BookLocker Sues Amazon Over POD

Maine publisher BookLocker.com has filed an antitrust class action lawsuit against Amazon.com.

According to their blog about the antitrust case, a complaint was filed in Bangor, Maine, on 19 May. Publisher Angela Hoy’s synopsis of their decision to file the complaint references what they consider a clandestine effort on the part of Amazon.com to unlawfully force all publishers to use their proprietary print-on-demand technology, using their own market share to advance their printing subsidiary. The complaint alleges that Amazon is demanding an “anticompetitive tying arrangement that violates section 1 of the Sherman Act” and requests a trial by jury.

Hoy’s entry also mentions that one option facing Print on Demand publishers included paying a premium to be part of Amazon’s “Advantage Program:”

However, they did not divulge in the public statement that the terms of the Advantage Program are even worse than their printing contract. The Advantage Program requires POD publishers to give Amazon 55% of the list price, pay them $29.95/year, and pay the shipping costs for books going to Amazon.

Hoy’s suit, which is currently seeking class-action status, “seeks an injunction preventing Amazon from implementing the new policy, as well as monetary damages and legal fees. There are about 4,300 potential print-on-demand class members,” according to Hoy’s attorney, Seth Klein.

Writer’s Weekly has set up a page tracking the progress of the Amazon complaint as well. According to the Writer’s Weekly page, Amazon/BookSurge had been telling other POD folks verbally (never in writing, a sign that potentially something rots somewhere in the north of Europe) that their options were BookSurge or no sale through Amazon.

This promises to be interesting, because Amazon, by virtue of being a publicly held corporation, has one goal: to make money for shareholders. Some of the discussion I’ve encountered reading about the Amazon/BookSurge controversy has almost taken a tone of horror, as if Amazon should be more altruistic, as if they were a library of some sort.

But that’s individuals, not companies being squeezed by Amazon’s decision as pertains to POD publishing. Positioning themselves in this manner to demand use of their own subsidiary to sell books through their marketplace is a curious move, and I really wonder whether it will hold up or if the injunction and potential class action suit will force them to alter their policy. There are other options, and other online booksellers, but few with the buying or selling power of Amazon, which works for them, or against them in this case.

 

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  1. 1
    DianeH says:

    I suspect there’s about to be a whole lotta Amazon-R-Evil replies… and I’d like to step aside from that white water for a small “huh?” 

    I’m not completely getting why everyone (and by everyone I mean Authors’ Guild, National Writers Union, and all our professional organizations) is/are more het up about this than say… how wholesalers and distribution has worked for the last few decades.

    Seriously.

    I did a brief stint as a co-owner of a small publishing house.  Wholesalers dictate ALL the terms, take 60% (less for the NY Houses), make you pay for shipping to their warehouses, and even make you pay for shipping back for the books that don’t sell.  Plus you got to follow a bunch of rules.

    This is a known.  You plan for it when you price your books and make business decisions.

    And there are little fees here and here (not totally unlike Amazon’s $29.95 Advantage fee). 

    And Wholesalers don’t advertise or have websites or post reviews or make ordering easy for the consumer.  I’m just saying.

    Publishers, who work with wholesalers, still manage to pay advances and royalties (which is what really matters, since I am a writer and am in big favor of us making money).

    Also, the “you can’t sell this elsewhere lower, ” seems like a misdirect.  This is not an uncommon clause in contracts when selling all sorts of products.  Companies love to throw this in to make them feel safe and secure about having a potential profit.

    The only thing I can figure is from the BookLocker article (By Angela Hoy):  “…it is our opinion that Amazon may be positioning itself to directly print and control every book it sells.”

    Also, I get the concern about the quality issue of the printing they/Amazon will be doing, and I would want a very solid clause where “lack of quality” = “reprint until you get it right, fool.”

    To sum up:  I am not for or against Amazon;  I am for writers.  Plus I am for a whole lot of things like fair trade and not running the law down with a truck.

    But I would love to understand a bit better how this is really different than how publishers are already giving HUGE discounts to The Pipeline of Sales.  How is Amazon-setting-some-rules any different than a VERY NARROW wholesale window setting all the rules (and sucking lots of profits up like a Hoover)?

    Thanks in advance for the enlightenment.

  2. 2

    As I understand it, the problem is not so much Amazon-the-bookseller trying to make money for Amazon-the-bookseller as it is Amazon-the-bookseller using its clout to make money for Amazon-the-POD publisher, at the expense of other POD publishers.

