Updated: IPG’s full memo to publishers on page 2.
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.”
IPG’s full memo to client publishers is on page 2.
The Chicago-based IPG is a distributor, which means that it provides services like marketing, sales and distribution to smaller client publishers. The company represents around 400 publishers, and some of the titles it distributes have been bestsellers, including Nelson Walker’s Boardwalk Empire (published by Information Today).
Suchomel noted that the print titles from IPG clients are still available on Amazon and that e-books are available from many other retailers. IPG’s terms are “acceptable to everyone else in the book business,” he said. “If half the accounts weren’t buying from us, I’d have to question it, but everyone else is.”
Client publishers have been “extremely supportive” of IPG’s decision not to capitulate to Amazon, Suchomel said. “We talked to many of them as Amazon was asking for more, and every one of them has said no, we can’t just keep giving more and more margin away.” Clients are “trying to direct people to other accounts [like Nook] where they can find their e-books.”
The move appears to be limited to IPG for now. Susan Reich, president of distributor Publishers Group West, told me, “We have an ongoing working relationship with Amazon and I have no reason to believe that our titles are at risk of being taken down.”
Amazon’s move against IPG is reminiscent of its battle with Macmillan at the beginning of 2010. When Macmillan switched to the agency model — in which it sets its own prices for e-books instead of selling them to Amazon and other retailers wholesale and letting the retailers sell the e-books at whatever price they want — Amazon turned off the “buy” button on Macmillan e-books, before eventually capitulating. All of the big-six publishers now use agency pricing for their e-books.
It is not clear what the outcome of Amazon’s actions against IPG will be or if the company is also turning off the buy button on other publishers’ titles. Publishers Weekly reported in late December that Amazon has been been demanding steeper discounts in negotiations with publishers, but this is the first time we’ve seen the ramifications for those who didn’t agree. I’ve asked Amazon for a comment and will update this post throughout the day.
IPG’s full memo to publishers on page 2.
Memo from IPG president Mark Suchomel to client publishers
I am disappointed to report that Amazon.com has failed to renew its agreement with IPG to sell Kindle titles. As of today, the Amazon.com website no longer offers for sale any electronic titles from any of IPG’s client publishers. All print editions are still available, as always.
As has been publicly reported, Amazon.com is putting pressure on publishers and distributors to change their terms for electronic and print books to be more favorable toward Amazon. Our electronic book agreement recently came up for renewal, and Amazon took the opportunity to propose new terms for electronic and print purchases that would have substantially changed your revenue from the sale of both. It’s obvious that publishers can’t continue to agree to terms that increasingly reduce already narrow margins. I have spoken directly with many of our clients and every one of them agrees that we need to hold firm with the terms we now offer. I’m not sure what has changed at Amazon over the last few months that they now find it unacceptable to buy from IPG at terms that are acceptable to our other customers. Hopefully Amazon will change their stance, but for now we need to make some changes. Please consider taking the following action today, or as soon as practically possible:
1. Every e-mail, ad, website, press release, author interview, and otherwise mention of an individual title needs to include the following: This book is available in print or electronic edition at your local independent bookshop, www.BarnesandNoble.com,www.indiebound.org, iTunes, Kobo, and elsewhere. It is not currently available in a Kindle edition.
2. Inform your authors of the situation and ask them to encourage traffic to those places that carry both print and electronic editions. Our website, www.ipgbook.com, is able to take direct consumer orders, but there is no better way to show our valued customers how much we appreciate doing business with them than to send orders their way.
3. Make available all electronic titles in all versions other than Kindle. Get those last remaining titles into electronic format so that the businesses that do support your titles can start selling them as soon as possible. IPG’s digital team can help you. Contact Digital Content Manager [redacted], for details.
4. Remind family and friends of the value to our society of independent voices and ideas, and that independent publishers and bookstores need to be supported or they will go away.
5. Practice what you preach. Support accounts that support your business. Ask the organizations you support to do the same.
6. Tell your local booksellers that they have access to some electronic books that Amazon no longer does. Accounts can contact Digital Content Manager [redacted], or Trade Sales Manager [redacted].
7. Seriously consider the implications of this action for the long run. If we don’t hold firm on your behalf, your margins will continue to erode. IPG will continue to represent you well to those customers that are happy to buy from us at reasonable terms. If you or your authors were working directly with any large vendor, you would not have the opportunity to push back on or even have a conversation about terms. Your continued support is appreciated.
8. If anyone from Amazon calls you, please let them know that you are distributed by and contractually tied to IPG.
Remember that Amazon continues to be an important account that sells a lot of units. This is a business decision on Amazon’s part, and hopefully they will soon decide to reverse it and buy at our standard terms. IPG will be informing our other electronic book accounts of their favorable competitive position on our electronic titles.