The Trouble with Amazon

The Nation has an in-depth look at Amazon.com's business practices. You've been warned.

From the piece...

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.

In the end Johnson, faced with an offer it was nigh impossible to refuse, agreed to the co-op. His books' buy buttons were reinstated. Today Amazon is Melville House's biggest customer, and though Johnson still regularly flays the company on his popular publishing blog Moby Lives, he also concedes that it is highly effective at bookselling: "They make buying so easy. It's impossible to resist."

Another man who recently lost his Amazon buy buttons is John Sargent, head of Macmillan, the US arm of German book giant Holtzbrinck, home to many authors familiar to Nation readers, including Naomi Klein, Noam Chomsky and Barbara Ehrenreich. In January Sargent confronted Amazon over its insistence on setting the prices of e-books it sold on its site, generally at under $10. This 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. Sargent informed Amazon that he wanted to move Macmillan to an "agency agreement," meaning that he, as the publisher, could price books at whatever level he chose, paying Amazon a fixed discount.

Amazon reacted with characteristic distemper: bye-bye Macmillan's buy buttons. A face-off ensued. Amazon was vehement that its stand was on behalf of customers looking for bargains. A gallery of cynics openly suspected it had more to do with securing the future of its proprietary e-book reader, the Kindle, in the face of Apple's imminent launch of the competing iPad.

Something had to give, and a few days later it did: Amazon gave in with a statement revealing contempt toward the very idea of a publisher.