Amazon responded this week to its ongoing conflict with book publisher Hachette, saying it’s having trouble reaching an agreement to sell Hachette’s titles.
Over the last few weeks, Hachette has been sounding the alarm about Amazon’s pressuring tactics after the e-commerce site removed pre-order buttons on some Hachette books. Amazon also listed unusually long delivery times for other titles.
Amazon’s new statement says that it is buying less print inventory and no longer taking pre-orders for new Hachette books because it hasn’t been able to reach a “mutually-acceptable agreement on terms” with the supplier, “which is part of a $US10 billion media conglomerate.”
Amazon argues that negotiating for equitable terms is a critical job for any retailer and ultimately necessary for ensuring low prices for customers. Its decision to stock fewer Hachette books or not to feature them is akin to choices that brick-and-mortar bookstores make everyday. For example, a physical retailer may decide not to feature certain products on an endcap.
Amazon also addresses one of the biggest public backlashes about its decision: That hard-working authors are making less money because Amazon has a problem with their publisher. Amazon says that it will fund 50% of a pool of money to mitigate the impact on authors if Hachette funds the other half.
“We did this with the publisher Macmillan some years ago,” the company writes. “We hope Hachette takes us up on it.”
Amazon also bluntly states that despite “working hard to come to a resolution as soon as possible,” it is not optimistic that the disagreement will come to an end in the near future.
In the meantime, the company encourages customers who want titles right away to purchase Hachette books from either its third-party sellers or even one of its competitors.
Finally, Amazon links to an interesting blog post by a publisher at a small publishing house that it says offers a “wider perspective” than much of the mainstream media coverage, which has largely been very critical of Amazon’s tactics.
Martin Shepard, author of the post and publisher at The Permanent Press, writes that Hachette essentially just wants more money and that, despite how the mainstream press might skew it, Amazon is the “very best thing” for independent presses and helps provide an equal playing field for small publishing houses like his.
Here’s the full statement from Amazon:
We are currently buying less (print) inventory and “safety stock” on titles from the publisher, Hachette, than we ordinarily do, and are no longer taking pre-orders on titles whose publication dates are in the future. Instead, customers can order new titles when their publication date arrives. For titles with no stock on hand, customers can still place an order at which time we order the inventory from Hachette — availability on those titles is dependent on how long it takes Hachette to fill the orders we place. Once the inventory arrives, we ship it to the customer promptly. These changes are related to the contract and terms between Hachette and Amazon.
At Amazon, we do business with more than 70,000 suppliers, including thousands of publishers. One of our important suppliers is Hachette, which is part of a $US10 billion media conglomerate. Unfortunately, despite much work from both sides, we have been unable to reach mutually-acceptable agreement on terms. Hachette has operated in good faith and we admire the company and its executives. Nevertheless, the two companies have so far failed to find a solution. Even more unfortunate, though we remain hopeful and are working hard to come to a resolution as soon as possible, we are not optimistic that this will be resolved soon.
Negotiating with suppliers for equitable terms and making stocking and assortment decisions based on those terms is one of a bookseller’s, or any retailer’s, most important jobs. Suppliers get to decide the terms under which they are willing to sell to a retailer. It’s reciprocally the right of a retailer to determine whether the terms on offer are acceptable and to stock items accordingly. A retailer can feature a supplier’s items in its advertising and promotional circulars, “stack it high” in the front of the store, keep small quantities on hand in the back aisle, or not carry the item at all, and bookstores and other retailers do these every day. When we negotiate with suppliers, we are doing so on behalf of customers. Negotiating for acceptable terms is an essential business practice that is critical to keeping service and value high for customers in the medium and long term.
A word about proportion: this business interruption affects a small percentage of Amazon’s demand-weighted units. If you order 1,000 items from Amazon, 989 will be unaffected by this interruption. If you do need one of the affected titles quickly, we regret the inconvenience and encourage you to purchase a new or used version from one of our third-party sellers or from one of our competitors.
We also take seriously the impact it has when, however infrequently, such a business interruption affects authors. We’ve offered to Hachette to fund 50% of an author pool – to be allocated by Hachette – to mitigate the impact of this dispute on author royalties, if Hachette funds the other 50%. We did this with the publisher Macmillan some years ago. We hope Hachette takes us up on it.
This topic has generated a variety of coverage, presumably in part because the negotiation is with a book publisher instead of a supplier of a different type of product. Some of the coverage has expressed a relatively narrow point of view. Here is one post that offers a wider perspective.
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.
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