The Least They Could Do: Amazon Charges 1 Cent To Meet French Free Shipping Ban

Last year, we mentioned that the French government was unhappy with Amazon for offering better prices than the French competition, and strongly limited the amount by which retailers can discount books. Last month, the French parliament also passed a law banning free delivery of books. Ars Technica reports that Amazon has responded with a one-penny shipping rate on the orders that would previously have shipped free. Says the article: This is by no means the first time France has tried to put a damper on major US tech companies dabbling in books or other reading materials. In 2011, the country updated an old law related to printed books that then allowed publishers to impose set e-book pricing on Apple and others. And in 2012, there was the very public dispute between French lawmakers and Google over the country's desire to see French media outlets paid for having their content pop up in search results. At least for now with this most recent situation, an online giant has found a relatively quick and easy way to regain the upperhand.

Comments

Not France vs US

[medoc]

This is not at all about the French/US competition, the big French sites like fnac.com are subjected to the same rules of course.

You can think one thing or another about the rules, but they are about the big sites killing off the small local shops.

Re:Not France vs US

[AK Marc]

Protectionism is protectionism, whether protecting "small" from "big" or "local" from "foreign" or "wasteful/bad" from "effective". I know a number of small shops. They haven't been killed by Amazon. The smaller book stores have gotten into service and knowledge. Selection and price is for Amazon. Casual discussion of authors while exploring, and running into other people in the shops is left for the locals.

But then, I haven't been book shopping in France.

Re: Not France vs US

[Anonymous Coward]

Or move their operation outside of France and ship from there to side step regulation. I'm no advocate of big biz but the law makers in France seem to be too protectionist (see: good regulatory balance).

Trying not to "piss off the law makers" simply caters to their silly protectionist rackets that are doomed to fail business and consumers in the long run.

Re: Not France vs US

[khallow]

If Google wants tot do business in France they should obey the laws of France, not frustrate the lawmakers. That is just not professional.

They are obeying the law. They're charging for shipping just as the unprofessional law in question requires them to do.

Re: Not France vs US

[Anonymous Coward]

Well, the problem with this line of thinking is omitting the fact this is largely a technology issue.

Progress will continue regardless of regulation. If the prices for books are relatively high, the negative externality of higher rates of book piracy may occur in the long run. Basic supply price vs demand.

Sure, some people might prefer paper copies but the monetary cost of free often overcomes that aspect.

Re: Not France vs US

[Anonymous Coward]

It is not a technology issue. The law that stated a maximum of 5% discount for books goes back to 1981. Decades before Amazon even existed. It was put in place to assure that local bookshops could compete on an equal term to big competitors (like supermarkets selling books etc...). Right now the French government has only clarified that that 5% maximum discount is also to include also the shipping charges. So you can't do 5% discount (allowed by law) on the book + x% discount (shipping).

Now as to the price of books, maybe you don't know but french books cost on average less than american ones. And considering the US is a much larger market, a free market WHAT does that really tell you ? The French have a vibrant cultural market. Especially when it comes to books. They love books, they love reading, and they buy a lot of books. Much more on average than americans. If this law were so bad you would see people stopping buying books but that's not what happens. Ensuring that local bookshops survive is a good thing to everyone.
Imagine a future were only Amazon or Apple can distribute/sell books. It would be a nightmare. Even now when thy don't have much of the market they're brazen in their attemps to censor/blocks books that aren't morally suited to the corporation. You want to publish a young adult books that talks about teen sex, tough luck. Apple doesn't like it so you don't get to publish it. No thanks. Having retail stores that stock and get access to all the back catalog is a good thing for everyone.

Re: Not France vs US

[Half-pint HAL]

Well that's how the cookie crumbles with any market. Sure, some good balance of regulation is good but competition is also good for the consumer. And France is probably on the side of over regulation while the US is often under regulated (sans the broken patent system, for example).

