Amazon.com, Inc. (NASDAQ:AMZN) continues to up the ante in its ongoing battle with book publishers. The Internet retailing giant already controls close to 60% of the rapidly growing eBook market, and Amazon is trying to leverage its dominance by playing hardball with publishers in contract negotiations.
Jeff Bezos’ firm is already duking it out with Hachette Book Group and Bonnier Media, who are refusing to accept Amazon.com, Inc. (NASDAQ:AMZN)’s new terms. Current sales contracts with book publishers Simon & Schuster and HarperCollins are also set to expire in the next few months. The net result could be best-selling authors such as HarperCollins’ Veronica Roth, writer of the Divergent trilogy, and Simon & Schuster’s Stephen King could soon no longer be available on Amazon.
These Are John Buckingham’s Stock Picks For 2021
The economy remains in distress, although there are signs of recovery underway. John Buckingham of Kovitz, editor of The Prudent Speculator newsletter, has found that value stocks typically outperform coming out of economic downturns. Thus, he argues that this is an excellent time to be a value investor. Q4 2020 hedge fund letters, conferences and Read More
Amazon looking to boost margins
The battle between Amazon.com, Inc. (NASDAQ:AMZN) and Hachette will give an initial read into whether publishers can gain any leverage against Amazon as demand for digital books is rising quickly and printed books are losing ground. The seller of all things wants a larger cut of the retail price of a book so it can keep discounting e-books and still boost margins, according to three Amazon insiders
In order to increase the pressure on Hachette, last week Amazon beagn blocking some Hachette book pre-orders and delaying shipments of Hachette books.
Opposition to Amazon growing
There is, however, a growing grassroots opposition to Amazon’s “bullying” of book publishers and authors. Many feel the company is using its dominant position to permanently damage the publishing industry, and is likely to put the screws to consumers too in the long run. Public figures including Stephen Colbert and best-selling author John Green have called for a boycott of Amazon.com, Inc. (NASDAQ:AMZN).
Many authors, such as Douglas Preston of Santa Fe, New Mexico, have said they feels “betrayed” by Amazon after having trusted and supported the online retailer. Preston is published by Hachette and some of his books are suffering from shipment delays and higher prices.
In an obvious PR ploy, Amazon offered to fund 50% of an author pool to mitigate the impact on writer royalties under the new contract. Well-known authors receive around 25% of the publisher’s profits on sales. If Amazon gets a higher percentage of the retail price, that means less profits for publishers and less royalties for authors.