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Amazon, again

26 July 2010

A recent article by British publisher Colin Robinson in The Nation has raised many issues about Amazon. Almost always in the news, the company has also just made an announcement about its e-book sales outpacing hardback sales.

Even though books now represent only 25% of Amazon's revenue, they were its starting-point and are still its bedrock. Amazon has however shown how domination in one area of internet retailing can lead seamlessly to another by adding new categories, the latest being groceries. It's all based on making things extremely easy and good-value for the customer and, when we're all so busy, it works.

Amazon has grown fifteenfold in the last decade, keeping pace with growth in internet use. It grew its revenues by a colossal 28% last year alone and in 2009 its sales were $24.5bn (£16.07bn). To get some measure of what this means, in 2008 total sales by all US bookstores were less than $17bn (£11.15bn), making Amazon by some margin the largest bookseller in the world.

But does Amazon use its huge power wisely? Unfortunately there are plenty of signs that it is single-minded in pursuit of its own interests. Very little of this is in the public domain because publishers are frightened of going up against Amazon publicly, the cost is too great. Over the years there has been relentless pressure over discounts and publishers are bullied into giving way. If they do not, either their books will not be sold on the site or the buy buttons will be removed.

The only single instance there seems to be of a publisher standing up to Amazon and getting away with it was quite recently, in connection with e-books. John Sargent, head of Macmillan US, confronted Amazon on the price of e-books, which they wanted to price under $10, threatening simultaneous hardback editions by undercutting them. Sargent stood firm, at a time when five US publishers had just concluded an agency agreement with Apple, and Amazon thought better of it and restored the buy buttons.

Amazon said at the time: 'We will have to capitulate because Macmillan has a monopoly over their own titles' - an odd way of putting it as authors' contracts with publishers do of course confer a 'monopoly', ie a license to publish them exclusively.

It looks as if Apple entering the ring with the iPad may have changed the situation and Google are also said to be planning to get into internet bookselling. Apple is also doing well at the moment, having just posted gains, with revenue jumping 61% to $15.7 billion in the third quarter. Competition is a good thing, so let's hope that their new ventures do well.


Agent Andrew Wylie's setting-up of Odyssey Books, the agency's own e-book publisher, delivering exclusively through Amazon's Kindle, has shocked the publishing world. International publisher Random House has said that it: 'undermines [Random House's] longstanding commitments to and investments in our authors, and it establishes this Agency as our direct competitor... Random House on a worldwide basis will not be entering into any new English-language business agreements with the Wylie Agency until this situation is resolved.'

Colin Robinson's article in The Nation