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James Patterson blasts Amazon at BEA; Slate blames publishers for Amazon’s practices

People who have been suspicious of Amazon’s quote-unquote predatory practices with regard to dealings with publishers have had quite a bit of evidence to back up their claims in the last week or so. On May 23, news broke that a pricing dispute between the digital bookselling behemoth and Hachette Book Group, one of the so-called “big five” U.S. publishers and distributors, had resulted in Amazon removing pre-order buttons on Hachette’s titles (including the upcoming pseudonymous J.K. Rowling novel). This came just over a week after rumours started circulating that Amazon was intentionally delaying shipments of Hachette’s titles.

The putative reason for all this is a contract dispute between Amazon and Hachette, but Jeremy Greenfield, editorial director of Digital Book World, told The New York Times, “This is about controlling the future of book publishing.”

Whatever the result of this conflict, the real losers are authors whose books won’t easily find their way into readers’ hands. Best-selling author Malcolm Gladwell, whose publisher, Little, Brown and Company, is distributed by Hachette, is quoted in Business Insider as saying, “Over the past 15 years, I have sold millions of dollars’ worth of books on Amazon, which means I have made millions of dollars for Amazon…. I would have thought I was one of their best assets. I thought we were partners in a business that has done well. This seems an odd way to treat someone who has made you millions of dollars.”

At BookExpo America last week, those critical of Amazon found another powerful supporter in James Patterson, mega-selling author and another person affected by the current dispute. At a luncheon last Thursday to honour the writer, Patterson, who earlier in the year pledged to donate $1 million to support independent bookstores, had some choice words about Amazon:

Amazon seems to be out to control shopping in this country. This will ultimately have an effect on every grocery- and department-store chain, on every big-box store, and ultimately it will put thousands of Mom-and-Pop stores out of business. It just will, and I don’t see anybody writing about it, but that certainly sounds like the beginning of a monopoly to me. Amazon also, as you know, wants to control book selling, book buying, and even book publishing, and that is a national tragedy. If this is to be the new American way, then maybe it has to be changed, by law if necessary, immediately, if not sooner.

While it is easy to sympathize with authors caught in the middle of such an acrimonious battle, there are those who think that the ire directed toward Amazon is, at the least, overstated. Writing on Slate.com, industry analyst Evan Hughes suggests that the current stalemate could have been avoided if Hachette had cut its own profit margins on ebooks and diverted that money into the hands of its authors:

A prominent industry analyst, Mike Shatzkin, has been arguing for some time that publishers ought to raise ebook royalty rates. For him, the point is not that this would be the fair thing to do; he just thinks it would be the best move strategically. By leaving royalty rates where they are, publishers have left their nice digital margins hanging out there for everyone to see. And when Amazon sees someone else’s healthy profits, it’s like a dog smelling a steak. As Jeff Bezos has said, “Your margin is my opportunity.”

What I suspect is happening right now is that Amazon is telling Hachette that they want some of that margin. If Hachette had spread some of those digital profits to authors in the first place, it would not be vulnerable to this tactic.

There are some industry watchers who think this reallocation of profits is inevitable in any case. Earlier in May, Digital Book World’s Greenfield wrote in an editorial for Forbes:

Really, though, it’s about profit margin. Amazon wants a bigger piece of its suppliers’ profit margins to purportedly pass on to its customers in the form of lower prices. This is the company line and by all accounts Amazon makes good on this promise whenever it can. (I’ve heard rumblings from publishers that as a way to combat this they are considering upping the royalties they pay authors for ebooks. The typical accepted royalty at a big publisher is 25% for ebooks. I’ve heard talk of 50% becoming the new norm.)

Regardless of whether this renegotiation of publishers’ contracts eventually occurs, what does seem clear is that both sides in the current farrago are digging in their heels for a long, and likely ugly, battle.