Amazon likened to Ryanair as publishers accuse it of bullying tactics


Paul Gallagher
Friday 27 June 2014 16:50 BST
Hachette has warned that Amazon was reaching a “Ryanair moment” when customers and suppliers would become uncomfortable with the way that the company operates
Hachette has warned that Amazon was reaching a “Ryanair moment” when customers and suppliers would become uncomfortable with the way that the company operates (Getty)

Amazon are in danger of becoming the “Ryanair of publishing” as UK firms locked in contract negotiations with the web giant accuse it of bullying tactics and warned the company was destroying the industry.

The online retailer is pushing for the right to print books itself if suppliers fail to provide enough stock and is also pressing publishers to match any pricing deals it offers to other distributors.

The Seattle-based firm is already in another fight in the United States with Hachette Book Group – it claims the online retailer is seeking to “dramatically change terms” over how to share profits on e-books. Trade magazine the Bookseller first reported that Amazon had introduced a number of new clauses in its recent contract proposals to independent UK publishers and there are parallels between the terms on offer to Hachette USA and British publishers.

Independent companies in the UK have been scathing in their reaction to Amazon’s tactics. One mid-sized firm accused the web giant of “bullying” and warned that the company was destroying the industry. Another said it had been approached by Amazon in the past with the changes it is trying to force through.

A senior manager at an independent publisher, which releases between 80 and 100 titles each year, told the BBC that if asked to agree to the new terms, their answer would be a “simple and monosyllabic no”.

The publisher also warned that Amazon, which celebrates its 20th anniversary this year, was reaching a “Ryanair moment” when customers and suppliers would become uncomfortable with the way that the company operates.

Amazon plans to use “print on demand” equipment to replenish its own stock should they run out and would also require publishers to hand over electronic versions of their titles. Industry experts said the method results in an inferior product and publishers fear unhappy customers will blame them rather than the online retailer for the poorer quality.

One representative of a mid-sized firm said Amazon had become “increasingly ruthless” in its negotiations, while another accused Amazon of “bullying”.

Separately, the European Union’s Directorate General for Competition is understood to have approached major UK publishers over an investigation into Most Favoured Nation (MFN) clauses, which ask publishers not to offer promotions to distributors without also offering them to Amazon.

This would include selling books at a discount on the publishers’ own websites and demands that publishers inform Amazon before offering e-book deals to other clients, and give Amazon the same terms.

A boss of a British publishing company said that they believed the MFN clause would cause Amazon to fall foul of competition rules and should be of concern to regulators. Publishers also told the BBC that Amazon generally prefers verbal agreements, and rarely documents its negotiations, but had done so in the latest round of talks, with one “mid-tier” firm saying this was the first time it had received correspondence outlining such terms.

The Bookseller’s editor, Philip Jones, told the BBC that if Amazon’s terms were agreed, it would be a “form of assisted suicide for the industry”. He added that the negotiations might be a tactic by Amazon, which has proposed similar terms in the past before abandoning their demands, and could be dropped again before a final deal is struck.

Mr Jones said Amazon has also played a positive role in the bookselling industry. He said: “The worst thing that could happen [to book publishers] would be for Amazon to go away. The second worst thing would be for it to become more dominant.”

No one at Amazon was available for comment, but in a previous statement on Hachette, a spokesperson said: "Negotiating for acceptable terms is an essential business practice that is critical to keeping service and value high for customers in the medium and long term."

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