  3. 3
    Ann Bruce says:

    the problem is…Amazon-the-bookseller using its clout to make money for Amazon-the-POD publisher, at the expense of other POD publishers.

    Amazon-the-POD publisher and Amazon-the-bookseller are both part of the Amazon group of companies and both are legally obligated to Amazon.com’s shareholders to increase share value; if they do not, the shareholders can take action against the company, up to and including suing them.  (Look at the current Yahoo!/Microsoft situation and the actions taken by Carl Icahn.)  Amazon.com is not obligated to be nice to their competition.  In an industry that is having a difficult time growing its market, increasing market share means taking it away from some other company (e.g. Toyota increased their North American market share by taking sales away from companies like Ford and GM).

    If the US courts agree Amazon.com is creating a vertical monopoly, then it will step in and rectify the situation, like the EU courts regularly do with Microsoft.  Until then, I can’t hold it against Amazon.com for meeting their legal obligations to their shareholders.  If you want your opinion to be seriously considered by Amazon.com, I suggest buying their stock so you can attend the AGM and speak directly to Bezos and Co.

  4. 4
    Ann Bruce says:

    Ugh!  I mixed up my singulars and plurals in the last comment.  Please excuse the late night brain hiccup.

  5. 5
    rae says:

    I’m having a hard time seeing what the problem is. Amazon does not have to be nice to their competitors. They are a business not a charity.  Booklocker is a business. If they do not like the way Amazon does business they do not have to deal with them. Amazon is big but it isn’t so large that they have like 50% market share or something. Honestly I don’t have much sympathy for booklocker – I have more sympathy for the writer who is getting 6% or whatever in royalties after these companies have taken the lion’s share.

  6. 6
    Erin says:

    Holy crap antitrust cases make me hot.

    But I digress.

    I agree that I think Amazon is likely to win this one out, especially considering that its not threatening to ENTIRELY remove the offending books from its listings – it’s just going to direct the buyer to another vendor. Where, God forbid, I’ll have to pay $5 for shipping and enter my address ALL OVER AGAIN. OH NOES.

    I think its ridiculous to include the “free shipping” bit in there as evidence for how its going to hurt customers. “Free shipping” isn’t some sort of economic right – it’s a selling gimic, one that’s apparently being doing a bit more harm to Amazon than good, in terms of finances.

    Here’s what appears to be an interesting article in opposition of the concept of “tying” being automatically considered anti-competitive:

    http://www.justice.gov/atr/public/hearings/single_firm/comments/219224_e.htm

    I haven’t had time to read it all, though, so if he starts raging against the government and telling us that Bill Gates is actually an alien…um…sorry.

  7. 7
    SB Sarah says:

    “Free shipping” isn’t some sort of economic right – it’s a selling gimick

    I concur. And I think “Free shipping” is also a tantalizing smoke screen to the actual environmental damage one does by shipping shit all over the earth. I fully acknowledge my own culpability in this one, though I try to place one large order delivered at once to offset the driving to four different stores for what I need, but the illusion of “free” makes it seem completely absent as part of the non-monetary costs that could be factored into the decision to buy from an online vendor, even though there is monetary and non-monetary costs associated with transporting my crap from point a to point b (aka my porch).

    But that’s far, far outside of the antitrust discussion and I know it.

  8. 8
    DianeH says:

    Thanks to Naomi, Ann, and Rae. :)

    I was skimming the replies on the bookLocker site, and one former attny noted that he thought the lawsuit had merit because Amazon was “promoting an illegal tie-in.”

    It will be interesting to see how this suit stands up and on what grounds.

  9. 9
    DianeH says:

    More thanks to Erin-who-is-anti-trust-hot.

    Free shipping?  Oh, yeah, I hear there is some sort of dance to get free shipping.  But my free shipping is actually a big chunk of up-front money called Amazon Prime.  I love to think it’s free, but it’s only free in the way that the clothes I buy are free after I pay the cashier before leaving the store

    So, while we are suing people, why don’t we sue those BOM book clubs and Sam’s for making publishers sell to them dirt cheap in order to Be Included.  Not to mention for the authors receiving a lower royalty, which is actually something the publisher does to “compensate” for making less…

    And this brings me my big question-of-the-moment:  Does a publisher (and consequently a writer) make less under the new Amazon evil idea?

    Or is the main focus where some think this could go in the future (Amazon becomes the only publisher in the Whole Wide World of every book ever published)?

