Amazon and Hachette reach a compromise; meanwhile, The Book Depository is being a bit dodgy

Amazon and Hachette reach a compromise; meanwhile, The Book Depository is being a bit dodgy

Amazon and Hachette are have reached an agreement (ostensibly on pricing). In local news, The Book Depository is trying to sign deals with publishers in a way that, well, seems a bit dodgy. YMMV.

Amazon/Hachette deal

If you follow book people on Twitter, expect today’s feed to explode with news about Amazon and Hachette reaching an agreement. They’ve been at an impasse since May, with both sides issuing public statements, and supporters on both sides passionately campaigning for, well, many things, depending on which side they support.

Details are scant regarding the deal, but here are a few sources: Gigaom, NPRThe New York Times, The Bookseller

The Gigaom article quotes the press release:

When the new ebook terms take place in early 2015, “Hachette will have responsibility for setting consumer prices of its ebooks, and will also benefit from better terms when it delivers lower prices for readers. Amazon and Hachette will immediately resume normal trading, and Hachette books will be prominently featured in promotions.”

Just in time for Christmas.

The Book Depository

A couple of days ago, Books+Publishing (subscription) reported that TBD is in talks with some Australian publishers about listing local titles on TBD and having the publishers fulfil orders to local customers directly. Before we get too excited, B+P points out that no deals have yet been confirmed. However, this post by former ABA president and bookseller of Pages and Pages Jon Page suggests that at least some publishers are thinking of getting on board.

I don’t know enough about the local industry to really understand how these arrangements will affect local authors and publishers, so I’m just going to list some of the arguments and observations from the articles, plus some of my own thoughts. I’m super interested to know what authors and readers make of this.

Disclosure: I edit the Romance Buzz newsletter for Booktopia, an online Australian book retailer that competes with Amazon, and whose CEO is quoted below. I also host the Heart to Heart podcast for Destiny Romance, an imprint of Penguin Australia. I did not speak to anyone from Booktopia or Penguin about the B+P article, or the rumours around TBD talking to publishers, prior to writing this post. All opinions here are my own.

1. Tony Nash from Booktopia is quoted extensively in the B+P article. He raises a question that most Australian booksellers have raised against Amazon/TBD: Will they pay GST on books?

I’m sure the question of GST is particularly galling for local booksellers. First, Amazon’s tax avoidance strategies were just in the news (Page’s blog post links to this news article in which he is also quoted). The Australian Financial Review has a more in-depth look at how Amazon juggles money around to play the least amount of tax. According to B+P, most of the revenue recorded against Australia by Amazon probably came from their cloud-computing business; Amazon book sales into Australia do not count. I have huge problems with this, and partly I blame the government for not putting better legislation in place.

Second, Nash doesn’t believe that Amazon or TBD plan to set up a local workforce, making them exempt from GST. But if publishers are directly fulfilling local orders, this might become a much fuzzier line.

2. What incentives will TBD give to Australian publishers to convince them to allow TBD to list their titles?

Will we see TBD excluding overseas editions for Australian readers? (And if they do, will it make TBD a much less attractive proposition against local booksellers?)

3. Will free shipping still apply if local publishers have to post the books locally?

If publishers absorb the cost of shipping on behalf of TBD, that puts local booksellers at a disadvantage unless publishers offer them the same deal.

4. Neither article talks about price, but assuming Amazon/TBD can negotiate significant discounts, what does this mean for independent booksellers?

I’m not talking about anything other than a level playing field here. If independent booksellers can’t buy books at the same prices as Amazon/TBD, it doesn’t seem fair. I’m the first to complain when I see higher prices in independent stores, and I love that more competition drives prices down, but if smaller bookshops start at a disadvantage, how do we expect them to compete? They’re already struggling against the market power of retail chains like Target, and the at times inexplicable price differences between overseas editions of books under parallel import restrictions.

Smaller booksellers also don’t really have much bargaining power when it comes to ebooks. I don’t know for sure, but I would guess that print — and particularly locally published books in print — is a much better proposition for them. In any case, Amazon’s share of the ebook market seems fairly insurmountable for independent booksellers (large or small). Part of the problem is that there’s just no alternative platform that enables booksellers to compete. So Amazon is biting at their heels (or probably is already past the heels) with ebooks, and now through TBD they’re going for print.

