News

Amazon pressing for new terms in UK

UK publishers have raised concerns about Amazon’s new contractual arrangements, with the giant retailer pressing for improved terms from a number of publishers, even as its stand-off with Hachette Book Group continues in the US.

Along with improved discounts on wholesale contracts, Amazon has introduced a number of new clauses in publisher contracts. One causing particular worry is a 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.

Meanwhile in a separate development, the European Union's Directorate General for Competition is understood to have approached major UK publishers over an investigation into Most Favoured Nation (MFN) clauses—the terms came under the spotlight during the inquiry into the shift to the agency model ins 2010, but the EU is looking at a new review focused specifically on MFN.

The EU move comes as Amazon and Hachette USA continue to tussle over terms. At an investor presentation at the end of May, Hachette Livre chief executive Arnaud Nourry said Amazon was seeking to “dramatically change terms”. It is understood that there are some parallels between the terms on offer to Hachette USA and publishers in the UK. The New York Times reported that Amazon is asking for payment for a range of services, in what the paper called “similar to so-called co-op arrangements with traditional readers, like paying Barnes & Noble for placing a book in the front of the store”.

In the UK a number of publishers spoken to as part of The Bookseller's investigations into the Hachette dispute said Amazon was also now putting them under "heavy pressure". According to the sources, new demands include adjusting terms so that e-books and physical book terms have parity; the adjustment is said to be in the direction of "p", which traditionally attracts a higher percentage for the retailer compared with "e". Amazon is also understood to be targeting academic terms, which have historically been more favourable to the publisher. The retailer also wants to impose a ceiling on the digital list price of e-books in preparation for 2015 when the retailer will have to begin imposing the standard 20% rate of VAT on digital titles.

New contracts are also said to include MFN clauses, whereby effectively books cannot be sold for a lower price than Amazon's anywhere, including on a publisher's own website. Amazon is also understood to want matching terms where a publisher enters into a new business arrangement, for example with a subscription service. Publishers told The Bookseller that MFN clauses had disappeared from contracts, but were now making a reappearance.

Another clause of particular note requires publishers to guarantee they have books in stock, allowing Amazon to do print-on-demand editions to customers – with extra terms benefits – should books be out of supply. The clause has echoes of a demand made in 2008 that small publishers use its POD service, with Amazon arguing at that time that it could “provide a better, more timely customer experience if the p.o.d. titles are printed inside our own fulfilment centres”. Publishers are worried that the clause would allow Amazon to effectively take over their stock-control.

Meanwhile, the use of MFN clauses is thought to have come under the Brussels spotlight, with the same EC competition authorities which earlier investigated publishers over agency pricing. Within the last few weeks, it is understood that some publishers' sales personnel have been summoned to meetings in Brussels, said to be "much more friendly" than the meetings held while agency pricing was being investigated.

The EU has investigated MFN clauses in the past, but has never ruled them illegal. However, under the terms of price-fixing settlements entered into by the five settling publishers in 2012, those publishers are forbidden until 2017 from entering into any agreement for e-books which contains a retail price MFN clause.

A spokesperson for the European Union's Directorate General for Competition refused to confirm or deny that it launched a new preliminary investigation into the matter. It said it was continuing to monitor the e-book market, but declined to give specifics.

Despite being contacted several times today (23rd June) Amazon's UK press office has not responded to a request for comment.

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One causing particular worry is a 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.

Whaaaaaat?!!

Yes this is wrong in so many ways - not least the fact that Amazon's POD just isn't good enough quality. We tried it last year and it was pretty poor. If they end up printing books the customers will no doubt blame the publisher for the poor quality and not Amazon.

"New contracts are also said to include MFN clauses, whereby books cannot be sold for a lower price than Amazon's anywhere, including on a publisher's own website." This sounds like the sort of price fixing arrangement that got publishers into trouble with Apple. I can't believe they think they'll get away with this.

This seems to be strange timing by Amazon. Just when fears are being raised in the US that one day Amazon will assert the strength of its dominance Amazon provides evidence, in the UK, that this is their ultimate strategy.

It really is time that Amazon was looked into closely by the competition authorities (and the tax authorities). Their ownership of the Book Depository and Abe Books - not to mention their Marketplace - must be close to a true monopoly of the physical (and ebook) trade in the UK. Certainly they must have a near complete dominance of online sales of books and ebooks.

Is it time for the wider group of Amazon companies to be broken up to inject some real competition back into the marketplace?

Maybe some brave soul can blow the whistle on the contract terms like this from YouTube/Google and Indie Music labels: http://www.theguardian.com/technology/2014/jun/24/youtube-music-contract...

If publishers were able to supply physical bookshops with titles as quickly and efficiently as Amazon can supply them to customers, then they would better be able to compete with Amazon. Few companies have the capital and infrastructure to compete with the range and quantity of unique titles that Amazon keeps in their warehouses. But it is up to publishers to improve this situation, and until then, Amazon will remain the industry leader.

Proposing POD facilities where publishers are slow to supply is only a logical solution to the failure of publishers to meet customer needs.

It also highlights where publishers are failing physical bookshops and have placed themselves in this position. Unless publishers improve their own supply systems so that physical bookshops can compete with Amazon, then Amazon will remain dominant.

