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Industry News: Amazon demands bigger discounts, DOJ collusion settlement in the works, Google ends indie bookseller partnership

April 7, 2012

Amazon demands deep discounts from publishers

If you’re a regular reader, this won’t be a surprise to you, but the Seattle Times is reporting that Amazon is demanding deep discounts from publishers. As the Department of Justice investigates Apple and five of the big six publishers for potential anti-trust violations, some publisher believe Amazon is nearly monopoly status. In late December, publisher McFarland and Company, a niche publisher from North Carolina, received an e-mail from Amazon’s Advantage Business Team demanding a 45-percent discount, twice its current discount rate. Because 70 percent of McFarland’s sales come through Amazon, the demand is difficult for the publisher to ignore, even though it would damage the company financially. Aside from the demand’s potential for damage, it leaves a bad taste for the publisher–an e-mail sent from a generic team address, with no opportunity for individual follow-up. This story is not going away.

DOJ nears pricing settlement with three of the five publishers it sued over e-book pricing collusion

The Department of Justice is said to be nearing a settlement with Hachette, Simon & Schuster, and HarperCollins in its suits over alleged collusion with Apple. The suit involves the agreement between the publishers and Apple to force an agency model–where the seller acts as an agent of the publisher, but the publisher sets the cost and the seller takes a percentage. Before the publishers forced the agency model (with Apple’s help), Amazon had been selling e-books at a loss and gained a large portion of the market for its proprietary Kindle format. According to a Bloomberg article, the settlement would allow retailers to sell books at a lower price, perhaps even a loss. It may also include Apple leaving the e-book business. The settlement may be delayed to allow the other two target publishers, Penguin and MacMillan, to join.

Google ends its eBook agreement with Indie booksellers

Google has announced that it will end its Google eBook Reseller program that gave independent booksellers. The reseller program allowed independent bookstores to offer e-books through Google’s e-bookstore. Google has announced the program will end in January 2013, replaced by something called Google Play, which will not include an option for Indies. Google says it’s discontinuing the program because of low sales; cynics disagree. The American Booksellers Association says it hopes to have its own reseller program for indies before the Google program ends.

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