With Apple's hands tied in e-book market, Amazon stops taking some preorders from publisher Hachette
Amazon is currently in the midst of a fight with Hachette, one of the so-called "Big Five" largest publishing companies, and has stopped taking preorders for high-profile upcoming titles, including the latest from "Harry Potter" series author J.K. Rowling.
The market dominating book seller on Thursday began refusing preorders for several upcoming Hachette titles including Rowling's latest, "The Silkworm," written under the pseudonym Robert Galbraith. The latest moves by Amazon, detailed by The New York Times, come as the retailer is involved in ongoing negotiations with Hachette, which is the smallest of the top five publishers.
Hachette has also seen higher prices on physical books, slower shipping times, much cheaper prices via the Kindle platform, and recommendations for alternative titles in their Amazon listings. The moves are widely believed to be designed to discourage sales of physical books sold by Hachette.
In addition, Amazon is also at odds with Bonnier, a major international publisher, by delaying deliveries of its titles in Germany.
Industry watchers believe Amazon is using its power to frustrate writers, hoping they will help pressure publishers like Hachette and Bonnier to give a more favorable --?and profitable --?contract to the online mega-retailer. Amazon is facing its own pressure from investors, who want to see the company's razor-thin margins improve.
All of this comes after the U.S. government sided with Amazon and punished Apple for its own moves in the e-book market with the launch of iBooks. Last year, the government successfully sued Apple in an antitrust trial, as a judge ruled that the iPad maker was guilty of conspiring with book publishers to raise e-book prices, and as a result hurt consumers.
Apple's closing slide in its e-book antitrust case. | Source: U.S. District Court
Apple led the charge in convincing publishers to switch to a so-called "agency" pricing model. That prevented content owners from being able to sell the same titles at a lower price elsewhere, without offering the same price on Apple's iBooks platform -- a "most favored nations" clause.
In contrast, the e-book industry prior to the launch of the first iPad was under the "wholesale model" preferred by market leader Amazon. In that model, resellers such as Amazon had the power to set prices, selling titles at or below cost if they chose to do so.
As part of the ruling against Apple, the company was saddled with an injunction barring the company from entering into any unsavory deals with publishers. Antitrust watchdog Michael Bromwich was also assigned to keep an eye on Apple. Bromwich and Apple have butted heads since he was installed last October.
Apple has formally appealed the antitrust ruling, asking for either a dismissal of the verdict or a complete retrial. Apple continues to believe that the iBookstore and iPad created competition in the e-book space, where Amazon's Kindle platform controlled some 90 percent of the market as of 2009.
The market dominating book seller on Thursday began refusing preorders for several upcoming Hachette titles including Rowling's latest, "The Silkworm," written under the pseudonym Robert Galbraith. The latest moves by Amazon, detailed by The New York Times, come as the retailer is involved in ongoing negotiations with Hachette, which is the smallest of the top five publishers.
Hachette has also seen higher prices on physical books, slower shipping times, much cheaper prices via the Kindle platform, and recommendations for alternative titles in their Amazon listings. The moves are widely believed to be designed to discourage sales of physical books sold by Hachette.
In addition, Amazon is also at odds with Bonnier, a major international publisher, by delaying deliveries of its titles in Germany.
Industry watchers believe Amazon is using its power to frustrate writers, hoping they will help pressure publishers like Hachette and Bonnier to give a more favorable --?and profitable --?contract to the online mega-retailer. Amazon is facing its own pressure from investors, who want to see the company's razor-thin margins improve.
All of this comes after the U.S. government sided with Amazon and punished Apple for its own moves in the e-book market with the launch of iBooks. Last year, the government successfully sued Apple in an antitrust trial, as a judge ruled that the iPad maker was guilty of conspiring with book publishers to raise e-book prices, and as a result hurt consumers.
Apple's closing slide in its e-book antitrust case. | Source: U.S. District Court
Apple led the charge in convincing publishers to switch to a so-called "agency" pricing model. That prevented content owners from being able to sell the same titles at a lower price elsewhere, without offering the same price on Apple's iBooks platform -- a "most favored nations" clause.
In contrast, the e-book industry prior to the launch of the first iPad was under the "wholesale model" preferred by market leader Amazon. In that model, resellers such as Amazon had the power to set prices, selling titles at or below cost if they chose to do so.
As part of the ruling against Apple, the company was saddled with an injunction barring the company from entering into any unsavory deals with publishers. Antitrust watchdog Michael Bromwich was also assigned to keep an eye on Apple. Bromwich and Apple have butted heads since he was installed last October.
Apple has formally appealed the antitrust ruling, asking for either a dismissal of the verdict or a complete retrial. Apple continues to believe that the iBookstore and iPad created competition in the e-book space, where Amazon's Kindle platform controlled some 90 percent of the market as of 2009.
Comments
Are Amazon lobbyists paying better than Apple's? Apple is still a giant neophyte in the lobby area. Google and Amazon have strong lobbies in Washington, Apple has a small one. And it shows. Google is a monopoly in search and government is not going after them. Amazon is a monopoly in online sales and books, and government is not going after them either.
