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Summary:

At least two of the big-six publishers are refusing to sign new annual contracts with Amazon. While that could result in their “buy” buttons being turned off, it is more likely that the feud will result in less promotion of big-six publishers’ titles on the site.

Amazon Package
photo: Flickr / William Christiansen

At least two of the big-six publishers are refusing to sign new annual contracts with Amazon. Though that could end with their “buy” buttons being turned off, it is more likely for now that the feud will result in less promotion of their titles on Amazon’s website.

The news was first reported by Salon reporter Alexander Zaitchik. In the middle of a piece on Amazon’s donations to literary nonprofits, Zaitchik wrote:

For the first time, the “Big Six” publishers — HarperCollins, Random House, Hachette, Simon & Schuster, Penguin and Macmillan — have refused to sign Amazon’s latest annual contract. The main sticking point is exorbitant increases in “co-op promotional fees” for e-books that the publishers see as an illegal gouge by another name. One person familiar with the details of the proposed 2012 contracts that Amazon has submitted to major New York publishers described them as “stupifyingly draconian.” In some cases, he said, Amazon has raised promotional fees by 30 times their 2011 cost.

Zaitchik told me a “source within the publishing journalism industry” and a contact at a major New York publishing house alerted him to the dispute.

People familiar with the situation confirmed to me that at least two big-six houses have refused to sign new annual contracts — but I have not yet been able to confirm that all six did so. Amazon is still fulfilling customer orders, these sources said, but is not promoting big-six houses’ books on the site or in marketing materials in ways it once did.

Could it really be all six?

The big-six publishers are quite wary at this point of appearing to make any decisions in concert — or even to be seen communicating with one another — because the Department of Justice is investigating five of them for allegedly colluding to set e-book prices. But if Amazon is indeed demanding better terms across the board and if contracts are up for renewal at the same time, it is not surprising that publishers would react similarly.

It is unclear whether all the big-six publishers’ contracts would come up for renewal at once or if they are in different stages of negotiations and/or refusal to sign.

The main source of conflict: Higher co-op fees

Book publishers traditionally paid bricks-and-mortar bookstores co-op fees on print books in order to ensure promotion of those books in stores. The concept is murkier when applied to e-books being sold via websites. Publishers have accepted co-op on e-books as the price of doing business with Amazon, but now the company appears to be requesting much higher co-op fees.

Publishers Weekly first reported in August that Amazon has been asking publishers for a steeper discount and higher co-op payments but it was not clear then whether any of them had refused to sign new contracts.

In February, distributor Independent Publishers Group refused to capitulate to Amazon’s demand for better terms. As a result, Amazon yanked the Kindle versions of IPG’s roughly 5,000 titles. The dispute has not been resolved.

I will update the post as I learn more.

Chris Meadows at Teleread first noted the paragraph in the Salon story. Thanks to Porter Anderson for pointing me to it.

  1. So the obvious question is, will the DOJ accuse the big 6 of collusion and force them to sign the Amazon contract as part of the agreement?

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  2. I think assuming the DOJ would get involved misunderstands what concerns antitrust regulators. With Apple, every publisher appears to have the same deal; there seems to be suspiciously little individualization of what are huge contracts that in the normal course of business would be heavily haggled and negotiated over. In contrast, here it seems to be AMAZON uniformly bumping up its demands for fees and discounts, and the refusal to accept that new offer is a typical way for a business to respond. The Big Six won’t look collusive unless Amazon were to drop back to its current contract and they all uniformly said no again in order to get a better deal than the current one.

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  3. I like Amazon better than those greedy publishers;
    They can sell their ebook on their sites; But
    who visits those crappy sites.

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    1. You would if you couldn’t get the books on amazon (unless you never used amazon) They did that for Harry Potter.

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    2. Bk, you’re a fool. Amazon is not your friend, they are trying to make a profit just like big pubs. When they squeeze everyone else out of business they will charge you whatever they want. This is the oldest trick in the book.

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  4. Impressive.

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  5. companies like amazon keep these greedy publishers at Bay.
    Else they are like hungry , crazy dogs who will not think of biting you. Well done amazon these suckers (publishers) deserve this. All these years they have squeezed the wallet with useless procing with Amazon came in things became normal

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  6. Melissa Douthit Thursday, May 24, 2012

    Wow! I’m interested to see how this all turns out!

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