Yes, competition is good for the consumer, which is why France wants to protect competition in the marketplace. Monolithic pile-em-high, sell-em-cheap outlets lead to monopolies. Amazon is increasingly dominant in more and more markets, and getting damned-near monopolistic.
The original fears in France weren't only about the loss of small shops, but also about the result loss of variety in the publishing sector (the supermarkets only stock a small selection of the most popular literature, much of which is pulp and/or translations). Amazon certainly doesn't pose a threat to variety of material, but the monopoly is still worrying. What France recognises is that employment makes the monetary system go round. Fewer jobs in your town means less money in your town, means less spending, means fewer shops, means fewer jobs, means...

Re: Not France vs US

[FireFury03]

Amazon certainly doesn't pose a threat to variety of material

Sure they do - they try some pretty hard negotiation tactics with the publishers which sometimes results in books from certain publishers being withdrawn from Amazon. If Amazon is pretty much the only place you can get books then this is going to threaten the variety of material available to the general public.

Re: Not France vs US

[AmiMoJo]

They looked over the channel and saw what has happened in the UK. Most places are what we call "clone towns", which all have exactly the same set of chain shops. There are very few independents left in most places. Choice is non-existent, as even where there are multiple chains they both tend to carry the same products and only differentiate (slightly) on price.

Re:Not France vs US

[IamTheRealMike]

Yeah, and so what?

The underlying assumption behind this kind of move seems to be the belief that small local bookshops are inherently worth protecting. Why is that? It's not like if a bookshop closes the land it occupied is salted with radioactive waste. Something else, possibly something more useful will move in.

The real problem here is not Amazon or books or even Google, it's the French mindset that things should never change, that the old ways are always the best ways. Perhaps France has an unusually elderly set of politicians or voters, but you see this in all its areas, most notoriously agriculture. Old ways of farming were put on a quasi-religious pedestal and vast amounts of EU policy and budget were redirected towards preserving them.

Fetishing bookshops doesn't have any emotional appeal to me - they're just buildings stacked with a small and limited selection of reading materials, which inefficiently deploy land and people. Given the rise of the e-book even large chain bookshops will likely disappear over the coming decades, and who will cry for them?

Perhaps the space the bookshops used up can be replaced by coffee shops - spaces for social interaction and work, where reading an e-book and then meeting a friend and having a nice conversation at ordinary volume is a perfectly acceptable way to spend your time.

Re:Not France vs US

[AK Marc]

Considering how bookshops have been obliterated by Amazon in the US

Borders and Barnes and Noble were obliterated by Amazon. But any book stores that survived Borders/B&N were not affected by Amazon at all. Amazon was late to the "cheap and easy" party, they just did it better than the big chains did, and hurt them most. Any small store that had a near by big store, was better off after Amazon, and the big store closed down again.

Re: Not France vs US

[Eunuchswear]

If you don't want French money you're not obliged to take it.

If you do want French money then you obey French law.

If you think that Amazon are stupid enough to ignore the 9th largest economy in the world just because of some idiotic pseudo-religous worry about "free markets" I've got a bookshop to sell you.

Re: Not France vs US

[Ash Vince]

Screw france and any other country that thinks they have a right to control how markets operate.

How about screw companies that want to do business in a local area without following local laws?

Does your same logic apply to columbians who want to sell crack in the US? That is just the good all free market too isn't it?

Re: Not France vs US

[geoskd]

Maybe not. The law says they need to charge shipping costs, so unless their couriers are charging them Ã0.01 they are probably not complying. They are just hoping that it takes the authorities a long time to get around to forcing them to charge the real price, which will be obfuscated as much as possible, by which time the will have forced even more of the competition out of business.

This actually presents an interesting problem. Many carriers contractually require that shippers not disclose the discounts they are being given. That means that if Amazon discloses the discounted shipping rates they are paying, then they loose their discounts, and everyone pays retail. This basically royally screws the shippers, and the consumers. As usual, the French have completely failed to think through the consequences of their actions. It continues a fine decades long tradition of fucking up in the name of protectionism. Its the reason, they have double and triple the rate of unemployment of the rest of the world.

Protectionism only works if your society is close to export parity. If you can afford to close your borders completely without collapsing your economy, then protectionism will work (and you actually don't need it under those circumstances). Whenever there is an imbalance, protectionism screws up the local economy. If there is a trade deficit, then your economy hemorrhages money until everyone is broke and in debt. If there is a trade surplus, then protectionism shuts it down, as no one wants to buy from the over-priced asshat who actively blocks foreign competition. With parity, you can afford to significantly reduce trade in both direction (and you will), but any other time its a bad idea.