Is it a bad thing if we lose all our small bookshops, or drive them all online only? My heart says yes, of course. This has pretty much happened for most independent romance bookshops. But rationally…well, I’m not sure. In part that’s because I’m lucky enough to have access to a fairly well-stocked public library. But I also feel that there’s something unique about reading culture in bricks and mortar bookshops as opposed to libraries. But that might be my personal bias and it’s probably completely subjective (and something that doesn’t have to exist just in bookshops; it’s just that I don’t find it anywhere else…yet).

At the end of the day, I know that it’s getting more and more difficult to fork out even $15 for a book without at least checking to see if it comes close to the cheapest online prices.

I’ll leave the last word to Page: ‘I would warmly welcome Amazon or The Book Depository setting up a warehouse in Australia because it would a fair fight. This is not a fair fight. This is an example of pure greed, cowardice and business without responsibility.’

5 comments

  1. Kaetrin says:

    There’s not much of a romance option in Adelaide. Borders used to have a reasonable range (about 5 shelves) but they closed. Angus and Robertson closed but their range was ridiculously poor even before then. (Since they’ve gone online as Bookworld, they have a much better range actually.) Last time I was in Dymocks their romance range had restricted to about 2 shelves and they’re in the city and a special trip to buy a book which I can get cheaper online or digitally plus the cost of petrol and car parking… well it’s not an attractive prospect.

    There aren’t any romance specialty bookshops in Adelaide and I prefer to read a digital book anyway for various reasons. All of my options, unless I can buy the book in KMart, are via online booksellers. It’s part of why I cling so much to my romance people on Twitter – there’s not much available locally for us.

    I’m not really sure what the point of my ramble was Kat! When it comes to selling books, I think it’s all just really complicated.

  2. Kat says:

    I think the business model for selling print books is very convoluted! I prefer print but that’s becoming more and more impractical (due to space as well as cost). I feel bad that independent bookshops are essentially uncompetitive in the ebook market. I feel that publishers really should have provided a free, accessible, easy to use platform as an alternative to Amazon. But given that some publishers are still DRMing their books, that was probably too much to hope for.

  3. Deborah says:

    I struggle with guilt over the small bookshop issue. I rarely buy books nowadays (I used to) but have to admit I’d mostly do so at larger stores (Target, Kmart etc) because they’d be so much cheaper than at a bookstore. And yet I know how much value book stores add to our lives.

    I still prefer ‘real’ books to eBooks which I only read for review purposes (via NetGalley etc) but I really can’t imagine buying a book to download. Am old-school I guess.

  4. Maz says:

    I don’t think you can entirely blame the Government for multinational corporations effectively minimising their taxes. It will take a multi-lateral agreement for these corporations to start paying a ‘fair’ amount of income tax in the appropriate jurisdiction(s).

    As to GST, don’t think there is the political will to pursue to it. If a bank can levy a forex conversion fee then the government can levy its GST.

    Are there any tax experts out there? My guess would be that the Australian publisher fulfilling local orders would be subject to GST as they are making the supply.

    Free Postage? Don’t think so. http://www.choice.com.au/reviews-and-tests/money/shopping-and-legal/shopping/high-postage-paid.aspx

    If bookstores survive, then it will only be in the metropolitan areas. For many, (since the collapse of A&R/Borders) a bookstore is a shopfront (on a short lease) selling remaindered stock.

    But even before that, Big W had a better range than the bookstore (very sad).

    The fate of the book really is in the hand of the ‘true’ digital natives.

  5. Kat says:

    Deborah — I prefer print, too, but more and more I hear from people who have digitised their personal libraries. My problem is that I tend to forget about the ebooks I have, whereas with print I can see them in my bookshelf and will pull out favourites to reread on a whim.

    Maz — But I do blame the government (in part). If a multilateral agreement is required, well, I believe that’s the job of government.

    If TBD removes free shipping, that pretty much removes their competitive advantage as far as I’m concerned. My feeling (for what it’s worth) is that whatever deal they make with local publishers would absorb the cost of shipping into the price of the book. Otherwise, there’s no point buying from TBD as opposed to local booksellers that offer similar pricing.

What do you think?

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