Amazon's Demands in Hachette Feud Have Been Leaked, and The Retail Giant Is Looking Pretty Shady
As the book world watches nervously, the feud between Amazon and Hachette wages on with no signs of letting up any time soon. For the first time, however, a source inside Hachette has leaked some of Amazon's demands, giving us a sense of what all these dirty tactics are for. And even though it turns out Amazon's asks are roughly what people assumed them to be, they still don't make the retail giant look very good.
According to an unnamed source who spoke with The New York Times, Amazon wants Hachette to pay for a variety of services, including pre-order buttons, personalized recommendations, and a dedicated employee at Amazon for handling Hachette books. The source said that Amazon “is very inventive about what we’d call standard service ... In the end, it’s very hard to know what you’d be paying. Hachette has refused, and so bit by bit, they’ve been taking away these services, like the pre-order button, to teach Hachette a lesson.”
While it's certainly understandable that a company like Amazon would want to find new sources of revenue given their narrow to non-existent profit margins (despite doing billions of dollars in sales, some years the company actually loses money), it's still a stretch for a retailer to expect their suppliers to pay them for, essentially, doing their job.
Amazon is a retailer, meaning it's their function to sell things that other people produce, be those things books or barbecue grills. They might be online, but in the abstract they're still doing the same thing that brick and mortar retail stores do. And yet if Barnes and Noble were to tell publishing companies that they needed to pay extra if they wanted the books on shelves instead of piled up in a dimly lit back corner of the store, we would all call Barnes and Noble crazy. If your job is to sell books, why wouldn't you want to do everything you can to make sure the products you stock do, in fact, sell?
Of course, publishers do pay bookstores what's known as "co-op," in exchange for which bookstores will prominently feature a certain title. Any time you've seen one of those mini-cardboard shelves specially designed for one specific book, publishers often paid for that. But Amazon, it seems, isn't just asking Hachette for the digital equivalent of a special display — which on Amazon would probably look more like on-site ads or a special place on their main page. Amazon is instead asking to be paid for more basic services, like the pre-order button.
Amazon clearly has leverage — they account for about 50 percent of all U.S. book sales. But that doesn't automatically mean it's okay for them to expect extra money in exchange for doing their job. Amazon doesn't exist in order to sell books as a favor to publishing companies. They exist in order to provide books to the consumer, and their focus ought to be on providing the best experience to a consumer while still maintaining a profit. It's in their best interests to make ordering books through Amazon as easy as possible — after all, if it isn't, people might start buying from other retailers.
Clearly Amazon needs to find new sources of revenue if they are to ever truly be profitable, but they shouldn't try to do it by extorting money from book publishers. Instead they should focus on getting better at being what they are actually supposed to be: a book retailer.