Re: Not France vs US

[damienl451]

Actually, the law says no such thing. Before this new law, booksellers in France could sell a book with at most a 5% discount relative to the mandatory price set by the publisher. The idea was to prevent supermarkets and larger booksellers from competing on price and driving smaller shops out of business. In the 1980s, it made some sense, as people were afraid that supermarkets would only stock bestsellers and that smaller shops were necessary to ensure the availability of more specialized, less popular books. Back then, the only people shipping books were mail-order book clubs, which re-published bestsellers after a year or two and did not have much market share.

With the advent of the internet, booksellers started complaining that Amazon and FNAC were too successful. Since they could offer both the 5% discount and free shipping, customers paid as little as it was legally possible and enjoyed the extra convenience of not having to visit several bookshops to find the rare book that they'd been looking for. This is definitely a good thing for consumers and Amazon takes care of the long tail much more effectively and efficiently than smaller booksellers. Plus everyone was treated equally: smaller shops could also offer free shipping if they wanted to: they just could not afford it due to the lower volumes involved. Amazon can negotiate very good shipping rates and buy books much cheaper. Publishers sell them their books with a 50% discount, versus 30-40% for smaller bookstores.

The law now says that you can still offer a 5% discount BUT, if you ship the book to the customer, this 5% discount must be deducted from the shipping fees, which cannot amount to zero. Thus, if Amazon sells a €10 book, they probably charge a €0.51 shipping fee, which ends up being €0.01 after the 5% discount. They're still at a disadvantage since a physical store can sell the same book for €9.5. Which means that the law now clearly favors physical stores, much more than it did small bookstores vs supermarkets before.

Re:Not France vs US

[Charliemopps]

This is not at all about the French/US competition, the big French sites like fnac.com are subjected to the same rules of course.

You can think one thing or another about the rules, but they are about the big sites killing off the small local shops.

Yes, the rest of the world had this argument 20yrs ago when Walmart killed off most of them here.

The consensus? Fuck the local shops. What good did they ever do us? Unlike most, I remember those shops. I remember the 70yr old owner busy chatting with his friends out front and not giving a shit if I could find what I needed because he was the only game in town. I remember paying $5 for a bolt. I vividly remember when I bought my first guitar, prior to the internet even existing and believing the store owner that $800 was a fair deal (it wasn't, it was a $200 guitar) and after he signed me up for a loan that would likely be illegal today, he asked "Oh... would you like a case with that?" $200 for the case. I paid over $1000 for the guitar, got signed up for a 30% interest rate and it was a balloon payment (go look up how awful that is) I was basically bankrupt all the way through college because of that guy.

Fuck the local shops. Competition is good. There are still local shops around here, but now they focus on carrying unique hard to find things and customer service. You can't walk in without them jumping up to help you. The products they do carry are things you need "NOW" and can't wait for shipping on. Or things that would be silly to ship. The local shops that weren't total ass-hats survived, the ones that weren't got what they deserved.

Re:Not France vs US

[Cederic]

Fuck you and your aspie world.

What he said has fuck all to do with being (or not being) aspie.

Incidentally, your post breaks UK law - stop fucking discriminating against a learning disability you cunt.

Re: Not France vs US

[rahvin112]

If this law were so bad you would see people stopping buying books but that's not what happens.

No you wouldn't. What you would see is people buying less books because the books they buy cost more. There is no way to prove one way or the other than such a result is happening.

But there is one absolute fact, that is that books cost more as a result of this law.

This law was enacted to protect small bookstores so that the long tail of customers still had access. Amazon provides that long tail service better than anyone else in the marketplace. So now the argument is that it protects the culture and small bookstore "experience". What it actually is for now is one of the infamous French jobs programs where everyone in France is forced to pay more for something by their government to protect an insignificant number of jobs. The reality is that it's quite possible that eliminating the law would create more jobs for authors and writers (at the expense of cashier jobs) by allowing French consumers to purchase more books for the same money. All market manipulations come at costs.

