April 2, 2015

Back to 2014? Another Amazon-Publisher Battle Takes Shape


Amazon and HarperCollins may be heading into Amazon vs. Hachette territory (which is really just Amazon vs. everybody in publishing territory).

Amazon and HarperCollins may be heading into Amazon vs. Hachette territory (which is really just Amazon vs. everybody in publishing territory).

Ebola. The Sochi Olympics. MH370. The annexation of Crimea by Russia. The rise of ISIS. “All About That Bass.” Amazon v. Hachette. 2014 was a great year!

So let’s roll back the clocks. After a third of a year without a major dustup with a major publisher, it seems that Amazon is readying itself for Hachette-style conflict once again, this time with HarperCollins.

According to Business Insider, negotiations between HarperCollins and Amazon are about to reach an impasse:

If HarperCollins and Amazon don’t come to an agreement, no print or digital HarperCollins books will be available on Amazon once its existing contract runs out “very soon,” our source says.

Business Insider’s source is anonymous, but given its perspective, it seems likely that it has some relationship with Amazon. HarperCollins did not comment but, in an interesting twist, an Amazon representative did, telling reporter Jillian D’onfro that, “I can’t comment on that rumor. I can say that we have offered Harper the same terms for a contract that Simon & Schuster, Hachette, and Macmillan have all recently agreed to.” Getting an Amazon representative to talk is a story in and of itself.

The Business Insider story may have sent some alarm bells ringing—especially for writers still recovering from covering Amazon/Hachette—but it’s important to note that this is still very much a developing story. For one thing, there’s some confusion about the timeframe. While Business Insider suggests that Amazon’s contract with HarperCollins is about to run out—which would instigate a doomsday scenario in which Harper books are pulled from the digital shelves of the world’s biggest retailer—I was under the impression that the contract had already expired.

Publishers Lunch’s Michael Cader notes, in his report, that he was under the impression that Amazon’s contract with Harper ended in the fall—he says September, which jibes with what I’ve heard—though short-term extensions have followed. While it’s possible that Amazon is treating the most recent short-term extension as a hard deadline, an ongoing negotiation with short-term extensions means that this is a development, rather than a potentially apocalyptic development.

So what has developed? Or, to put it somewhat differently, why has an ongoing negotiation that began in the fall become a story now? Here’s Cader:

Perhaps most surprising is that an official Amazon representative does tell BI on the record, “I can say that we have offered Harper the same terms for a contract that Simon & Schuster, Hachette, and Macmillan have all recently agreed to.” Those three publishers did not all agree to the same exact terms, and of course it was Amazon that instigated a Federal investigation in 2010 when five publishers agreed to “the same terms for a contract” for ebooks with Apple. The recent injunction against Apple was structured to have each publisher negotiate its own particular terms for the sale of ebooks in the future, but here is Amazon apparently advocating and pressuring for all big publishers to agree to the same terms.

But the BI story may be Amazon’s way of telling Harper, their authors, and others that the bookseller’s patience has worn out.

The last point is crucial here. Amazon and HarperCollins may be at an impasse, but this story seems to be more of a well-timed negotiating tactic, aimed at the publisher, its authors, and the bookselling world as a whole, rather than a development in and of itself. And, while Hachette responded admirably to its half a year without Amazon, “We’re going to Hachette you” is still a pretty damn good threat, as far as bookselling threats go. (It’s worth noting that the bookselling world isn’t exactly a Michael Bay movie—we’re a pretty passive, conflict-averse bunch, so threats like that have a lot of leverage.)

Business Insider, moreover, has a pretty cozy relationship with Amazon—which is remarkable, considering that Amazon has traditionally been pretty tight-lipped when it comes to the media. But Jeff Bezos, as any article about Amazon in the publication notes, is an investor in Business Insider. And, as the Amazon-Hachette dispute kicked into high gear last summer, Business Insider was one of the few mainstream outlets that had the retailer’s back. When Amazon and Simon & Schuster reached a deal last October—which many believed would give it leverage with Hachette—Business Insider had the scoop. I don’t think anything sinister is going on here, of course, but it’s worth noting that Amazon’s comfortable going to BI and that it’s not particularly comfortable with any other major publication. (The language of Business Insider’s headline, “Another major publisher is going to war with Amazon” is interesting, too, in that it implies that HarperCollins is the aggressor, but sometimes you’re just being paranoid.)

There’s also an added irony here, which Cader hints at in his post. Amazon instigated the Department of Justice’s lawsuit against five major publishers for price fixing when it sent a white paper alleging that the publishers were all getting the same deal from Apple after colluding. This is a different scenario (because it doesn’t involve collusion), but what Amazon is telling Business Insider is still pretty funny: “Why won’t Harper take the same deal everyone else is taking?” Again, there’s a difference between a giant, and enormously powerful retailer, throwing its weight around and five very large corporations banding together with a giant one, but a buyer behaving this way—especially one with Amazon’s influence—should send alarm bells ringing. (At the very least, it should make people google “monopsony.”)

If things do come to a head—and they might!—HarperCollins may be better prepared for war than its predecessor, Hachette. Here’s Cader for a final time:

As Harper has stated in the past, of the five large trade publishers they likely do a smaller percentage of business at Amazon than their peers, since their big Christian publishing and children’s books program sell less online and in ebook form than other verticals, and their big romance line also underindexes for online sales.

D’Onfro, in her report, highlights another one of Harper’s strengths:

Forbes contributor Jeremy Greenfield wrote that HarperCollins was “taking steps to build and strengthen alternate retail channels, grow in size, and create new business lines” so that it would not have to rely as much on Amazon. As the publisher and Amazon continue their negotiations, HarperCollins will most likely be relying on these alternate retail channels even more.

Harper is far less risk averse than its Big 5 peers, to its credit, and its experimentations over the past few years have been admirable from a bookselling perspective, as much as an Amazon-fighting perspective. Unlike its competitors, the publisher has embraced digital sidelines, particularly subscription-based digital outlets like Oyster and Scribd, along with a host of other start-ups. While Harper has rarely made a big splash in the arena, its been content to place dozens of nickel bets on low-risk, low-reward sidelines—though few of these outlets have the potential to take off in a big way, anything’s possible in an increasingly diverse marketplace. Those bets may start to pay off if the dispute with Amazon truly kicks off—and Harper has actual cards up its sleeve.  (And hey, if it does, things sure will get interesting on Twitter, won’t they?)

Alex Shephard is the director of digital media for Melville House, and a former bookseller.