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Originally published May 23, 2014 at 11:32 AM | Page modified May 24, 2014 at 8:10 AM

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Amazon escalates its battle against publishers

Seeking ever-higher payments from publishers to bolster its anemic bottom line, Amazon is holding books and authors hostage on two continents by delaying shipments and raising prices. The literary community is fearful and outraged — and practically begging for government intervention.


The New York Times

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Amazon’s power over the publishing and book-selling industries is unrivaled in the modern era. Now it has started wielding that might in a more brazen way than ever before.

Seeking ever-higher payments from publishers to bolster its anemic bottom line, Amazon is holding books and authors hostage on two continents by delaying shipments and raising prices. The literary community is fearful and outraged — and practically begging for government intervention.

“How is this not extortion? You know, the thing that is illegal when the Mafia does it,” said Dennis Loy Johnson, of Melville House, echoing remarks being made across social media.

The battle is being waged largely over physical books. In the United States, Amazon has been discouraging customers from purchasing titles from Hachette, the fourth-largest publisher by market share.

Late Thursday, it escalated the dispute by making it impossible to order Hachette’s forthcoming books. It is using some of the same tactics against the Bonnier Publishing Group in Germany.

But the real prize is not the physical books. It is control of e-books, the future of publishing. Amazon is by far the dominant e-book company, and feels it deserves more of the digital proceeds than it is getting. The publishers, contemplating a slide into irrelevance if not nonexistence, are trying to hold the line.

Late Friday afternoon, Hachette made by far its strongest comment on the conflict.

“We are determined to protect the value of our authors’ books and our own work in editing, distributing and marketing them,” said Sophie Cottrell, a Hachette senior vice president. “We hope this difficult situation will not last a long time, but we are sparing no effort and exploring all options.”

James Patterson, one of the country’s best-selling writers, described the confrontation between Amazon and the publishers as “a war” in a Facebook post titled, “Four of the most important paragraphs I’ll ever write.”

“Bookstores, libraries, authors, and books themselves are caught in the crossfire of an economic war,” he wrote. “If this is the new American way, then maybe it has to be changed — by law, if necessary — immediately, if not sooner.”

Patterson is published by Hachette. His forthcoming novels are now impossible to buy from Amazon in either print or digital form.

The Authors Guild accused the retailer of acting illegally.

“Amazon clearly has substantial market power and is abusing that market power to maintain and increase its dominance, which likely violates Section 2 of the Sherman Antitrust Act,” said Jan Constantine, the Guild’s general counsel.

Independent booksellers, meanwhile, announced that they could supply Hachette books immediately. The second-largest physical chain, Books-a-Million, advertised 30 percent discounts on select forthcoming Hachette titles. Among the publisher’s imprints are Grand Central Publishing, Orbit and Little, Brown.

Amazon is also flexing its muscles in Germany, delaying deliveries of books from the Bonnier Media Group, a major publisher. “It appears that Amazon is doing exactly that on the German market which it has been doing on the U.S. market: using its dominant position in the market to blackmail the publishers,” said Alexander Skipis, president of the German Publishers and Booksellers Association.

The association said its antitrust experts were examining whether Amazon’s tactics violated the law.

“Of course it is very comfortable for customers to be able to order over the Internet, 24 hours a day, seven days a week,” Skipis said. “But with such an online structure as pursued by Amazon, a book market is being destroyed that has been nurtured over decades and centuries.”

Christian Schumacher-Gebler, chief executive for Bonnier in Germany, said the group’s leading publishing houses had noticed delays in deliveries of some of its books several weeks ago and confronted the company about it.

“Amazon confirmed to us that these delays are directly related to the ongoing negotiations over conditions in the electronic book market,” Schumacher-Gebler said.

Amazon is, as usual, staying mum. “We talk when we have something to say,” Jeff Bezos, the founder and chief executive, said at the company’s annual meeting this week.

The retailer began refusing orders late Thursday for coming Hachette books, including J.K. Rowling’s new novel, published under the pseudonym Robert Galbraith.

In some cases, even the pages promoting the books have disappeared. Anne Rivers Siddons’ new novel, “The Girls of August,” coming in July, no longer has a page for the physical book or even the Kindle edition. Only the audio player edition is still being sold. Otherwise it is as if it did not exist.

“Like all repressive regimes, Amazon wants to completely control your access to books,” fellow Hachette author Sherman Alexie, who is based in Seattle, said in a Twitter post.

The confrontations with the publishers are the biggest display of Amazon’s dominance since it briefly stripped another publisher, Macmillan, of “buy” buttons in 2010. It seems likely to encourage debate about the concentration of power by the retailer. No firm in U.S. history has exerted the control over the U.S. book market — physical, digital and secondhand — that Amazon does.

The retailer, whose Kindle device popularized electronic reading, has increased its control over the U.S. digital book market after the Justice Department’s successful pursuit of most of the major New York publishers on antitrust violations having to do with the pricing of e-books. Hachette was one of those publishers.

For several months, Amazon has been quietly discouraging the sales of Hachette’s physical books by several techniques: cutting the customer’s discount so the book approached list price, taking weeks to ship the book, suggesting that prospective customers buy other books instead, and increasing the discount for the Kindle version.

Amazon has millions of members in its Prime club, who get fast shipping. This, as Internet wits quickly called it, was the “UnPrime” approach.

One of the books made scarce by Amazon’s actions is an updated edition of Brad Stone’s “The Everything Store: Jeff Bezos and the Age of Amazon.”

The book revealed how Bezos said Amazon should approach vulnerable publishers for better terms “the way a cheetah would pursue a sickly gazelle.”

“What irony,” said Stone, a former New York Times reporter. “A book detailing Amazon’s heavy-handed tactics in business negotiations becomes, at least in a small way, a victim of those tactics.”



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