Re: Not France vs US

[Karmashock]

Wrong. An imperialist would think that he has the right to impose rules through his nation.

Instead, I am saying that NO country has a right to control the market.

And anyone that tries simply creates an imbalance that creates black markets or inspires people to create loopholes or complicated ways of doing things that confuses the morons trying to regulate the system into thinking you're not doing the thing they passed laws to keep you from doing.

What France is trying to do is save brick and mortar retail.

It can't.

It would be like trying to save agrarian farm culture in the face of the industrial revolution. Utter waste of time.

So France can pass any sort of law they like... they're wasting their time... it will fail.

Adapt to changing circumstances. Don't try to pass laws making the future illegal... the future will not be denied.

Re: Not France vs US

[mysidia]

The first laws passed by the First United States Congress after the ratification of the constitution were tariffs.

There were extreme situations extant at the time necessitating a tariff. And by extreme situations; I don't mean fiscal irresponsibility. I mean: there was no such thing as an income tax; the new government needed a bit of money to get on its feet, and the tarrifs were low and not a significant barrier.

Tariffs on international trade in order to fund the new government, largely the tariff was a penalty against Great Britain, and provided to help pay down the government debt. And then to help protect certain manufacturing industries just getting started in the young nation against foreign imports, so the country could begin to become self-sufficient, after surviving almost a decade of british blockades.

Re: Not France vs US

[ray-auch]

The UK high street shops are not all the same chain they are all the same charities. The reason for that is down to local council policies, not online competition.

They put high street business rates up to unsustainable levels, and shops go bust.
Then they get less money from business rates so they put them up again so more shops go bust.
Then charity shops move in - because, guess what, they don't pay business rates.
Then the council gets less money from rates so they up the parking charges and remove free parking to get more money.

So the shoppers have all gone online ? Nope - they've gone to the big out-of-town supermarkets and shopping centres where parking is free and the business rates for the shops are a fraction of the high street. The councils approve the out-of-town developments because they think they get additional business rates and jobs that way - but don't account for the fact that they lose the high street income and jobs.

Result - the high street dies. Populated only by charity shops and customers who don't drive.

Re:What's the difference

[AK Marc]

"free" means optional and not explicitly/separately paid for by the end user.

Shipping is free. Or now one cent.

So instead of "free" why don't they say "covered"?

[mark-t]

The implication being that although shipping is not truly free, the cost of it is already fully covered by the order and will be paid for by the shipper.

Re:What's the difference

[davester666]

Shipping is optional? I wasn't aware Amazon permitted the option of driving to their warehouse to pick items up.

Why the assumption....

[Chrisq]

At least for now with this most recent situation, an online giant has found a relatively quick and easy way to regain the upperhand.

Why the assumption that it is good for for-profit companies to find loopholes and avoid the will of democratically elected governments. The French government has made a decision that will have repercussions. If this is followed, books will be more expensive in France, but they wont lose the independent small bookstalls in town high streets that so many other countries will have. It may also inhibit the ability of online companies to start in France. But, guess what, the people can decide. They can lobby for it to be an election issue, ask their representatives which way they vote, etc. If they don't like the law they can get it changed.

Why is it assumed to be better for a private company with a board who the French people ave no influence upon circumvent this decision?

Re:Why the assumption....

[silfen]

Stop being so naive. It's not "the French people" vs a "private company". This whole thing is about wealthy and powerful European publishers trying to rid themselves of competition that's threatening to erode their profits and their power, and local bookstores are a pawn in that issue.

As for the French people, if the majority wanted to shop at local bookstores, the issue would be moot, because local bookstores wouldn't be going out of businesses. Of course, even if the majority had that preference, it still doesn't have the right to impose that on the minority who prefers to shop at Amazon; the ability to engage in business without arbitrary restraints is essential to democracy.

Re:Why the assumption....

[IamTheRealMike]

Why the assumption that it is good for for-profit companies to find loopholes and avoid the will of democratically elected governments.

Democratically elected does not equal democratic.

The most democratic place I know of is Switzerland, where there is an absolutely constant stream of referendums on absolutely everything, mostly things that in other countries would be all be lumped under an umbrella vote for left or right. For example the Swiss recently voted on the question of whether to buy new Gripen fighter jets. The French, in contrast, have a system so undemocratic that the President doesn't even need the authority of parliament to start a war!

