Amazon’s growing power over the publishing industry

Amazon.com started in 1995. At the time, it was a tiny startup. But it now has the power to destroy hundreds of companies that have existed since the 1800s. How is that those venerable firms, with their wealth and connections and political power and their capital, have not been able to build something to compete with Amazon? They have now had 19 years to respond to Amazon, and they have failed to respond for 19 years. Why?

According to book industry bible the Bookseller, to whom UK publishers spoke on condition of anonymity, Amazon is putting publishers under “heavy pressure” to introduce new terms. The Bookseller reports that these include the proviso that “should a book be out of stock from the publisher, Amazon would be entitled to supply its own copies to customers via its print-on-demand facilities”, and that “books cannot be sold for a lower price than Amazon’s anywhere, including on a publisher’s own website”.

The Bookseller’s editor Philip Jones said the ongoing negotiations “indicate a direction of travel that would see [Amazon] take a sizeable control over both a publisher’s inventory and its marketing”, and that “publishers spoken to – and obviously they will only speak on condition of complete anonymity – have every right to be concerned. This is a form of assisted suicide for the book business, driven by the idea that publishers are a sickly lot unable to run even the most basic operations efficiently.”

The Society of Authors chief executive Nicola Solomon called the print-on-demand clause “deeply worrying”, and said that Amazon was “already far too dominant in dictating ebook prices”. “No one company should have such dominance or be the principal commercial driver of an entire industry,” she said.

Although it is publishers who are currently feeling squeezed by Amazon, Solomon said the negotiations also “threaten” published authors. “Despite increasing profits, publishers are increasingly under pressure: they say, rightly, that even bestsellers tend to sell fewer copies than in the past (now readers have such a wide range of choice); their budgets will be under further pressure if they have to concede larger discounts to Amazon and pay for ‘services’. Authors will suffer as publishers claim that paying large advances is increasingly risky and, of course, authors are traditionally paid less on print books if publishers concede high discounts. On ebooks they are paid a proportion of net receipts so higher terms for Amazon will result in less money going to authors,” said Solomon.