  10. 10
    Erin says:

    I’d like to know how it’s an illegal tie-in (I’m not contesting it – I’m not an antitrust lawyer, so I’m just kinda hanging out here, looking for teh infos).

    As far as I can tell, the case boils down to Amazon requiring that the POD books it sells be printed by its subsidiary. It’s not preventing people from buying books not published by the subsidiary, unless you consider having to go to a third party website to purchase it a serious barrier to trade. I…don’t.

    This is an imaginary scenario:

    So there’s this giaganormous ice cream store in the middle of town. There are lots of other ice cream stores, too, but this one is pretty giganormous. It offers all kinds of ice cream, and this ice cream is made in factories that it doesn’t own.

    As one of its draws, you can telephone the ice cream store, and it’ll come in a van to pick you and your friends up and drive you down to the ice cream store so that you can enjoy your tasty cold stuff. Once you’ve filled up your tummy with all you can eat, it’ll drive you back home.

    But then one day, gigamormous ice cream store buys a factory to make its own ice cream, and it tells its ice cream suppliers that they won’t be able to sell their delicious flavors of tastiness unless they’re made in the ice cream store’s factories. However, the ice cream store will continue stocking empty buckets of the ice creams that are not made in its factory, complete with labels and descriptions, and the buckets will have directions to neighboring ice cream stores where you can purchase the tasty flavors. The pimply faced kids behind the counter will hand you a sheet of directions when you ask for one of the flavors the ice cream store no longer provides.

    Yeah – that example is confusing and mouthwatering, but that’s how I’m thinking of it. Feel free to correct me if I’m wrong.

    I mean, I understand the rage of this whole 55% profit thing or whatever, but being a douche and commiting an antitrust violation aren’t always in the intersection of the sexy venn diagram in my mind.

    I could be totally wrong, but I’m really not seeing the whole illegal mandatory tie-in thing. Feel free to point it out to me.

  11. 11
    Terri Pray says:

    There is actually another Amazon option many small presses and rpg companies use. It’s Amazon Marketplace.

    We (Under the Moon/Final Sword/Ad Astra Games) deal with Amazon that way. Mojocastle also handles Amazon that way.
    Alright, so it means shipping orders direct and we aren’t covered under the free shipping, but it works for us.

  12. 12
    Erin says:

    There is actually another Amazon option many small presses and rpg companies use. It’s Amazon Marketplace.

    Right! It’s not even a 3rd party website!

    It will be interesting to see how this goes. Sometimes the rulings can be pretty crazy.

  13. 13
    DianeH says:

    empty buckets of the ice creams that are not made in its factory, complete with labels and descriptions, and the buckets will have directions to neighboring ice cream stores

    ::snort::

    Tres funny.

  14. 14
    DS says:

    I buy a bit from 3rd party sellers on Amazon.  Easier than eBay—no Paypal! and coverage by Amazon in case something doesn’t show up.  We pay for Prime because the company buys stuff from Amazon.  As for the carbon footprint, given that mass transportation is practically nonexistent and horridly inconvenient were I live—having a bunch of stuff moving at once is better than firing up the car and heading for the mall every time we need a toner cartridge.

  15. 15
    DS says:

    Probably should note Prime doesn’t work with 3rd party sellers.

  16. 16
    Castiron says:

    Erin, one further tweak I’d add to your metaphor:  The ice cream factory is still selling ice cream that was made in other factories under the more favorable terms, though.  They’ve just decided that if you make your ice cream by putting it in a big mixer that’s electrically chilled, then they’re happy to sell it, but if you make your ice cream by putting it in a mixer with liquid nitrogen, then they want you to send them the raw ingredients and have them make it.

    Because that’s what this Amazon move effectively amounts to; they’re saying “if you want favorable terms from us and you use this particular printing technology to produce your books, you have to print it through us, but if you’re using this other printing technology, you don’t have to.”  Print your books at Edwards Brothers or Thomson-Shore, traditional offset printers, and you get to sell your books through Amazon under the normal terms; print your books at Lightning Source, and you don’t.  Where’s the sense in that?

    (I’m now waiting for the day when Amazon buys up a big offset printing house and then tells Penguin and Random House that they can only sell their books at Amazon if they use Amazon’s offset printer.)

  17. 17
    Mary says:

    And this brings me my big question-of-the-moment:  Does a publisher (and consequently a writer) make less under the new Amazon evil idea?

    I believe it has the potential to and in a big way. And a lot of it depends on how much hardball Amazon wants to play and how bad this economy gets.

