Last week I discussed, among other things, the rise and rise of Amazon’s Kindle in the ebook space over the past few months, and how difficult it is going to be for other retailers to get into this space. Despite this, I’ve been happy with my choice to buy a Kindle, and still think that Amazon has the best overall ebook platform for readers. I also said that I hoped Amazon would not do anything too evil in 2011.
Then I read this. For those who don’t have the time to read a ten-page investigative report on Amazon and the book trade, allow me to break it down for you. For a number of years, Amazon has been using their clout (they are responsible for about 75% of online book sales in the US) to demand larger and larger discounts on sales from publishers. This is pretty much par the course for large booksellers, and it’s been happening the world over since the 80s. What disturbs me more than this, however, is what booksellers call the ‘co-operative advertising’ element of Amazon’s demands on publishers.
For those who don’t know, co-operative advertising, or promotional allowances (known as co-op) is the term used by big booksellers for the fees charged for premium placement at the front of a bookstore for that publisher’s books. For example, if you go into a Dymocks or Angus & Robertson bookshop, the books that are placed right at the front of the store in big carousels and piles are not there by accident. Their publishers have paid to ensure that they get good placement in the store. These payments even extend to the so-called ‘Top 10’ areas in many stores – which are often not even the real top ten or bestseller lists at all, but a list of books that publishers have paid to be placed there. Evil, you might say, but these payments are pretty standard now, and according to the Boston Review article linked to above, publishers (at least in the US) now allocate approximately 4% of their net revenue for co-op payments.
Where Amazon is different is the scope of what they can charge for, mostly because of the technology they have access to. For those of us used to using Google, we assume when we search for products on a store’s website, we’re getting a kind of ‘best pick’ attempt to find what we’re looking for. Apparently this is not so:
“Amazon also may turn off the search options to publishers’ books, making it possible to find a title only when the correct name of the book or the ISBN is entered.” What publishers were supposed to get in exchange for this co-op, was, essentially, not being made to disappear from the Web site.
This is a two part post. Please click here for Part 2.