Amazon Confirms Hachette Spat Is To "Get a Better Deal"

tlhIngan (30335) writes "Last week we heard that Amazon was withdrawing Hachette books from its virtual shelves including allowing preorders of the new JK Rowling book. Amazon has responded to these allegations, and confirms that yes, they are purposefully preventing pre-orders and lowering stock in order to get a better deal from Hachette. Amazon recommends that in the meantime, customers either buy a used or new copy from their zShops or buy from a competitor. Amazon admits there is nothing wrong with Hachette's business dealings and that they are a generally good supplier." Here's Hachette's response to the Amazon statement.

Comments

Books aren't special

[Enigma2175]

FTFA:

Amazon indicates that it considers books to be like any other consumer good. They are not.

My rebuttal: Yes they are.

Re:Books aren't special

[Charliemopps]

FTFA:

Amazon indicates that it considers books to be like any other consumer good. They are not.

My rebuttal: Yes they are.

The entire reason we have a first sale doctrine is because a publisher was trying to artificially inflate the price of a book.

Re:Books aren't special

[Anonymous Coward]

Hachette's response was no more elaborate. Why do you hold him to a higher standard then the publisher? That indicates you aren't interested in the answer, but are just trolling.

Re:Books aren't special

[LocalH]

But things that are considered consumer goods, like many technologies, are not completely fungible by that standard. Sure, you have devices that can serve the same purpose, but in most cases they're not really interchangeable without some major changes in what you're doing. You can't really replace a Wii U with an Xbox One and consider them "completely fungible".

Re:Books aren't special

[fuzzyfuzzyfungus]

Arguably they aren't like any other consumer good: they share a pretty easily identified, and salient, set of characteristics with certain other 'culture products', music, movies, and similar: marginal cost of production is essentially zero, different ones are partial substitutes for one another; but rather weakly compared to other consumer goods, 'brand' affinity follows individual producers (or nominal producers, as in the case of certain heavily-managed tween-pop-to-order acts) rather than companies, and so forth.

Books aren't some Unique And Sacred Category Unto Themselves; but the characteristics listed above are pretty significantly unlike those of, say, consumer appliances(where marginal cost of production is comparatively high, different ones are nearly perfect substitutes, brand affinity, if any, follows companies while individual designers are unknown, etc.)

What isn't clear to me (any authors in the house?) is whether the traditional big publishers are, by reason of a certain gentlemanly ossification, allies to the otherwise scattered and helotized writers, or whether this is basically a spat between two would-be-exploiters of authors over who gets the profits.

Amazon sure as hell isn't in this out of the goodness of their hearts; but they are also not going to waste a penny more than necessary on quaint traditional supply chains, 'remaindered' or 'stripped' books, and anything of the like; but they also aren't going to let any mere customs hold them back when it comes to contractual matters.

The incumbent publishers are definitely more tradition-bound; but I don't know how much this just makes them inefficient, and how much it makes them act more nicely than good old sociopathic 'homo economicus' would.

Re:Books aren't special

[Anonymous Coward]

Your argument is that books aren't like other consumer goods because they're not fungible. Your debate partner pointed out that other items which are generally considered consumer goods are also not fungible. This implies that whether or not an item is fungible isn't sufficient for defining whether or not an item is a consumer good. Generally, this is the point were you would offer up another criteria to distinguish between non-fungible consumer goods and books.

Re:Books aren't special

[phantomfive]

Amazon sure as hell isn't in this out of the goodness of their hearts;

And lets be honest, neither are publishers. And if we really dig deep, we might find that authors sometimes write mainly for profit as well.

Re: Books aren't special

[LocalH]

Spot on. I take issue with Amazon's handling of this not because of anything to do with whether books are a "consumer good" or not, which they clearly are in the first place (they're sold at retail, buyer gains first sale rights concerning the physical object, sounds pretty much like a good to me). It's because it's anti-consumer. It punishes people who dare to buy from vendors or publishers which the marketplace provider has some sort of issue with. It's exactly like the fights between cable/satellite providers and distributors. The only thing they do is punish the people who enjoy the things they air. Exactly like those situations, we have public communication from each entity blaming the other and confusing the average person. I half-expect Amazon to start putting a little ad-size box on pages for Hachette books "explaining" to the potential buyer why they shouldn't even buy the book in the first place, and Hachette adding extra pages into Amazon-destined copies explaining how shitty Amazon is.