Why will anyone order a title from a physical bookshop that might be "reprint under consideration", "temporarily out of stock" (with no due date) or even in stock, but it takes more than a couple of days to be received - if they can order it from Amazon's stockholding and have it delivered as soon as the next day? Perhaps publishers should consider how they have contributed to the decline of bookshops on our high streets.

Only then will I consider their complaints about Amazon's tactics valid. Because, for now, they still offer some of the best access, prices and service to people buying books. If publishers don't like how they use this power, they need to look at improving relationships with independent bookshops, Amazon's competitors and suppliers/distributors. In turn, this would give consumers other avenues and potentially reduce Amazon's dominance.

While I agree publishers might improve their distribution, you are assuming that Amazon PODs are the same quality as books publishers secure from their book manufacturing partners. You are for the most part incorrect.

If I order a hardcover whop manufacture included a dust jacket and a cloth binding, and I get instead a smudgily printed hardcover with an image pasted on the cardboard cover, that is not the same product. So, if I was not assured I would get the SAME product from Amazon as the publisher, I would never buy new books from Amazon. Amazon has given no one such an assurance.

Also, you do not address at all the issue of the MFN. For another company to demand a) to manufacture my product and b) dictate at what price I sell means that I just put them in substantial control of my company. I think it is absurd to deny a company to price its own product at its own venues however it wishes.

I am amazed no one has uttered the words 'breach of copyright'.
If we could all just print books as and when we want of any publishers books, I am certain there would be a 'federal' case.
What next? Amazon telling the Bank of England, that if they run at a loss they will threaten to print £££ notes to make up the deficit??

One causing particular worry is a 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.

Whaaaaaat?!!

Yes this is wrong in so many ways - not least the fact that Amazon's POD just isn't good enough quality. We tried it last year and it was pretty poor. If they end up printing books the customers will no doubt blame the publisher for the poor quality and not Amazon.

"New contracts are also said to include MFN clauses, whereby books cannot be sold for a lower price than Amazon's anywhere, including on a publisher's own website." This sounds like the sort of price fixing arrangement that got publishers into trouble with Apple. I can't believe they think they'll get away with this.

This seems to be strange timing by Amazon. Just when fears are being raised in the US that one day Amazon will assert the strength of its dominance Amazon provides evidence, in the UK, that this is their ultimate strategy.

It really is time that Amazon was looked into closely by the competition authorities (and the tax authorities). Their ownership of the Book Depository and Abe Books - not to mention their Marketplace - must be close to a true monopoly of the physical (and ebook) trade in the UK. Certainly they must have a near complete dominance of online sales of books and ebooks.

Is it time for the wider group of Amazon companies to be broken up to inject some real competition back into the marketplace?

Maybe some brave soul can blow the whistle on the contract terms like this from YouTube/Google and Indie Music labels: http://www.theguardian.com/technology/2014/jun/24/youtube-music-contract...

If publishers were able to supply physical bookshops with titles as quickly and efficiently as Amazon can supply them to customers, then they would better be able to compete with Amazon. Few companies have the capital and infrastructure to compete with the range and quantity of unique titles that Amazon keeps in their warehouses. But it is up to publishers to improve this situation, and until then, Amazon will remain the industry leader.

Proposing POD facilities where publishers are slow to supply is only a logical solution to the failure of publishers to meet customer needs.

It also highlights where publishers are failing physical bookshops and have placed themselves in this position. Unless publishers improve their own supply systems so that physical bookshops can compete with Amazon, then Amazon will remain dominant.

Why will anyone order a title from a physical bookshop that might be "reprint under consideration", "temporarily out of stock" (with no due date) or even in stock, but it takes more than a couple of days to be received - if they can order it from Amazon's stockholding and have it delivered as soon as the next day? Perhaps publishers should consider how they have contributed to the decline of bookshops on our high streets.

Only then will I consider their complaints about Amazon's tactics valid. Because, for now, they still offer some of the best access, prices and service to people buying books. If publishers don't like how they use this power, they need to look at improving relationships with independent bookshops, Amazon's competitors and suppliers/distributors. In turn, this would give consumers other avenues and potentially reduce Amazon's dominance.

While I agree publishers might improve their distribution, you are assuming that Amazon PODs are the same quality as books publishers secure from their book manufacturing partners. You are for the most part incorrect.

If I order a hardcover whop manufacture included a dust jacket and a cloth binding, and I get instead a smudgily printed hardcover with an image pasted on the cardboard cover, that is not the same product. So, if I was not assured I would get the SAME product from Amazon as the publisher, I would never buy new books from Amazon. Amazon has given no one such an assurance.

Also, you do not address at all the issue of the MFN. For another company to demand a) to manufacture my product and b) dictate at what price I sell means that I just put them in substantial control of my company. I think it is absurd to deny a company to price its own product at its own venues however it wishes.

I am amazed no one has uttered the words 'breach of copyright'.
If we could all just print books as and when we want of any publishers books, I am certain there would be a 'federal' case.
What next? Amazon telling the Bank of England, that if they run at a loss they will threaten to print £££ notes to make up the deficit??