Amazon: Friendly giant or unstoppable bully?
“There’s enough ruthless intrigue in this profile of the machine also known as Amazon,” writes the widely followed Twitter pundit who posts as Kontra, “to make a TV mini-series.”
Indeed, David Streitfeld’s article on the front page of the New York Times’ Sunday Business section — Feed the Beast (or Else) — is a must-read for anyone who has been following the ongoing clash between Amazon (AMZN) and the lumbering giants in the first retail business Amazon entered: books.
Streitfeld’s story opens with a mystery writer who a few years ago was reduced to returning bottles and cans for grocery money and now pulls in six figures a year from pot-boilers published, promoted and awarded prizes by Thomas & Mercer, one of Amazon’s many book imprints.
Toward the end of the piece Streitfeld tells the story of Berkshire Publishing, a small academic house in Great Barrington, Mass., that is dependent on Amazon for 15% of its sales. “I offered them a 30% discount,” says Berkshire’s Karen Christensen, “and they demanded 40.”
Amazon got what it wanted, the Times reports. Then it asked for 45%.
According to Streitfeld, the very public dispute with Hachette that came to light when Amazon stopped carrying the publisher’s titles was triggered by an even more aggressive demand. “The general belief,” Streitfeld writes, “is that [Amazon] wants to increase its share of revenue on every e-book to 50% from 30%.”
Apple is currently appealing a judge’s ruling that it violated U.S. antitrust laws when it conspired with publishers to switch from a business model where Amazon set the prices of e-books to one where publishers set the prices and gave Apple a 30% cut.
For a nuanced take on the Amazon/Hachette story from a venture capitalist based not far from Publishers Row, see Fred Wilson’s Platform Monopolies.