It's all a big dick-waving contest and doesn't help anyone but the one with the biggest dick.

Re:Books aren't special

[ranton]

They were more elaborate. Here's the entire paragraph ouf of which' context the sensence was taken

Authors, with whom we at Hachette have been partners for nearly two centuries, engage in a complex and difficult mission to communicate with readers. In addition to royalties, they are concerned with audience, career, culture, education, art, entertainment, and connection. By preventing its customers from connecting with these authors’ books, Amazon indicates that it considers books to be like any other consumer good. They are not.

You may agree of disagree, but do not hide behind lies.

You could come up with any number of reasons why a certain consumer good is unique. Take this for example:

Microwave oven manufacturers, with whom we at [generic distribution company] have been partners for nearly 60 years, engage in a complex and difficult mission to provide food to humanity. They provide a way to reuse food in a way that helps cut down on food waste, thus reducing the amount of land that is necessary to feed to world. By preventing its customers from purchasing these microwaves, Amazon indicates that it considers microwaves to be like any other consumer good. They are not.

Nothing they said backs up their claim that books are not just another consumer good. They are just explaining why this particular consumer good exists.

Time to become a better shopper

[careysb]

Guess I'll be broadening my shopping horizons.

Re:Time to become a better shopper

[Charliemopps]

Guess I'll be broadening my shopping horizons.

This is how all major contact negotiations work. I'm involved with them all the time and this is almost assuredly the publishers fault.

The rule is, you have the contract done and signed before the previous one expires. If you don't, it puts you in a precarious situation... like this. If the previous contract was still in place, Amazon couldn't do what they're doing. All of the pricing, etc... is set in the contract. It's very very precise language. Once the contract runs out, if they haven't come to an agreement yet, it's standard for the one or both of the companies involved to flex their muscle, just like amazon did here. The message is clear "You have no leverage over us. We can just stop selling your product, we still keep making money, oh look at your stock price..." etc... If Hachett doesn't like it, they can stop doing business with amazon, or agree to the terms.

And before you get all sad for Hatchett, you should know they're a $2 billion company, that contain parts of the publishing of CBS, Disney and Time Warner. They are not the friendly do-good book publisher you think they are.

Re:Time to become a better shopper

[Frosty Piss]

See, I'm not necessarily upset at Amazon for doing this, as they're being seemingly open and honest about it.

Sure they are. But that doesn't make it right.

Cheap books now, but in the long run, fewer choices.

Re:Time to become a better shopper

[lgw]

Except Wal-Mart's prices are damn low over time. They can sustain lower prices than just about anyone else because they have the best logistics chain in the world - really amazing tech there. Also partly because they sell low-quality versions of familiar products, of course, but apparently consumers are just fine with that.

Face it: hatred for Wal-Mart is a tribal identification thing, not a rational economic argument.

The interesting fight is yet to come. Eventually, Wal-Mart and Amazon will be in direct competition. Bring popcorn.

Re:Time to become a better shopper

[I'm New Around Here]

The interesting fight is yet to come. Eventually, Wal-Mart and Amazon will be in direct competition. Bring popcorn.

Like we'll be able to afford popcorn when the only two suppliers of it are WalMart and Amazon.

Re:Time to become a better shopper

[Accordion Noir]

I'd say that WalMart is getting close to a monopoly in towns I've visited where a few years before there were hardware stores, grocery stores, fabric stores etc, and a somewhat functional downtown, and now there is ... Walmart. It's not the only place you can buy things in the country, but it has pretty much driven some whole towns out of business.

There's anecdotal evidence for you.

Re:Time to become a better shopper

[ArmoredDragon]

This is quite false, and in many respects is a red herring.

The first problem with this argument is that there is no set time period for how much something will last. The second is that at the same time, marginal reductions in production cost don't necessarily equate to reduced durability. Generally when they refer to lower quality, at least in the case of Wal-Mart, they're referring to a substitute for a cheaper material in all or part of the product, which generally results in lower aesthetics and has nothing to do with durability.

