The Trouble with Consolidation

Update (05/15): Today's Publishers Weekly included an article with a copy of a letter from the Association of Authors Representatives, a trade association of literary agents. In the letter to Amazon, Association President Gail Hochman called out the harm that the dispute is doing, especially by Amazon in restricting the availability of Hachette authors to the said authors as well as the readers who want those books. She closes by saying "This is a brutal and manipulative tactic, ironically from a company that proclaims its goal to fully satisfy the reading needs and desires of its customers and to be a champion of authors."

Over at Politico, columnist Dylan Byers points out that several media critics had noted that Jeff Bezos owned Washington Post has yet to cover the dispute between Amazon and Hachette. Ironically, in 2010, the Post covered the dispute between McMillian and Amazon at length.

Update (05/13): From an article in Publishers Weekly: Books A Million has stepped up and decided to take advantage of the disagreement between the two parties. BAM is now pointedly advertising Hachette titles on their cover page (See below):

There's no reason that any bookseller shouldn't capitalize on this dispute.

Update (05/12): There are two excellent articles out today about what is going on in the tug of war between Hachette and Amazon. The issue, of course, is one of discounts. In today's New York Times it is noted that so far 15 authors have complained to the Writer's Guild about the issue. Noted author Richard Russo said, “If you’re a monopolist, you get to be a bully.” It should be pointed out that Amazon is not, technically, a monopoly.

Today's Publishers Weekly also has an article on this issue that interestingly concludes with this quote:  "We as an industry are in the odd position of pushing Amazon away with one hand and hugging it closer with the other. We need them…but we need them to be reasonable.”

A number of years ago, a major publisher I was working with entertained a presentation from a distributor. The distributor wanted us to switch our specialty business from a long-standing distributor to them. We piled into the conference room and sat through a very entertaining and well thought out presentation. We were thoroughly impressed.

We spent the next few weeks poring through charts, statistics, financial analysis and came to the conclusion that while we were impressed, we really liked who we were doing business with currently and there was no compelling reason to switch.

As it turns out, there was. The distributor who presented to us also controlled about 30% of the rest of this publishers' business and their management at the time did not take kindly to being told, "No, thank you." When we got our next order from them, it had been cut 85%. When we asked them why, they said it was a "Business decision."

A middle school business decision, perhaps, but theirs to make.

Long story short, there were a lot of phone calls between the parties. The publisher called in a lot of favors. Many old friends made appeals to the distributor on the publisher's behalf. Eventually things returned to "normal" and the appropriate numbers of copies were shipped and sold.

I remembered this story this morning when the following article appeared in my Shelf Awareness feed. It appears that Amazon has decided to delay from three to five weeks, the delivery of a number of very popular books from Hachette. As near as Hachette can tell, there is no real reason for this to be happening as no other retailer, online or bricks and mortar, is experiencing these delays. So the rationale must be that there is some dispute between Hachette and Amazon and Amazon is punishing Hachette for it.

If Amazon was one of twenty some odd book distributors, this would not be that huge a deal. But Amazon is, well, Amazon. And while many book people I know have a hard time feeling sorry for Hachette, you do have to ask, "What the...?"

The book distribution industry, like the magazine distribution industry, is not a monopoly. But in both cases, one or two major players controls the lions share of the business and a dispute between a publisher and that large distributor can be a disaster.

Source: Firstnovelsclub.com

My publisher narrowly avoided a disaster and relations ultimately reverted back to normal. Most likely, Amazon and Hachette will resolve whatever their differences are.

But businesspeople should ask themselves: Do you feel comfortable competing in an environment where one company can control your destiny to such a great degree?