Wednesday, June 11, 2014

Amazon Socks it to Time Warner: Authors, Are You Paying Attention?

For those of you who are not following the Amazon vs Everybody wars, you are missing the prize fight of the century. Amazon's hard-ball tactics are part of its bid to take over the world. 

I am not joking. Amazon has monopoly on its mind, in a very big way. Now it is using its platform to deny pre-orders of Time Warner videos, including the hugely popular Lego Movie.

If you can't figure out what is happening, let me sum it up for you: 

1) Amazon cornered the Internet market on sales of electronics, media, etc. by offering lower prices, a greater share of royalties for self-publishers, fast delivery, etc. 

2) Amazon then used its expanded platform to make unilateral changes in book pricing agreements, forcing publishers (mostly recently Hachette) to reduce their wholesale prices to Amazon, while Amazon maintained its retail prices. This resulted in losses for publishers, especially the small ones, reduction in royalties for their authors, and increases in Amazon profits. 

3) Hachette objected to the unfavorable new terms. Authors objected. Stephen Colbert objected.

4) Amazon tried to force acceptance of the terms by delaying releases of new Hachette books, delaying shipping, and pulling pre-releases (which normally garner a huge percentage of initial sales), while simultaneously offering other "equivalent" and/or cheaper products.

5) Competing retailers started offering the books that Amazon had refused to release - at a discount. Walmart rakes it in.

6) Amazon then pulled Time Warner videos, using the same strong-arm tactics it had used on Hachette - and quite a few other publishers - to secure better terms for itself while driving out the competition.

Why should you pay attention? 

If you are a self-published author using Amazon as your primary outlet, and are doing so because you get the lion's share of royalties along with a great platform, I can guarantee you that as soon as Amazon knocks out all of its competitors your share of royalties will plummet.

And there will be nowhere else to go.

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Amazon Stops Taking Advance Orders for ‘Lego’ and Other Warner Videos

New York Times, By David Streitfeld , June 10, 2014

The Everything Store is shrinking again. Amazon customers who want to order forthcoming Warner Home Video features, including “The Lego Movie,” “300: Rise of an Empire,” “Winter’s Tale” and “Transcendence,” are finding it impossible to do so.

The retailer’s refusal to sell the movies is part of its effort to gain leverage in yet another major confrontation with a supplier to become public in recent weeks.

In a standoff with the Hachette Book Group, Amazon is refusing to take advance orders and delaying shipments. Amazon and Hachette are wrangling over e-book terms. The retailer is in a third standoff in Germany, with the Bonnier Media Group.

Disputes between retailers and vendors happen every day. What is unusual here is not Amazon’s relentless desire to gain margin from its suppliers, but the suppliers’ growing resolve to hold the line. If other suppliers adopt the same attitude, that might have significant implications for Amazon’s pell-mell growth.

The confrontations indicate that Amazon’s long-stated desire to sell everything to everybody might be taking a back seat. The biggest book release in the middle of June is the new J. K. Rowling novel from Hachette; the biggest movie is “Lego.” Amazon is basically telling its customers to go elsewhere for them, which is a very un-Amazon thing to do.

Read the rest of this article here.

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