Jul
23
2010

Amazon vs. the Little Guy Does Not Mean Macmillan

Unlike a lot of critiques of Amazon from the publishers' point of view, Colin Robertson's article in the latest issue of the Nation (8/2-9/10) does describe actual bad behavior on the part of the online bookseller:

Dennis Loy Johnson, co-publisher of the Brooklyn-based independent Melville House, is one of the few publishers who have dared to speak openly about Amazon's bullying. His story is far from atypical. In 2004 a representative of the retailer contacted Melville's distributor demanding an additional discount. Such payments are illegal under antitrust law, which precludes selling at different prices to different customers. Large retailers circumvent this restriction by disguising the extra discount under the rubric of "co-op," money paid to the bookseller for promotional services, often notional. In this case the distributor did not bother with such niceties, describing what Amazon was after as "kickback."

Johnson resisted Amazon's pressure and complained to Publishers Weekly about what he saw as the retailer's capo-like tactics. What happened next evidently still rankles. "I was at the Book Expo in New York and two guys from Amazon came to see me. They said that the company was watching what we were doing and that they strongly advised us to get in line. I was shocked at how blatant the pressure was." Within a couple of days Johnson noticed that the buy buttons for his books had been taken off Amazon's site, making Melville's titles unavailable.

If Amazon is violating anti-trust laws, the Justice Department should take action; certainly, putting an embargo on one's critics is creepy. But when Robertson suggests that the treatment Johnson describes is akin to Amazon's interaction with Macmillan chief John Sargent, "another man who recently lost his Amazon buy buttons," he seems to be seeking underdog sympathy for the publishing giant that is not really deserved.

The dispute between Macmillan and Amazon had to do with the pricing of ebooks; Amazon wanted them at 10 bucks, Macmillan at $13 or $15. The $10 price, Robertson writes, "was a concern throughout an industry worried that low prices of electronic versions would undermine profits from printed books and generally lower the perceived value of the product."

But as the New York Times' Motoko Rich has pointed out–and a more publisher-friendly reporter you could not hope for–publishers make about as much profit per-unit on a $10 ebook as they do on a $26 hardcover, and would get considerably higher profits on a $12 or $15 ebook. What Macmillan and other big publishers are trying to do is use a technological change to get windfall profits–just as the record labels did when they moved from vinyl to CDs (which even back then cost less to make), and just as the movie studios are doing right now with 3-D films. This is understandable behavior on the part of for-profit entities, but it's not particularly noble.

If Tower Records, say, had had the market clout to tell the labels that they should pass CDs' manufacturing savings along to the consumer, would it have been accused of trying to destroy music? If Loews told the studios that their 3-D markups had to come down, would people say the theater chain was going to be the doom of cinema? Corporate publishers are engaged in the same profit-maximizing behavior at the expense of consumers.

About Jim Naureckas

Extra! Magazine Editor Since 1990, Jim Naureckas has been the editor of Extra!, FAIR's monthly journal of media criticism. He is the co-author of The Way Things Aren't: Rush Limbaugh's Reign of Error, and co-editor of The FAIR Reader: An Extra! Review of Press and Politics in the '90s. He is also the co-manager of FAIR's website. He has worked as an investigative reporter for the newspaper In These Times, where he covered the Iran-Contra scandal, and was managing editor of the Washington Report on the Hemisphere, a newsletter on Latin America. Jim was born in Libertyville, Illinois, in 1964, and graduated from Stanford University in 1985 with a bachelor's degree in political science. Since 1997 he has been married to Janine Jackson, FAIR's program director. You can follow Jim on Twitter at @JNaureckas.