Don’t you think Amazon looks tired?

by Suw on August 11, 2014

Amazon recently returned fire at Hachette and Authors United with a particularly ill-considered new website, Readers United. Authors United is a group of 900+ authors, published by all sorts of companies not just Hachette, who support Hachette and are calling on Amazon to end their sanctions against Hachette authors.

There is a lot of commentary on Amazon’s open letter already.

There’s no value in me rehashing those points, so just take a moment and read the above, if you haven’t already.

Now, let’s pull back a bit, let’s get more of the picture in our viewfinder.

There is a common narrative thread throughout many responses to Amazon which relies on the belief that it has an unassailable position in the publishing industry, that it cannot be argued with and that publishers depend upon it too much to really do it any damage. It’s an easy narrative to take up, because Amazon is big, and it is in a very strong position controlling, as it does, such a vast swath of the book/ebook retail market.

But it’s not invulnerable. I wrote in 2012 that I thought Amazon was ripe for disruption, although few people bought in to that argument. Baldur Bjarnason said the same thing in Frankfurt a few years ago, got the same response, and reiterated his thoughts this past weekend. And Jake Kerr has examined just how fragile he thinks Amazon’s position really is. If you haven’t read the last two pieces, which both cover similar territory, then please do.

Now, what if Amazon is starting to feel the pressure of the narrow margins that plague its book retail proposition? It has made a bit of a rod for its own back in creating the expectation amongst its customers that 60% discounts are normal, and that books should be almost trivially cheap. Publishers are all complicit in this — they like Amazon’s discounts because they sell more books and Amazon eats the loss. Fantastic, eh?

Well, not really, no. Because Amazon is coming under pressure from Wall Street to start showing some sort of profit and to create some sort of return for investors. Shares dropped 6% after Amazon’s second quarter financial report, which showed a loss of “27 cents per share on revenue of $19.34 billion, while Wall Street had been expecting, on average, a loss of 15 cents per share.” This, despite net sales rising 23%.

It may be a coincidence that Amazon’s tone has become increasingly shrill at around the same time that Wall Street is showing displeasure at Amazon’s performance. Certainly Amazon, a company previously noted for its wall of silence, has shown itself to be lacking in skill when it comes to its external communications. I can’t help but think that Amazon thinks its being clever, but as Linda Dawson says, it is instead sounding over-emotional.

What is almost certainly not a coincidence is that the Hachette conflict is not an isolated case. It’s certainly the one that Amazon has escalated the highest, but Amazon is fighting for bigger margins and more money on a number of fronts.

Amazon is now in a spat with Disney, and is this time using the availability of Captain America: The Winter Soldier, Maleficent, Muppets Most Wanted and Million Dollar Arm DVDs and Blu-Rays as leverage.

Amazon is in dispute with Bonnier in Germany over ebook terms and, as the Bookseller explains, the “German trade association Börsenverein officially lodged earlier this month with the German competition authorities has attracted the attention of the EU Commission.” Börsenverein is describing Amazon’s actions against Bonnier as akin to blackmail. Sound familiar?

Amazon halted pre-orders of Warner Bros’ The Lego Movie earlier in the year, in another pricing row.

And that’s just this year’s spats — Amazon has long-standing form with these sorts of negotiating tactics.

It’s clearly not just ebook prices that Amazon has a problem with, so you have to ask yourself, why all these arguments? Why use these blackmail-like “negotiation” tactics? What would drive Amazon to behave in a way that makes life harder for buyers, damages its reputation as being customer-focused, whilst also managing to piss off half the publishing industry and sections of the movie industry?

None of this strikes me as just ‘business as usual’. You don’t normally tell your customers to buy from a competitor. You don’t normally invoke WWII and misquote famous people in a way easy to debunk. You don’t normally create special web pages to get your press release out to as many people as possible, or email customers (in this case KDP authors) to outline your position about a news story. Unless, of course, you believe you need to create popular outrage because your hand is weak and you want to use the court of public opinion to strengthen it.

Amazon does not just look like a bully now. It looks like a crazed ex who just can’t get over the fact you’ve walked away. It looks like a cornered, scared animal fighting for survival. But more than anything, don’t you think Amazon looks tired?

 

Deirdre Saoirse Moen August 11, 2014 at

Thank you for the link love!

The really sad thing is that I made more profit last year as an author last year than Amazon did in all its businesses combined.

(Yeah, we both lost money, but I lost many millions less.)

Given that my gross writing income last year was in the three digit range (and most of that was the $150 I got as prize money at a conference), it boggles me that Amazon is pressing so hard on this issue.

They should look at how they’re spending money and not squeeze their sources of revenue.

Deirdre Saoirse Moen August 11, 2014 at

Year should read quarter above. Bah.

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