Macmillan: The New Amazonfail

As widely reported, Amazon has removed all Macmillan titles from its site. This means that you won’t be able to buy new print or digital books from Paul Auster, John Scalzi, Richard Powers, or countless other authors bundled inside Macmillan’s many imprints through the Amazon website. The dispute, according to Macmillan CEO John Sargent, arose from a Thursday meeting Sargent had with Amazon, in which Sargent proposed new terms of sale for eBooks. Sargent desired to set the price for eBooks on an individual basis and under an agency model, sidestepping the austere $9.99 price point that Amazon has long insisted on for its Kindle titles. It is safe to say that Amazon, feeling particularly smug after reporting a profitable fourth quarter, felt compelled to not only have its cake and eat it too, but to throw numerous books beneath its oily guillotine. By the time Sargent returned to New York on Friday afternoon, the buy option for Macmillan’s books — both print and digital — had disappeared from Amazon’s website.

Bookstores have often refused to stock individual titles. (In 2004, Amazon.co.uk refused to carry Craig Unger’s House of Bush, House of Saud.) But it’s important to understand that not a single bookstore chain has ever discriminated against a publisher like this before. It’s also important to understand that the laws of vertical integration — most famously ruled on through United States v. Paramount Pictures, Inc., in which motion picture studios, who produced the movies and owned the theaters that they played in, were ordered to break up their monopolies — don’t necessarily apply. Amazon may not be owned by the publishers, but there are some indicators that the company controls 90% of the eBook market, effectively securing a monopoly.

While Sargent’s statement is the only real word that has emerged from this conflict (Amazon has remained mum), Amazon’s lack of transparency about the sudden removal of Macmillan books, as Michael Orthofer severely understates, is unacceptable, possibly violating federal price discrimination statutes that were guaranteed under the 1936 Robinson-Patnam Act. And it remains to be seen whether the Federal Trade Commission, which has recently devoted its resources to badgering bloggers, will investigate these troubling developments to determine if its creaky howitzers might be rolled out to combat this greater greed.

But these developments have caused some authors, viewing Amazon’s aggressive pricing as a grave threat to their livelihood, to take umbrage. John Scalzi writes, “If Amazon is willing to play chicken with my economic well-being — and the economic well-being of many of my friends — to lock up its little corner of the eBook field, well, that’s its call to make. But, you know what, I remember people who are happy to trample my ass into the dirt as they’re rushing to grab at cash.” Charles Stross writes, “Amazon, in declaring war on Macmillan in this underhand way, have screwed me, and I tend to take that personally, because they didn’t need to do that.”

UPDATE: I’ve just received word that the Amazon Kindle Team has addressed the situation in a forum, stating that “we will have to capitulate and accept Macmillan’s terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books.”

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3 Comments

  1. […] Ed Campion says “not a single bookstore chain has ever discriminated against a publisher like this before” Possibly related posts: (automatically generated)Apple vs. Amazon: The Great Ebook War Has Already BegunGreat ebook store—great prices, honorable products, and undisputed companyLender giants’ price war ‘great’ for housing market Follow Me […]

  2. It is unlikely that the cited laws apply to this situation. The fact that Amazon controls 90% of ebook market is not relevant, since for antitrust purposes the “market” is books (p and e), and Amazon has only a small part of that market.

    Nor is it a Robinson-Patman situation, since that law applies to sellers who sell products to different buyers at different prices. It does not apply to a company’s decision to stop doing business with a supplier.

    Nor is it likely that the FTC would get involved, since their jurisdiction is fairly limited and a company’s decision not to purchase from a single supplier due to difference opinions on pricing is not something that is likely to get the FTC’s juices flowing.

    Amazon has no ability to stop others, including MacMillan, from selling MacMillan’s titles as ebooks.

    Amazon has spent millions of dollars to establish a loyal following and to establish its Kindle as a major ebook reader. Amazon took all the risk and is entitled to reap the benefits of all of its hard work. Amazon has the absolute right to decide who it will do business with and on what terms. The antitrust laws are not going to help MacMillan or any other publisher. Nor should they.

  3. Thanks for the helpful input, Mr. Scott.

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