I think it's very corrosive to imply that people a huge bloc of people get a vote between two or three possibilities every four or five years, that somehow legitimises everything that government does in the meantime. It doesn't. The system of voting we have was decided on hundreds of years ago when most people couldn't even read and letters took days or weeks to cross countries. Representatives chosen locally every few years made total sense in such a world. It's now obsolete, much better possibilities can be imagined or even implemented. Western democracy is merely the least worst system tried so far, not the best.

In this case, there's no justification for the French government to be messing with Amazon. As pointed out in other replies to your comment, if the French people truly prefer their local bookshops over Amazon then they'll vote with their wallet, a far fairer and more democratic way of doing things than central government mandate. This idea isn't stupid, there are parts of the world that places big chain stores and brands don't make much progress in because of local culture. But times change and countries are very large. Take McDonalds in France. In 2013 we have this story about an anti-McDonalds protest and the local government attempting to block construction of a restaurant there. But then in 2014 we have another story where the French are protesting for a McDonald's, they're upset because it's been delayed and they want it to open.

These sorts of disputes are best left to ordinary people to work out economically.

Re:Free Shipping

[Half-pint HAL]

We should also remember that Amazon went years without profit, churning through venture capital like there was no tomorrow. They did this to muscle their way into the market, and to this day I don't know how they didn't get hauled up on anti-trust/anti-competitive charges for delivering loss-leaders.

Re:So instead of "free" why don't they say "covere

[sumdumass]

you'd be guilty of various crimes, like tax evasion due to accounting fraud, and also price discrimination against some of your customers. Besides, you'd also be guilty of dumping, which is a variant of antitrust violation.

How so?

I mean building costs into pricing models has been around for quite a long time. Shipping is just one of those costs and costs come off the ledger for profit statements and tax purposes.

The US Postal Service has a flat rate box where if it fits, it ships anywhere for something like $15. If Amazon negotiates that to $10 and their average order qualifying for free shipping has 4 items in it, it is only $2.50 added onto the costs. So they take the retail price, discount it by 25% then add $3 to it and cover the costs of shipping without dipping too much into profits.

Businesses to this with taxes too. You place a fee or raise their rates and they just adjust their prices accordingly. It's easiest to do when the tax increase effects the entire industry too. Of course there has been some industries who got pissed and attached it as a separate fee specifically notating the law that caused the increase on the bill. Congress was really pissed when the telco industry started doing that.

What's the point?

[silfen]

I really don't see how making books more expensive than they need to be by adopting policies that support physical bookstores helps anybody. Shouldn't the goal be to make reading and culture as affordable as possible and meet the needs of buyers, instead of imposing particular delivery methods?

Re:france is such a pathetic country

[Anonymous Coward]

France is really TWO countries. Firstly there is the greater France and then there is Paris and its environs.
The equivalent would be to separate the greater US and what goes on inside the Beltway. The two are totally divorced from each other (and reality)

Many French People in rural France loathe the Parisiennes. When a car with a Paris Department number plate comes to my Village the locals suddenly become sullen and un-coopoerative towards the visitors. When the car leaves, life returns to normal. Even to a 'Les Rostbiff' like me they are far friendlier that they are to anyone from Paris.

I live most of the year in a village in the Haut-Savoie region, about 50Km from Geneva. We are just starting to see the holidaymakers from Paris arriving. Tomorrow marks the start of the French Summer holiday season as it is Bastille day.
Roll on Sept 1st and they all go home.

the problem is small independent book stores fail

[chentiangemalc]

The problem here is Amazon is not killing small or independent book stores with free shipping. The problem is independent small book stores are typically overpriced, have poor customer service from a minimum wage clerk who doesnt care to assist, and worse don't have what i want to buy. i love how retailers continue to have a big sook about unfair competition from online shopping, while totally ignorant of the fact they are not delivering what most customers want. and not just price. i find Amazon customer service is *better* than most brick and mortar retail stores.... I just watched a video via archive.org "Blockbuster Customer Service Training" and found Most of the "bad service" examples to demonstrate typical retail experience.

