Amazon strategy raises hackles in Germany

Written By Unknown on Selasa, 27 Mei 2014 | 21.43

BERLIN: It was German authors, carefully monitoring their Amazon rankings, who were among the first to notice something was amiss.

In a country where efficiency is prized as highly as the written word, Amazon was suddenly saying it could take as many as 11 days to deliver some older titles — inconceivable given that a system of distributors ensuring deliveries within 24 hours has existed for decades, predating online book sales.

Only when the German division of Bonnier Media Group wrote to its authors and agents several weeks ago to apologize for the delays did an explanation emerge. Bonnier, one of Germany's largest publishing groups, said it was in negotiations with Amazon over how to share the earnings of its electronic books. The delays appeared to be a tactic aimed at forcing the publisher to give Amazon, the American retailing giant that has come to dominate book sales, a bigger cut of the proceeds.

Like their counterparts in the United States who have felt the force of Amazon's clout, German book agents are chafing. "This is above all about the future market and the e-book market," said Matthias Landwehr, a literary agent who represents many of the authors affected.

So far, unlike in the United States, where Amazon has been discouraging customers from buying new and coming titles from Hachette by making it impossible to order or pre-order, the tactics in Germany involve only delays in deliveries of backlist titles of authors published by houses owned by Bonnier Media Group.

But in Europe, where the clout of American Internet giants is already deeply resented, whether on privacy grounds in the case of Google, or by their sheer marketing might, Amazon may find itself facing rules and resistance of sorts it has not encountered in the United States.

Other European countries like France and Britain do not appear to be affected by Amazon's actions. Sales of Hachette's books via Amazon's site in France did not appear to be impeded; Hachette's French division declined to comment. Nor have other leading German publishers been targets.

Still, many in the publishing world here contend that Amazon has used the negotiations with the German Bonnier imprints, which include Piper, Ullstein, Carlsen and Berlin Verlag, to send a message.

"They are using them to set an example and counting on the fact that publishers are not allowed to speak with one another," Landwehr said of Amazon, citing potential antitrust concerns on the publishers' part if they should compare notes. "But if they can get them to change the existing conditions with one publisher, it would trigger a domino effect."

Amazon did not respond to requests seeking comment.

Amazon is no stranger to conflict in Europe. This year, French lawmakers approved what has become known informally as the "anti-Amazon law," which restricts online vendors from offering free delivery on top of the country's maximum 5% discount on books.

In Germany, the company came under fire last year for its use of immigrant workers and Amazon workers in two of the largest distribution plants have been struggling to unionize.

But the new dispute marks the first time the US company has confronted head-on the country's tradition of protecting the printed word.

Germany has prided itself since the 19th century on being the home of "Dichter und Denker," or poets and philosophers. As in several other European countries, including France, Austria and Italy, books in Germany are considered of such indispensable value to society that publishers are allowed to dictate the prices at which retailers can sell all new titles, including best sellers and e-books.

That law also is aimed at ensuring the survival of a thriving network of bookshops. The German Publishers and Booksellers Association counts 3,800 across this country of 80.7 million people, from larger chain stores to traditional antique booksellers.

Yet in a country where shopping hours are also tightly controlled by the government, Germans are becoming increasingly accustomed to the ease and independence of ordering books at all hours and having them delivered to their front doors.

Germany's book-order business, including online sales, grew 4% last year to 2.7 billion euros, or $3.7 billion, according to the Federation of Mail-Order Booksellers. Amazon towered above its competitors, controlling more than half of the German market, with sales of 1.9 billion euros.

Amazon has an even stronger hold on the e-book market here, despite attempts by German publishers to create an alternative open-source platform to compete with the Amazon Kindle format. E-book sales in Germany grew 200 percent from 2012 to 2013, and experts predict that number will only increase.

But given German price-setting laws, Amazon has little wiggle room in Germany for increasing its share of the income generated by e-books. While Amazon receives a 50-50% cut of all printed books sold in Germany, the standard rate for e-books gives the company just 30% of the sales price, with the remainder going to the publisher, who then pays authors.

Amazon appears to be banking on the strength of its position to push for a larger share of the proceeds, hoping to eventually reach the parity it enjoys on printed books, said Christian Russ, an attorney who specializes in publishing law.

"The publishers are not allowed to react under the current antitrust laws," he said. "Every individual publisher is forced to deal with these demands, because they cannot break with a company that accounts for 50% of the market."

The German booksellers association has responded by calling on lawmakers to adapt antitrust laws to better fit the digital market, which would allow publishers to band together. It is also pushing lawmakers to grant e-books the same value-added-tax exemptions that printed books receive. The tax now on e-books is 19%, compared with 7% for printed books, which further reduces the wiggle room for price negotiations.

The European Commission has ruled against allowing member states to lower their VAT rates on e-books, although both France and Luxembourg, where digital copies of books are taxed at 7% and 3%, have ignored that edict.

The commission on Monday had no comment on the Bonnier publishers' dispute with Amazon, a spokeswoman said.

Landwehr, the literary agent, contends that ultimately Amazon wants to drive authors away from the traditional system of agents and publishers, and have them sign directly with the company's Kindle Direct Publishing. He said he counsels authors against such arrangements, pointing to what he considers the heavy-handed tactics the company is using against Bonnier.

Public reaction by German authors has been generally muted, although many have reached out to their publishers asking how they can show their support, Siv Bublitz, chief executive of the Ullstein publishing, wrote in an email.

"We have asked them to show restraint at the moment, because we are in talks with Amazon and do not want to exacerbate the conflict from our side," Bublitz said.

Joscha Sauer, a cartoonist whose works are published by Carlsen, is one of the few who swiftly took to social media to decry Amazon for "blackmailing several publishers." He said he has "no clue" whether sales of his backlisted books have been affected.

"It is theoretically possible that through the dispute, even more people have become aware of my work," Sauer said in a telephone interview from Frankfurt. "From a purely moral standpoint, what Amazon is doing is a dirty trick. From an economic point of view, it is nothing out of the ordinary."


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