Take for example, substituting leather for vinyl. Vinyl actually carries a few advantages over leather (for example, it is far more tolerant of getting wet, more tolerant of direct sunlight exposure, and less likely to crack or fade.) It also carries a few disadvantages in that it generally feels somehow rubbery/artificial and not as "soft," in addition to being more likely to cause you to sweat if it sits against your skin. The cheaper "quality" product will be made with vinyl rather than leather, but as for which one expires sooner depends on how the product ends up being used. In a more wet environment, the vinyl product is guaranteed to last longer.

Indeed, the defining characteristics of modern manufacturing are for cheaper products while having fewer defects. This is called Lean Principles. Arguably by cutting out some of the more expensive manufacturing processes, you also reduce the chances for error, simultaneously reducing cost as well as increasing quality. Historically (over the last 60 years) this argument has proven to be accurate. Yes there are some products that are so horribly built that they have poor endurance, however that has more to do with poor manufacturing techniques than cost of production. I've seen plenty of expensive products have the same characteristic, take for example the mac mini's which are often built from notoriously bad parts (meanwhile Apple fans tend to praise them anyways.)

Re:Time to become a better shopper

[JDAustin]

Was hatred of Standard Oil irrational?

Actually, it was somewhat.

In 1865, the price of kerosene was 58 cents/gallon and Standard oil had almost no share of the market. By 1870, Standard Oil had a 4% share of the market and kerosene prices were at 26cents/gallon. In 1880, Standard had a 90% share of the market. Kerosene prices were now at 9cents a gallon. After a decade of 90% market share, kerosene prices were down to 7cents/gallon.

Why? Efficiency.

Rockefeller did such things as purchasing entire forests so he could make his own barrels. The result is a barrel price drop from $3 to $1. Rockefeller also offered guaranteed daily traffic to the railroads using Standard-owned cars, loaded and unloaded in Standard owned facilities. The result was a lowering of transport costs from $900k per trip to $300k per trip.

When it came to take-overs of competitors, Rockefeller opened the books and made a reasonable offer as he wanted talent and assets. If they refused, then he would start undercutting on price (while still turning a profit).

Now Standard Oil wasn't broken up until 1911, but due to competitors copying Rockefellers methods, its market share was at 65% and falling. Standard Oil didn't stop competition, it only forced them to become better.

Antitrust investigation?

[manu0601]

Shouldn't this fuel an antitrust investigation? The mere fact they can pressure a publisher by not listing their books means free market failed.

Re:Antitrust investigation?

[Anonymous Coward]

no, being able to put preassure on someone by deciding to buy from someone else is not showing that the free market failed, it is the free market in operation.

Re:Antitrust investigation?

[Arker]

"it is the free market in operation"

Except the only free market in books tolerated is in reprints of books originally published in prior millenia. This is not a free market on either end or in any way.

Here

[Charliemopps]

I'll just leave this here...

http://booksprung.com/dear-hac...

Thanks Amazon ;-)

I recommend...

[Frosty Piss]

...that consumers dump Amazon in favor of Powell's Books.

Re:Fight for consumers

[Frosty Piss]

It's good to see a big company actually fight for better prices for customers.

No, that's not the Amazon plan. In fact, they are trying to drive publishers out of business and force authors to deal directly with them, as the only choice. As the de facto monopoly, they can dictate to the authors what they will pay, and it ain't going to be pretty.

Punish Apple!

[SuperKendall]

Amazon behaving badly in a market where they have a monopoly? Time to get out the Apple Beatin' Stick again! Got to keep down those competitors with government sanctioned punishments for even trying.

Comment removed

[account_deleted]

Comment removed based on user account deletion

To Summarize

[matunos]

Both parties admit they're in contract renegotiations. So the current public spat appears to be about whether a retailer should be obliged to continue to stock the goods under negotiation for resale without a contract, because... authors?

Re:Information isn't matter, symbols are one encod

[Shazback]

"Mathematics, Fashion, Automotive industries have no copyrights or design patents and yet are very profitable"

You might have been lured in by a very bad TEDx talk (http://www.ted.com/talks/johanna_blakley_lessons_from_fashion_s_free_culture) but this is pretty much entirely false.

Mathematics is not profitable, by pretty much any metric imaginable. Lots of things that use mathematics are very profitable (pretty much the entire IT sector and any heavily engineered business), but mathematics itself isn't. In order to translate mathematics into goods and services, a significant amount of work is required, and whilst the mathematics itself can't be protected under IP laws, the product of the work put into making the service or good can. Programs can be copyrighted, goods or services that leverage mathematical properties can be patented if they meet the required criteria, and so forth.

