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

[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

[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: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: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.

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: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.