Publishing giant tests its muscle with almighty Amazon

The world’s biggest publisher, Penguin Random House, could block sales of its books on Amazon if it fails to resolve a contract dispute with the online bookseller.

Industry sources say that Amazon, which sells about 90% of all books online, and Penguin Random House are in a dispute over the terms of a new contract for online sales that could grow into a full-blown row.

Penguin Random House, which publishes 15 000 books a year across 250 imprints, is the last of the “big five” publishers to renew its contract with Amazon for selling titles online. Talks are said to be ongoing, although neither side would divulge details.

Failure to reach a deal could result in Amazon freezing pre-orders or slowing down delivery of Penguin Random House titles, the hardball tactics that the online retailer deployed against Hachette last year. The bitter feud between Amazon and Hachette over the price of ebooks dragged on for more than six months and brought a wave of bad publicity for Amazon, with hundreds of bestselling writers accusing the online retailer of hurting authors and misleading customers. Hachette suffered a sharp drop in ebook sales before the dispute was resolved last November, although it said Amazon’s “punitive” tactics were only partly to blame.

Amazon’s spokesperson, Tarek El-Hawary, declined to comment on rumours about its negotiations with Penguin Random House. “I can say that we have long-term deals in place already with the other four major publishers and we would accept any similar deal with Penguin Random House UK.” His remarks were first reported on recode.net.

Penguin Random House’s US spokesperson, Claire von Schilling, sought to play down the negotiations and denied any intention of ceasing to sell print or digital titles on Amazon. She said: “We are in continuous conversation with Amazon, with whom we have an ongoing business relationship. We have no intention whatsoever of ceasing to sell our print or digital titles on Amazon. We want our books to be accessible and available everywhere.”

Negotiating power
A dispute would be costly for both sides, as Penguin Random House titles are a mainstay of Amazon’s bestseller lists. Some industry watchers think the world’s largest publisher has bolstered its negotiating position, following the merger of Penguin and Random House in 2013.

“With so many books in their repertoire comes tremendous negotiating power,” said Michael Kozlowski, the editor of goodereader.com. “There are not many online digital booksellers that could stay viable if suddenly all of the books published by Penguin Random House were pulled.”

According to the Bookseller magazine, the dispute centres on deals that were agreed to between Amazon and the British arms of international publishing houses in the wake of a 2012 competition inquiry by the European Commission into ebook prices. Under the agency pricing model, which Amazon has been trying to unpick, publishers set the consumer price of ebooks and retailers take commission.

Philip Jones, the editor of the Bookseller, said it was helpful for the publisher that the dispute had flared up well before the peak pre-Christmas sales period. But, he added: “I think we could be in for a prolonged period of public negotiation.” He said Penguin Random House was in a pretty good position since the merger. “But Amazon, as we have seen from past experience, is not shy in pulling out the big guns.” – © Guardian News & Media, 2015


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Jennifer Rankin
Jennifer Rankin works from Brussels. Brussels correspondent @guardian It's not all about Brexit. Like ≠ always like Jennifer Rankin has over 22962 followers on Twitter.
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