It's not just France

[yacc143]

Only as a side note, the German speaking countries have also a system where books are not allowed to be sold below the price set by the publisher. Nothing new here.

Things are simple...

[Ecuador]

You should never try to protect at an overall cost an established business, however small, cute etc it is. Bookstores have to close. Not all of them, but a lot of them. The ones that actually provide value to the customer will stay due to people actually visiting them. For example I love Amazon, however there is one small local bookstore that provides a great personalized experience and does not gouge prices to which I go first. I see a lot of people not minding a surcharge when they get even more value out of the experience, so this bookstore will servive. Also that small bookstore has found things to bring that Amazon doesn't have etc. Protecting or bailing out failing businesses is always bad for the community as a whole in the long-run. Yes, poor buggy whip makers will be out of jobs in the short term, but we can't all be riding carriages into the future...

Re:Paid taxes

[Chas]

if amazon and others giants really paid their taxes in the countries where they do business, this law does not exist.

Bullshit. First to last.

The idea that protectionist laws favoring home-grown business over large, well organize foreign ventures with low overhead if only they were bribed with even more taxes?

Naive at best. Idiotic in reality.

French culture protectionism

[sjbe]

Now as to the price of books, maybe you don't know but french books cost on average less than american ones.

Citation needed.

And considering the US is a much larger market, a free market WHAT does that really tell you ?

It tells me nothing because even if what you claim is true (and you haven't proven that) there is insufficient information to draw conclusions regarding why that might be the case. Could be subsidies, could be exchange rates (the Euro is strong relative to the dollar and a lot of books are published in the US which would make them cheaper in Europe), could be some other structural advantage. No conclusions can be drawn without more information.

The French have a vibrant cultural market.

And yet we see the French constantly having to pass laws to "protect" their culture from the outside. I see McDonalds opening in France but I don't exactly see French bistros dotting the countryside of the US. The French should be justifiably proud of their culture and what it produces but sometimes they forget that sometimes people should decide for themselves what they want their culture to be.

Especially when it comes to books. They love books, they love reading, and they buy a lot of books. Much more on average than americans.

Again, citation needed but their supposed love of books has little to do with whether price supports should be used to subsidize small, inefficient bookstores. If French customers like the experience of browsing in such stores and are willing to pay more for the experience then such stores should have little difficulty surviving because they are not competing on price. But if they ARE competing on price then all this law does is subsidize a business that customers really aren't willing to pay for. Either way price floors are not a good idea.

Imagine a future were only Amazon or Apple can distribute/sell books. It would be a nightmare.

It is also a strawman argument. That is deeply unlikely to ever come to pass. The market will certainly change but change doesn't have to be bad. Right now you have a smallish number of large publishers who control the sale and price of most books. Amazon and others are taking the power and profits from the publishers but as an end consumer I'm simply trading one large oligopoly for another. What we really want is some way for readers to buy directly from authors without any middleman and in theory the internet provides a way to completely circumvent Amazon and publishers altogether when they don't provide extra value.

Re:Price floors are subsidies

[rahvin112]

Amazon's bread and butter is the long tail. I'd be willing to bet more than 1/4 of their revenue is used, older and out of print books. You can buy nearly every ISBN in existence on Amazon.

Everything you claim about Small Bookstores serving the long tail better than Amazon is bullshit.

This is a French jobs protection program, nothing more. In the long run I would be willing to bet it harms more jobs than it protects. Just like most of the French jobs programs where everyone in France pays more for everything to protect jobs.

Re:Price floors are subsidies

[MikeBabcock]

Actually I'd argue it is the government's job to protect cultural value; that's precisely why they fund libraries and museums. They just shouldn't be doing it by forcing Amazon to charge shipping.

Re:Cost of housing

[IamTheRealMike]

The price of homes has become wildly disconnected from the cost of land thanks to their use as speculative asset, but even if that were not the case in most places you can build upwards way more than people do. And populations are stabilising or even falling in developed parts of the world. Only immigration keeps it from entering full-on collapse. So if our messed up financial system gets fixed and people stop using houses as piggy banks I see no reason why the cost of homes must go up forever.