Last week in a Seattle Times article entitled, “An Amazon.com Powergrab,” Amy Martinez reported on Amazon’s questionable treatment of McFarland & Co, a small press. Apparently the mega-company, via email, demanded from the small publisher nearly twice their usual discount. Adding insult to injury, they gave the press only nineteen days’ warning of this change. Since Amazon accounts for a sizable portion of McFarland’s sales, and since the small press offers all their retail partners the same discount, it was, in the words of Karl-Heinz Roseman, director of sales and marketing at McFarland, “the apocalypse. We couldn’t exist like that.”
According to Martinez, many in the book world are concerned that “Amazon will use its pricing pressure to crush publishers. They say Amazon’s demands for deeper discounts threaten already-thin profit margins, and some warn of a coming Amazon monopoly.”
When a company corners more than 70% of the market, and engages in predatory activity, it is considered a monopoly; currently, Amazon controls between 55 and 60% of the ebook market, and the figure is climbing. Mike Shatzkin, founder and CEO of The Idea Logical, a New York publishing consultancy warns, “There’s never been anything like the potential for domination by a single company in the U.S. book business like what we see now with Amazon.”
The issues get even more complicated. Readers may recall that two years ago, Amazon attempted to price ebooks significantly below what major publishers wanted to charge. Macmillan Publishing tried to gain control over the pricing of their ebooks, which
prompted Amazon to remove the “buy” button from Macmillan titles. The U.S. Justice Department is now investigating Macmillan and five other companies for possible violation of anti-trust laws via price-fixing, but this doesn’t erase the fact that Amazon appeared to be attempting to control the market by undercutting its competitors. “When you sell books at a loss, by the millions, to corner the market, you’re not interested in competing,” said Pulitzer Prize-winning novelist Richard Russo, about Amazon business practices. “You’re interested in burying your competitors and then burying the shovel.”
Macmillan had the clout to retaliate against Amazon. But inasmuch as Amazon’s current (mis)treatment of McFarland reflects their habit with small presses, we have to wonder—has the behemoth simply chosen smaller presses to pick on, those that don’t have the economic power to fight back?
Tune in next week for more on the Amazon powergrab, and Fuze’s subjective experience.