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New Rumors Say Amazon is Pushing for Contract Revisions in the UK

13932227313_10e69a802d_o[1]In the midst of an ongoing contract dispute with Hachette here in the US, new rumors are circulating today that Amazon is pushing for similar changes to their contracts with UK book publishers.

Citing unnamed sources, The Bookseller reports:

In the UK a number of publishers spoken to as part of The Bookseller’s investigations into the Hachette dispute said Amazon was also now putting them under "heavy pressure". According to the sources, new demands include adjusting terms so that e-books and physical book terms have parity; the adjustment is said to be in the direction of "p", which traditionally attracts a higher percentage for the retailer compared with "e". Amazon is also understood to be targeting academic terms, which have historically been more favourable to the publisher. The retailer also wants to impose a ceiling on the digital list price of e-books in preparation for 2015 when the retailer will have to begin imposing the standard 20% rate of VAT on digital titles.

Another clause of particular note requires publishers to guarantee they have books in stock, allowing Amazon to do print-on-demand editions to customers – with extra terms benefits – should books be out of supply. The clause has echoes of a demand made in 2008 that small publishers use its POD service, with Amazon arguing at that time that it could “provide a better, more timely customer experience if the p.o.d. titles are printed inside our own fulfilment centres”. Publishers are worried that the clause would allow Amazon to effectively take over their stock-control.

Those are quite different contract terms than what the latest leak has revealed about Amazon’s negotiations with Hachette over the weekend. According to one of the NYTimes’s unnamed sources Amazon is negotiating with Hachette over co-op fees, with the retailer teasing out each service they can provide and asking to be paid for it specifically.

it’s not known why Amazon is seeking different terms in the UK, but they are also rumored to be new most favored nation clauses.

Amazon is also reportedly seeking MFN clauses which include not just the option for Amazon to match prices with their competitors but which also gives Amazon the option to match whatever terms a publisher  might get for a new business arrangement, for example with a subscription service.

If that is true then it could be a sign that Amazon is already looking ahead to their next ebook effort, or at the very least they don’t want to be a step behind when someone else comes up with a new idea for the ebook market. And that is a telling clue of where Amazon thinks the book industry is going.

On a related note, what do you think the POD clause means?

I’m not sure if Amazon is that confident that their printing quality is that good, or if they just want to guarantee 100% availability for the books they carry.

The Bookseller

image by hnnbz

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fjtorres June 23, 2014 um 1:03 pm

Standard negotiating tactic: ask for the moon and the stars, then negotiate down from there.
See who blinks first.

Thing is, these are all anonymous reports from people who are supposed to be under non-disclosure agreements. Amazon could easily be feeding different demands to different publishers just to see who is breaking NDS.

Or, these could just be as made up as most Digitimes rumors.

Robert Nagle June 23, 2014 um 5:50 pm

When are MFN clauses going to be thrown out because of their anti-competitiveness?

Robert Nagle June 23, 2014 um 5:57 pm

Sorry, I didn’t realize that this was an article about UK. I was asking mainly about the US.

Ebook Bargains UK June 24, 2014 um 7:21 am

"The retailer also wants to impose a ceiling on the digital list price of e-books in preparation for 2015 when the retailer will have to begin imposing the standard 20% rate of VAT on digital titles."

This will be a game-changer in the UK, putting UK-based stores on an even keel with Amazon and the other Luxembourg players for VAT purposes.

Tesco Blinkbox and Sainsbury in particular will be looking to take full advantage.

Right now Tesco are playing the supermarket card well, price-matching Amazon for all Martin’s Game of Thrones ebooks and then adding 100 ClubCard points each making them effectively half the Amazon price. Tesco then goes further and is tying its ebooks to its digital film and TV arm, offering more ClubCard points for the Box Sets and throwing in a free pizza for good measure.

Felipe Adan Lerma June 24, 2014 um 10:35 am

Free pizza? NOW we’re getting competitive 🙂

Kidding aside, the companies with access to these side perks, club card type points, food treats, etc, are smart to use them.

Felipe Adan Lerma June 24, 2014 um 10:33 am

"a telling clue of where Amazon thinks the book industry is going" –

Meaning the subscription route?

Either way, I have no doubt Amazon’s looking several steps ahead, and then seeing which road they want to plow 🙂

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