April 09, 2008

It's Getting HOT IN HERE! Amazon Under Fire in the U.S. and Abroad

Since WritersWeekly broke the Amazon Ultimatum Story two weeks ago, news has traveled quickly across the globe and it didn't take long for everyone, including book buyers, authors, publishers, and writing organizations, to weigh in against Amazon's actions.

WritersWeekly was also the first to report Amazon's actions to the Washington State Attorney General's Anti-Trust Division, simply giving a bullet-point synopsis of what had occurred and asking them if Amazon might be violating any laws. They responded to my initial fax in under one hour, and have since been bombarded with complaints about Amazon's plans. Last night, the Washington State Attorney General sent us an update, which states they are investigating the situation and that "it may be more appropriate to refer this matter to one of the federal antitrust agencies for review."

Late last week, the American Society of Journalists and Authors (ASJA), the Author's Guild, The Independent Book Publishers Association (PMA), The Small Publishers Association of North America (SPAN), and the UK's Leading Writers Website,, have all publicly questioned and/or denounced Amazon's actions. The Author's Guild is asking anyone with any information about the subject to contact their legal services department.

Last week, I reported that a Lulu employee posted a cryptic note online that implied Lulu had signed the contract. However, Lulu authors report Lulu has been working on a beta program with Booksurge for about a year now. So, Lulu is indeed working with Amazon/Booksurge but the details of their relationship have not been made public...and probably never will.

Author Solutions CEO Kevin Weiss (AuthorHouse/iUniverse) contacted me on Monday. We were in receipt of an email sent to an author by one of his sales reps that claimed AuthorHouse was working with Booksurge. We then received another email sent by an AuthorHouse sales rep just two days ago (Monday) that also stated AuthorHouse is working with Booksurge. That information seemed to conflict with the statement Kevin published last week, which concluded with, "We will aggressively fight anything that is done to limit choice, increase cost, or weaken the industry that together we've worked so hard to build."

If you interpret that statement to mean that AuthorHouse is opposed to Amazon's recent actions, I'd have to agree with your interpretation.

These are the burning questions on everybody's minds:

  • Is Amazon breaking one law, many laws, or no laws at all?
  • Is anybody going to file a lawsuit?
  • Why didn't Amazon remove any "buy buttons" on or shortly after the alleged April 1st deadline? Will the buy buttons be removed before the end of this month, as some are claiming?
  • Is Amazon backing off or moving forward?
  • After all the public outcry, why hasn't Amazon issued a statement one way or the other?
  • If Amazon backs off, will the POD publishers who signed that horrible contract be forced to stick with it?
  • Who has signed the contract so far? (We'll probably never know the answer to that last one because of the confidentiality clause in the contract.)
  • And, finally, why hasn't WritersWeekly published that horrible contract they claim to have their hands on?

Boy oh boy, have people been dogging us online for that! The answer is quite simple. Copyright infringement! Amazon is undoubtedly looking for any way to shut us up at this point. We're not going to publish the contract. However, I'll be happy to tell you the most disturbing part of their contact. It deals with pricing.

You must provide them with a list price for each book that will be at or below any list price you offer to any other seller for that work AND at or below the price you use when selling to your customers direct. It also says they or their affiliates have sole discretion to set the selling price of books they make available to their customers.

What does this mean?

  • You CAN'T sell your own books for less than the list price you provide to Amazon
  • Amazon CAN sell it for less - meaning they can undercut the publisher's own price (and all your other sellers' prices, too). They can do this because they're demanding a 48% discount off that list.

So, you can't put your own books on sale, at a discount, on your own website... but Amazon CAN. Amazon can also discount the book and keep it discounted, thus tempting customers away from the publisher's own website on an ongoing basis AND from other websites, since Amazon says you can't offer the book for a lower price anywhere else, either. As I and other POD publishers have interpreted this clause, it appears Amazon is effectively taking control of the pricing of each publishers' books.

And, remember, if you give Amazon their 48%, you have to give other bookstores 48% off, too, or you risk violating The Robinson-Patman Act of 1936 (or Anti-Price Discrimination Act).

Next week, we'll have more breaking news for you. Until then, don't give up and don't assume it's over! It won't be over until:

1. Amazon retreats
2. The government steps in
3. Amazon follows through with removing the buy buttons

In the meantime, don't miss Morris Rosenthal's excellent article, Is Amazon Publishing Ready For Prime Time?. His discoveries are pretty startling.


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