Time for T.Diddy to wake up and hire some real lobbyists and start defending Apple from government goons.
DoJ then sues Apple, forcing them to nullify the deal.
Heh heh. Predictable (although, I would not have expected it so soon).
These fools -- including a whole bunch of authors as well as Amazon users, Cote, Bromwich, and the US DoJ -- are simply reaping what they sowed.
Only the current DoJ would use anti-trust law to grant a de facto monopoly to Amazon. And, of course, this is how Amazon behaves as a result.
While I doubt it, I secretly hope this is the beginning of the end of Amazon's ebook business. Their stock has been taking a beating by wall street, now lets pile it on with more publishers who refuse to meet their terms.
Are Apples hands really that tied? If they had the power for force publishers into a deal where books couldn't be offered cheaper than the iBooks price then they must have enough power to buy then at the cheapest wholesale price.
all I know is the books are being offered in the Apple bookstore for those not offered in Amazon. Keep it going Amazon, piss off some more publishers. No doubt the other 4 publisher are watching this closely as it could happen to them also.
I hope they kick Amazon's butt. They most certainly deserve it.
Wel, well, well, who could've seen this coming ?
Certainly not the hapless DOJ or all the greedy short-sighted consumers. This was Amazon's plan all along.
Quote:
Interesting how government is not going against the real monopoly in the book/ebook market: the Amazon store.
Are Amazon lobbyists paying better than Apple's?
That's the general consensus it seems amongst Apple followers of this case. Interesting is an interesting PC choice of words.
Apple led the charge in convincing publishers to switch to a so-called "agency" pricing model.
No, they did not. AppleInsider please stop writing this. Eddy Cue approached the publishers with the wholesale model and they came back proposing the agency model. When Cue forwarded this along with sample wholesale prices to Jobs he famously responded in his infamously unsent draft email :
"I can live with this, as long as they move Amazon to the agent model too for new releases for the first year, […] If they don't, I'm not sure we can be competetive (sic) …".
That prevented content owners from being able to sell the same titles at a lower price elsewhere, without offering the same price on Apple's iBooks platform --
-- a "most favored nations" clause.
In contrast, the e-book industry prior to the launch of the first iPad was under the "wholesale model" preferred by market leader Amazon. the market as of 2009.
These fallacies are being repeated constantly everywhere. I wish that at least AppleInsider would stick to the real facts on this. Daniel, please get the rest of the staff on track.
Are Apples hands really that tied? If they had the power for force publishers into a deal where books couldn't be offered cheaper than the iBooks price then they must have enough power to buy then at the cheapest wholesale price.
Why would Apple want to buy at cheapest wholesale price? They wanted an agency model which was designed such that Apple always gets 30% profit, regardless of price to be set by the publishers.
A publisher could always drop Amazon and give Apple the exclusive...just thinking out loud here.
Of they could but considering Apple doesn't offer an iBook for Android, Windows (phone, tablet or PC) and barely offers a decent client for Mac, it would significantly limit their market. The publisher could offer it on the Google Play Store as well. In fact the Play Store shows it available for pre-sale for $12.74. Apple hasn't been stopped from offering it either and has it for $12.99.
DoJ then sues Apple, forcing them to nullify the deal.
No. Apple hasn't been stopped from taking such actions. However Apple's current attitude regarding these matters makes them an unviable solution for exclusives in the e-pub market because their solutions are inferior, incomplete and exclusive to Apple products.
Are Apples hands really that tied? If they had the power for force publishers into a deal where books couldn't be offered cheaper than the iBooks price then they must have enough power to buy then at the cheapest wholesale price.
Apple doesn't compete on price. They want their 30% and a tidy profit. That is what the whole epub lawsuit was about in the first place.
DoJ then sues Apple, forcing them to nullify the deal.
What a country!
And how much was Amazon taking prior to Apple being in the market?
Thank God the DOJ allowed Amazon to keep a monopoly.
So when JK Rowling publishes her next book (via Hachette), I will order direct and expect delivery by owl, rather than by drone. Seems preferable in any event!
More seriously, doesn't this make ya wish mainstream bookstores were still around? Thank goodness at least Barnes & Noble survives with Apple, as they're the only two real competitors to the Kindle (with their iPad & Nook). Too bad we lost Borders. And so many others. Competition is good! (And mergers & monopolies are bad!)
Apple doesn't compete on price. They want their 30% and a tidy profit. That is what the whole epub lawsuit was about in the first place.
And how much was Amazon taking prior to Apple being in the market?
Thank God the DOJ allowed Amazon to keep a monopoly.
Are you seriously suggesting that Amazon's margins are higher than Apple's? That would be the most absurd statement I've read in a while.
Apple's goal with pricefixing was the raise margins for everyone by raising prices.
Amazon is no more a monopoly in epub than Apple is with iTunes.
And how much was Amazon taking prior to Apple being in the market?
Thank God the DOJ allowed Amazon to keep a monopoly.
More than 50%?