Price War

German Regulators Must Stop Amazon From Cornering Book Market

Amazon distribution warehouse in Leipzig, Germany Source DPA-CHANGED
Amazon needs more than slick distribution.
  • Why it matters

    Why it matters

    The pricing power Amazon wields over the world’s book publishers will have huge economic and cultural implications.

  • Facts

    Facts

    • Amazon has been accused of delaying book shipments from publishers with whom it has a pricing conflict.
    • German publishers have asked antitrust regulators to intervene and restrain Amazon.
    • If Amazon is able to determine pricing and profits, entire national publishing industries could be threatened.
  • Audio

    Audio

  • Pdf

Nobody takes on Mickey Mouse. 

Unless he is named Jeff Bezos. The founder and chief executive of Amazon, the world’s largest online retailer, feels strong enough to battle Disney and the company’s worldwide empire of television broadcasters, films, theme parks and products. Mr. Bezos is blocking advance orders for Disney’s popular and profitable DVDs and Blu-ray discs such as “Maleficent.”

Mr. Bezos is putting pressure on the Hollywood entertainment giant by hindering or delaying the sale of its products. Mr. Bezos is hitting at a sensitive spot, because the marketing of products for home consumption constitutes the film and TV industry’s backbone. A creative destroyer, Mr. Bezos is attempting nothing less than to break Hollywood.

With sales of $75 billion last year, Mr. Bezos has built an online industry leader. But the Amazon chief executive needs greater discounts from product producers to increase his company’s meager return on sales and, finally, to satisfy his disappointed shareholders.

For this reason, he’s taking on the book sector. The 50-year-old is demanding higher discounts from publishers of electronic books. After his joust with French publisher Hachette in the United States, he is seeking a duel with the Swedish publishing group Bonnier, which is represented in Germany by such publishing houses as Piper, Ullstein, Carlsen, Berlin-Verlag and Thienemann.

 

amazon Mickey Mouse DPA
Amazon has allegedly delayed sales of some Walt Disney Co. products. Source: DPA

 

The controversy has implications extending far past Bonnier. The conflict’s outcome will determine the future of publishers and authors. If Mr. Bezos is successful in extracting above-average profit margins from electronic books, authors and publishers will get even less money.

That would have not only economic, but cultural consequences. Amazon’s battle for larger profits would mostly penalize young and unknown writers. The result could be a media wasteland.

 

amazon German anti Amazon authors dpa
A host of prominent German-language authors, including Austrian Nobel Literature Prize Winner Elfriede Jelinek, seen in the second row, third from left, oppose Amazon’s treatment of book publishers . Source: DPA

 

So it is understandable that German-language authors are rebelling. More than 1,500 authors have already put their names to the rising wave of protest against Amazon. Their demand is simple: They want a fair book market.

The open letter to Mr. Bezos and his head of German operations might be considered somewhat naïve. Amazon clearly is not concerned with fairness, but with dominance.

Mr. Bezos wants to extend his quasi-monopoly to the German online-book business and to break the power of the publishers once and for all. If he is successful in forcing publishing houses such as Bonnier or Hachette to their knees, then the same fate awaits other publishers. A retreat by Amazon is not in sight.

Authors and publishers will be unable to put Amazon back in its place on their own.

Antitrust authorities are needed to solve this situation. They must guarantee that fairness is maintained in the book market.

In recent years, Germany’s antitrust agency has issued a series of downright dubious decisions, particularly in the media sector.

It would be commendable if the German antitrust authorities, which are located in Bonn, turned their attention to the tectonic shifts within the power structure of the German book market, which, after all, is Europe’s largest. A complaint has already been issued. Earlier this summer, the German booksellers association lodged an objection with the antitrust agency. The bookseller’s group criticized Amazon’s negotiation practice as “contrary to cartel law.”

It is of crucial importance, not least for the cultural diversity of the book market, that antitrust authorities go after Amazon. All the more because a German example would have repercussions in the rest of Europe and beyond.

Time is pressing. Last year, according to figures from the German federal association of mail-order booksellers, Amazon controlled about three-fourths of the German book trade on the Internet. In 2013, online sales accounted for 16.3 percent of all book sales, which totaled more than €9.5 billion, according to the German Booksellers Association.

Amazon argues that books must become less expensive. But the price that would be paid for cheap reading material would ultimately be too high, namely the elimination of the book culture we have known and cherished. That is reason enough for the officials charged with preserving competition to act quickly and decisively.

The writer is the Handelsblatt correspondent in Vienna. He can be reached at: siebenhaar@handelsblatt.com

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