The automotive industry is a hot-bed of IP protection. Ford alone has been assigned over 6 000 patents in the US, looking only at the records from 1979 onwards (http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&u=%2Fnetahtml%2FPTO%2Fsearch-adv.htm&r=0&f=S&l=50&d=PTXT&RS=AN%2FFord&Refine=Refine+Search&Refine=Refine+Search&Query=AN%2FFord+and+Global+and+Technologies). Toyota, VW and all the other major automobile manufacturers have similarly huge patent stashes that they guard preciously. In the past decades they have been more aggressive with design patents in order to stop aftermarket parts makers from successfully entering the replacement parts market. Design patents are ubiquitous, and pretty much every single car since the 70s has a few... Porsche (http://patft.uspto.gov/netacgi/nph-Parser?Sect2=PTO1&Sect2=HITOFF&p=1&u=/netahtml/PTO/search-bool.html&r=1&f=G&l=50&d=PALL&RefSrch=yes&Query=PN/D673484), Toyota(http://patft.uspto.gov/netacgi/nph-Parser?Sect2=PTO1&Sect2=HITOFF&p=1&u=/netahtml/PTO/search-bool.html&r=1&f=G&l=50&d=PALL&RefSrch=yes&Query=PN/D688160), Ford (http://patft.uspto.gov/netacgi/nph-Parser?Sect2=PTO1&Sect2=HITOFF&p=1&u=/netahtml/PTO/search-bool.html&r=1&f=G&l=50&d=PALL&RefSrch=yes&Query=PN/D488405) just to name one in each major market.

As for fashion, well it's hardly a brilliant example of a "beneficiary" industry when it is the sector that pursues the most aggressive out-sourcing and mechanisation strategies. Buying things made in the USA isn't always easy, but for clothes it's almost impossible. A few companies that are pushing the high end of the market manage it, but that's hardly a ringing endorsement of a sector that is in great health.

But beyond the obvious financial difficulties that many fashion companies have had over the past decade or two, a more potent criticism is the actual lack of innovation that fashion has brought over the past century or even two. In 1930 IT didn't even exist as a sector, and pretty much every aspect of our lives have been transformed. Cooking has seen the meteoric rise of the microwave oven and the freezer, whilst fridges became basic home appliances. Communications went from the radio to TV and online broadcasting, whilst telephones have become mobile personal assistants. Cars have seen vast transformations in performance, variety and ease of use. Air travel has gone from a luxury reserved to a prestigious and wealthy elite to a popular mode of transport. Electricity has definitively finished its transformation from a convenient novelty to a base necessity of achieving any decent standard of living. Plastics have gone from being synonymous with bakelite to a whole group of materials with ever more varied properties...

The changes in pretty much every facet of life have been huge thanks to sustained innovation over the past century. What has fashion (or even apparel in a larger sense) brought to the table? Very little I fear. New materials have been brought to the ma

Re:Fight for consumers

[bdam]

Full Disclosure: I work for a small publisher. In terms of actual stores dedicated to selling books, there are fewer and fewer of them as time goes by. And it's not just the small guys, Borders got taken out too. To be clear, there's an economic argument to be made that this is a good thing but let's at least be clear about one thing: Amazon has a very real monopoly on print and electronic books. While publishers will come and go over time the idea that authors will publish their own books shows a lack of experience actually dealing with real authors. Sure, some have the talent, desire, and resources to do so. However, that vast majority of authors we deal with do not want to prepare their books for market and then have to deal with retailers. Further, publishers are partially in the business of risk taking by offering up payment upfront to authors for works they haven't completed yet. Authors tend to be comforted knowing that they'll get $X now for signing the contracts and $Y later when they deliver the manuscript regardless of actually making a single sale. Again, some authors are willing to take that risk and it will pay off but not many. So sure, Amazon could take on those roles but that doesn't just magically remove teat suckers. Unless you want unedited and un-styled walls of text someone's going to have to edit the damn thing and someone with an eye for a design needs to make it look half-way appealing. Those people aren't likely to do so for free. I'm sure Amazon could come into the market though and push those costs down and economically that'd be great. However, speaking long term, how long is that going to last? If Amazon has a monopoly on publishing in addition to distribution then what makes you think they'll continue with razor-thin margins?