seems clearly to be retribution over that partnership.

It’s also notable that out of that group of publishers, Amazon decided to pick on the smallest.

It’s also notable that Amazon made the move over a weekend, typically a time news stories get less notice, particularly with all the buzz over this week’s announcement of the iPad still resonating (although it’s more notable that Amazon must have known the story would get considerable notice nonetheless, and went ahead anyway). Nonetheless the move was so drastic it has led, in just a few short hours as we report this, to an avalanche of reporting.

A smart report from Carolyn Kellogg at the Los Angeles Times’ Jacket Copy blog asks,

Who loses? Will people seeking Macmillan hardcovers and paperbacks on Amazon buy from the secondary retailers? Will rival online retailers Barnes & Noble and the independent Powells’s see a sudden bonanza? Will people leave their screens and walk into their local bookstores to get “Wolf Hall”? Or will they simply get “The Help” instead?

A report from TechFlash asks, “Is Amazon making an example of Macmillan, to send a signal to other publishers?” And is the message: Don’t work with Apple? After all, “Apple is also working with HarperCollins, Hatchette, Simon & Schuster, and Pearson. Many of those publishers have made a policy of holding back e-book titles from Amazon for months after hardcover release.”

Meanwhile, a report on Publishers Marketplace by Michael Cader notes extremely strong support for Macmillan from authors and agents of books thusly blacklisted by Amazon, with agent Tina Bennett at Janklow & Nesbit, the agent for Atul Gawande‘s new and now blacklisted bestseller The Checklist Manifesto, accusing Amazon of censorship, and super-agent Robert Gottlieb of the Trident Media Group saying, “The agents I know feel the $9.99 price for new releases is not good for the business.”

A “senior publishing executive” at another house, meanwhile, tells Cader that

“Amazon may ‘spin’ that the consumer is at the heart of the decision, but really their goal is a monopoly position in books. Publishers don’t want a monopoly – they want consumers to have choice through a number of partners and channels. They want digital pricing which allows bricks and mortar retailers to survive and thrive alongside a growing digital market.” That person added, “This reaction proves what Amazon’s true motives are. It is a signal to any other publishers not to change the model and weaken Amazon’s pathway to a monopoly. I hope authors, agents and publishers see what these motives are and stand by Macmillan.”

And a customer on an Amazon forum writes in to Amazon head Jeff Bezos,

Here’s a thought Jeff: You list them and I will decide if I want to buy them or not. How’s that sound? I agree with you they should not cost more than $10, but I can enforce that with my pocketbook. I don’t need you to make a big hairy freakin deal out of it on my behalf and I certainly don’t need you to limit my choices based on this principle.

Finally, coinciding with incipient consumer rage, a Publishers Weekly story reports an immediate backlash supported by indie booksellers:

With word circulating about Amazon’s action to drop the buy button from Macmillan titles, one independent bookseller is trying to rally support for the publisher. Matt Norcross of McLean and Eakin Booksellers sent an e-mail to the ABA Saturday morning urging the association to contact members to have them create a page on their Web sites that features Macmillan titles and to promote the offerings on their home page. Norcross also sent the e-mail to Great Lakes Independent Booksellers Association board members to get them to back the proposal.

In Norcross’s view, Amazon’s action gives independent booksellers the opportunity to show support for publishers “that are willing to stand up to Amazon’s pricing.”

As the story continues to unfold, the most pressing questions are yet to be stated but are of course obvious: Is this an example of unfair business practices? Monopolistic behavior? Censorship? Of course it is. Leading to the most obvious question of them all: Will the Justice Department finally address any of the many ways that Amazon flouts American law?

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

MobyLives