April 30, 2008
Was the Washington State Attorney General's Office Bamboozled? It's Time to Submit Your Amazon/Booksurge Complaints to the Feds! By Angela Hoy
Two weeks ago, I was walking through Washington, DC, and discussing the Amazon/Booksurge situation with my brother-in-law. I just happened to look to my right and realized we were right next to the Department of Justice. For some reason, I felt compelled to take a photo. Weird, huh?
The Washington State Attorney General issued a weak statement about Amazon/Booksurge last week. I will include it in its entirety below, along with my comments.
We have reviewed each of these complaints and we have contacted Amazon to explore the concerns that have been raised. Amazon responded to our inquiry by directing us to a publicly posted "Open Letter to Interested Parties" in which they describe their new policy.
The "Open Letter to Interested Parties" is posted on the Internet at http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-printondemand. Some of the complaints that we have received state that Amazon is refusing to sell books printed by Lightning Source or other POD publishers, and will only sell POD books printed by BookSurge. In its "Open Letter to Interested Parties", Amazon addresses this question:
Do I need to switch completely to having my POD titles printed at Amazon?
No, there is no request for exclusivity. Any publisher can use Amazon's POD service just for those units that ship from Amazon and continue to use a different POD service provider for distribution through other channels.
Alternatively, you can use a different POD service provider for all your units. In that case, we ask that you pre-produce a small number of copies of each title (typically five copies), and send those to us in advance (Amazon Advantage Program-successfully used by thousands of big and small publishers). We will inventory those copies. That small cache of inventory allows us to provide the same rapid fulfillment capability to our customers that we would have if we were printing the titles ourselves on POD printing machines located inside our fulfillment centers. Unlike POD, this alternative is not completely "inventoryless." However, as a practical matter, five copies is a small enough quantity that it is economically close to an inventoryless model.
The complaints that we have received have come from across the country. It appears that the markets involved are national in scope. Thus, it may be more appropriate to refer this matter to one of the federal antitrust agencies for review.
For these reasons, and based on the information that has been provided to us, the Attorney General's office does not plan further action on this matter. However, and as noted before, this is not a conclusive legal opinion and anyone feeling that they have been harmed and wish to pursue a remedy should consider consulting with private counsel.
If you have additional information or have evidence that what Amazon is representing is not true, please feel free to contact us.
When I first read the note above, I was stunned! Are they KIDDING!? They let a company use a PUBLIC STATEMENT, which probably took hours to write and tweak in an attempt to sway public opinion, as an acceptable response to a possible investigation by the Washington State Attorney General's Office?!
NO FORMAL INVESTIGATION? NO QUESTIONS ASKED OF THOSE WHO SUBMITTED COMPLAINTS?!
According to the statement above, it doesn't appear the Attorney General (AG)'s office discussed this with Amazon at all (other than to read a canned statement!). Uh, does this strike anyone else as odd? Hundreds of people complain about a company and ask the government to investigate. The government contacts the company, the company says, "Hey, look at our public statement", they do, they don't ask anybody any questions, and then say they're finished?
I was the first one to alert the AG's office to Amazon's actions. I provided detailed information. Other than to initially call to ask for some contact information and to confirm they received my email, they never contacted me again to ask if Amazon's actions or public statement were truthful or if they told the whole story (they didn't!). As far as I'm concerned, reading a company's public statement is NOT an investigation. Heck, it's not even in inquiry!
Did any of those who submitted a complaint to the AG receive any follow-up questions from them at all? If you did, please let me know. If you did not, the AG let us all down and failed miserably in their job (which is to FULLY investigate companies that may be violating the law).
Amazon says they need to get paid to print all POD books so they can marry products together for fewer shipments, blah, blah, blah...
As I wrote previously, Amazon's statement doesn't reveal that the Advantage Program (we've always called it the DISadvantage Program) requires payment to Amazon/Booksurge of $29.95/year, PLUS 55% of the sale of each book, PLUS the shipping costs to get the books to Amazon. And if they need to return the books to you in the future, guess who gets to pay for the shipping for those, too? You do!
Amazon's statement also says they "only" need 5 copies of each book. Uh huh. Here's a huge hole in their argument that nobody seems to be talking about. If they need copies of all books in all their distribution facilities (10 facilities in the U.S. so far?) in order to marry products, why do authors only need to ship 5 books... to 1 of their facilities? Wouldn't they need authors to ship at least 1 copy of each book to all 10 distribution facilities in order for the "marrying products" argument to hold any weight?
Do you think they make the Advantage Program so disadvantageous in an attempt to get more people to use their POD service? If you do, you're definitely not alone!
You can read about more holes in their "statement" in comments posted by one of their former employees HERE.
MAYBE SOME LARGE COMPANIES' TAX DOLLARS ARE TOO VALUABLE TO THEIR STATES TO RISK AN INVESTIGATION WHEN THINGS APPEAR NOT-QUITE-RIGHT?
I can never prove this of course, and it's pure speculation, but I wonder if some AG offices purposely allow some huge companies avoid an in-depth investigation because of all the money they're generating for that particular state?
GOOD NEWS - THEY APPEAR TO BE (PASSIVELY) PASSING THE BUCK TO THE FEDS
I guess the only good news is that they admit the matter might be national in scope (duh). However, they don't tell you how to complain to the feds. That's okay. I'm happy to do that!
SUBMIT YOUR AMAZON/BOOKSURGE COMPLAINT TO THE FEDS TODAY!
According to the DOJ website:
Sherman Antitrust Act
"An unlawful monopoly exists when only one firm controls the market for a product or service, and it has obtained that market power, not because its product or service is superior to others, but by suppressing competition with anticompetitive conduct."
I'm no lawyer but, to me, that sure sounds like what Amazon might be trying to pull!
"Information from the public is vital to the work of the Antitrust Division. Your e-mails, letters, and phone calls could be our first alert to a possible antitrust violation and may provide the initial evidence needed to begin an investigation."
If you have information about a possible antitrust violation or potential anticompetitive activity, please contact us by e-mail, regular mail, or phone. We recommend that you use the following questions as a guideline when describing your complaint:
To make it easier for them to sort their emails, consider putting "Amazon/BookSurge" in the subject line of your email.
The Washington State Attorney General closed with this: "If you have additional information or have evidence that what Amazon is representing is not true, please feel free to contact us."
Here's what I think. If they were really doing their jobs and had read all the complaints submitted to them, they'd already have plenty of information regarding the holes in Amazon's public statement. I also believe that even if you or I or a hundred other people contacted them to follow-up on this, it would be a waste of time.
They also appear to pass the buck when they tell you that you should hire your own attorney if you feel you've been harmed.
PLEASE SUBMIT (antitrust.complaints - at - usdoj.gov) YOUR COMPLAINTS REGARDING AMAZON/BOOKSURGE TO THE DEPARTMENT OF JUSTICE TODAY! If you want, send us a copy, too, and we'll publish it on WritersWeekly.com.
You can read more about the Department of Justice complaint process HERE.
We're continuing to post updates regarding the Amazon/Booksurge Ultimatum HERE.
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