Despite my spirited defense of Amazon a few days ago, I go back and forth about supporting them sometimes. It’s not that I feel guilty, it’s just that they tend to lean on the same tactics to get what they want, mainly their leverage based on market share. That’s what’s happened this week with Independent Publishers Group. Amazon and IPG had a contract dispute, and Amazon pulled their ebooks from the Kindle Store.
There are two sides to every story, and Amazon is being typically tight-lipped, so all we have to go on is the IPG account (via Teleread and Paid Content:)
Amazon (NSDQ: AMZN) has turned off the buy button on nearly 5,000 Kindle titles from distributor Independent Publishers Group after IPG refused to capitulate to Amazon’s demand for better terms.
The story was first reported by Publishers Marketplace and was confirmed by IPG President Mark Suchomel, who told me, “We’re offering [the e-book sales terms] we offered last week, and somehow they think it’s not quite good enough.” As IPG’s contract with Amazon approached renewal, Amazon “told us [the move] was coming, and has been telling us what the consequences were if we didn’t change what we were offering.”
The unfortunate part of this is that Amazon has a great deal more power here (for now). IPG can advise their authors to not cave, they can push ebooks on other platforms, but if someone is browsing the Kindle store then nothing IPG does to promote books on the NOOK platform will help. On the other hand, while this is an age-old business strategy (don’t agree with your supplier? Stop using them!) there’s another side to that: history repeats itself. Amazon has all the power right now, with a wildly successful Kindle lineup and the Fire dominating non-iPad sales, but 10 years ago Barnes and Noble was the heavyweight in bookselling. Businesses and market share go through cycles, and Amazon needs to remember that just because they have the leverage to force action today, next year there may be someone else waiting with open arms to support IPG or anyone with whom Amazon is feuding.
To be fair to Amazon, we don’t know that pulling the buy buttons wasn’t the nuclear option. IPG makes it sound that way, but this may have come after a month of negotiations. In fact, the Paid Content article notes that Amazon has been negotiating with various publishers since December, so this wasn’t an overnight falling out. Plus Amazon has been relying extremely heavily on independent authors to fill in the ranks of the Amazon PRIME library, so I can’t see the business benefit of upsetting a huge body of independent publishers over contract terms.
My hope is that there is more to this than Amazon being a bully, and my guess is that we will find out as the year progresses. I am not ready to defend Amazon or crucify them, but it does bear further attention! What’s your take on this? Will Amazon leveraging their market share to force negotiations change how you shop? Let us know in the comments!