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Amazon plays hardball -- and puts the hurt on consumers

Commentary: In economic fight with major publisher, e-tail giant is sacrificing not only authors, but book buyers too.

Nick Statt Former Staff Reporter / News
Nick Statt was a staff reporter for CNET News covering Microsoft, gaming, and technology you sometimes wear. He previously wrote for ReadWrite, was a news associate at the social-news app Flipboard, and his work has appeared in Popular Science and Newsweek. When not complaining about Bay Area bagel quality, he can be found spending a questionable amount of time contemplating his relationship with video games.
Nick Statt
5 min read

Amazon CEO Jeff Bezos CNET

If the average Amazon-loving book buyer were to go to the company's website and attempt to order a book from publishing house Hachette, they'd find everything from price increases to availability issues to overt roadblocks to buying those titles.

The reason: Amazon is in a negotiations standoff with the publisher, which owns the imprints Grand Central Publishing; Orbit; and Little, Brown; among others. A months-long battle around e-book pricing now has trickled down to Hachette authors and -- in perhaps a worrisome harbinger for Amazon's consumer-first reputation -- book buyers.

There's no one-size-fits-all approach to e-book pricing, and Amazon hammers out models with publishers on a case-by-case basis. But after pricing talks fell through with Hachette, Amazon began a series of increasingly aggressive maneuvers to force the publisher to play by its rules and accept lower prices. Coincidence or not, the moves come at a time when Wall Street has put a magnifying glass to Amazon's spending as the company's stock stumbles. Shares of Amazon have dropped from $407 apiece in late January to $312 each at market close Friday.

CEO Jeff Bezos built Amazon as an e-commerce juggernaut on the promise of always prioritizing the needs of the customer. But now the company is using customers' discomfort and inconvenience as a bargaining chip to hammer out a more profitable position for itself.

For instance, if you want to, "The Silkworm," you can't. Amazon says the book is unavailable, stripping the page of its order button late Thursday. The same goes for Brad Stone's upcoming paperback edition of "The Everything Store: Jeff Bezos and the Age of Amazon," a book detailing the e-commerce company's hardball tactics in its dealings with book publishers. And Amazon has bumped up prices on scores of other Hachette titles, according to sci-fi writer Michael Sullivan, who complained to The New York Times, after Amazon began escalating pressure on his publisher, that "it's the little guys who pay the price."

Other titles have been slapped with recommendations that buyers check out similar but cheaper books. That was the case with Hachette author Marla Heller, whose once-strong position in Amazon's book rankings with her diet title "The Dash Diet Weight Loss Solution" has evaporated because of the dispute, dropping her from the Top 300 to the Top 3,000.

If you want to buy a title anyway, like Malcolm Gladwell's "Outliers," you may find shipping times as long as two to three weeks, despite the book being in stock and Hachette's claims that it's fulfilling orders same day.

Amazon did not respond to a request for comment.

Amazon has long resisted suggestions that its dominant position as the world's biggest book retailer might be cause for concern. Even though it controls more than a third of the book market and is the leading seller of e-books, the company says its success is the result of putting more books in the hands of more readers while opening up avenues for self-publishing and digital-first literature.

But in pulling pre-order buttons, increasing shipping times, boosting prices, and encouraging customers to spend their money on other publishers' titles, Amazon has exercised its might in an unprecedented fashion.

So far neither side in the negotiations between Hachette and Amazon is publicly talking about the dispute in detail. And there very well could be demands from the publisher that are unreasonable, especially given that Amazon could claim that driving down e-book prices is in the interest of consumers. (It's also worth noting that Hachette was one of the big six publishers that the Justice Department said had conspired with Apple to fix e-book prices in an attempt to keep Amazon from undercutting them into nonexistence.)

But Hachette is fiercely resisting Amazon's digital book pricing, with its CEO voicing fears about being put out of business.

"Please know that we are doing everything in our power to find a solution to this difficult situation, one that best serves our authors and their work, and that preserves our ability to survive and thrive as a strong and author-centric publishing company," Michael Pietsch, chief executive of Hachette Book Group, wrote in a letter to the company's authors. The underlying meaning there is naturally ambiguous, and it's unclear at what point Hachette's willingness to stand its ground against Amazon will prove detrimental to the publisher's core business and its relationship with its authors.

For the time being, anecdotal evidence suggests, those authors are directing their anger at Amazon.

"I have supported Amazon for as long as Amazon has existed," children's-book author Nina Laden wrote on Facebook. "I've been published for 20 years now and you have sold so many of my books. I am frankly shocked and angry at what you are doing to my new book."

Author James Patterson was more blunt. In a post on Facebook titled "Four of the most important paragraphs I'll ever write," he said, "If the world of books is going to change to ebooks, so be it. But I think it's essential that someone steps up and takes responsibility for the future of American literature and the part it plays in our culture.

"Right now, bookstores, libraries, authors, and books themselves are caught in the cross fire of an economic war. If this is the new American way, then maybe it has to be changed -- by law, if necessary -- immediately, if not sooner."

There is, of course, the "take your business elsewhere" argument. If publishers don't like how Amazon plays the game, they can always try their luck with physical bookstores. Given the devastation of the bookselling business, that's not a palatable alternative. What's more, any publisher opting to cut ties with Amazon would lose book sales and likely see many of their prominent authors flee to competitors.

The publishers may be seething, but it's unclear what they can do to force Amazon to backtrack. This is a world in which Amazon sets the rules and brings down the hammer fast and hard and frequently enough to keep everyone in line with how it wants to sell books. And unless the government steps in, the publisher's best -- perhaps only? -- hope for now may be the court of public opinion.

When Amazon compromises its core promise -- making commerce easier, faster, and better -- by pushing book buyers and authors around like expendable chess pieces, consumers might start viewing Amazon in a different light.