    Maybe it won’t hurt things right now, but maybe in the future it will. I’m an amazon.com prime member. I’m also an author and a small press owner. As an amazon.com user, my baseline is this… if a book through marketplace or half.com or ebay is $3-5 cheaper INCLUDING SHIPPING (at an extra $3.99 for books from Marketplace) than it is through amazon.com, then I’ll go that route. But, to be honest, for most books it’s within a buck or two, and that, coupled with the fact that I KNOW that that the author will get royalties (note – I know Terri above, so what she does under Ad Astra, etc. is like buying a book new, but one can’t guarantee that with all sellers), means I buy new for most things. Take that option away from me, and I’ll buy from the lowest common denominator, usually ebay/half.com or go without. Sorry!!! And after having just discussed books with a single-income mother of five this evening talking about price-points, she doesn’t even give it those few dollars.

    I don’t think I’m alone. I think a lot of readers have similiar buying habits or ones that may even lean more heavily on UBS/cheaper options. And that may mean free shipping means a lot to them. I know before I bought into prime, and to be honest, I’m not sure I’ll re-up it, the free shipping meant a lot to me.

    Which means, that if a small press wants to compete it may mean lowering it’s price and/or lowering royalty rates.  Right now, because of the uncertainty surrounding whether Amazon.com will remove buy buttons (new titles are going up WITH buy buttons, but who knows how long that will last), a publisher has to figure dual-setup fees and dual-costs into the picture if it doesn’t like Advantage or Marketplace. If it does that, something has to give, be it cover price or royalty rates, because if it keeps everyting the way it is, there’s a good chance that if the buy button isn’t available customers will go to other venues such as ebay/half.com/other where the publisher won’t see a dime. In fact, the last time I bought from marketplace, my item wasn’t available and I got a refund, so I bought it new, because ebay was about the same price, and I am disinclined to try marketplace again. (There’s also the I pay $79 to get things in two-days, but marketplace orders can take 7-10 to reach me. Yes, I’m impatient. Blame it on being a child of the 80’s. LOL!!!)

    Amazon Advantage costs the publishers a lot more than they may see, depending on publisher size and sales.

    Amazon Marketplace isn’t an end all, though I know some publishers do quite well with it, and kudos to them.

    Right now, new titles are coming through with their buy buttons being allowed, but should that change…things will change. And probably not for the financially better.

    eye24= I know I don’t see eye-to-eye with everyone on this issue, and that’s okay. YMMV!

  18. 18
    Terri Pray says:

    Market place works very well for us, and yes we make money even after the fees taken off. More than we would with prime.
    So yes, publishing houses and authors do still make money this way.

    As I understand it Ingrams won’t handle books from Booksurge now (someone please correct me if I’m wrong) and that happened prior to this whole thing from Amazon. If I’m recalling this correctly it does open up the idea that the big boys are playing tit for tat?

  19. 19
    DianeH says:

    I just found the following well-written article by Angela Hoy. 

    March 27, 2008
    Amazon.com Telling POD Publishers – Let BookSurge Print Your Books, or Else…
    http://writersweekly.com/the_latest_from_angelahoycom/004597_03272008.html

    She makes some good points here, and I wonder if there is a case based on the size/market/reach of Amazon and it’s ability (real or perceived) to strong-arm the industry/market.  (Not that business doesn’t do that every day)

    I will say this, Amazon gets 99.5% of my book business.  I buy a lot of books and tend to give gifts of books when at all possible (see love = books).  I also tend to buy only books that are available and fall under Prime.  So, I can see that for me, Amazon has become a monopoly of my buying attention.

    I also find myself wondering if I have ever bought a POD book.  I honestly don’t know.  Oh, I think maybe I have bought one!  Wait, wait!  (I’ll start paying attention here.)

    I do think there is an excellent business opportunity for a company to step forward on the Internet and become the “We Have No POD Rules” company of choice… like say B&N;.  If B&N;gets a inventory that Amazon “can’t get” (due to their own policies), then that’s a market benefit to B&N;.

  20. 20
    Janeane says:

    The larger point of an anti-trust suit is escaping most people at this point. Even the ice cream store example stops short of the real issue. Note:
    “We’ll only sell your ice cream if our factory produces it.”
    All the other ice cream factories (printers and publishers) and stores (pretailers) go out of business.
    Then, Giganormous Ice Cream Maker and Retailer raises the fees it charges to ice cream flavor makers (authors) and to consumers.

    And do any of you really think that Amazon cares about making money by printing books? Printing books is part of an old system that’s not part of their business model. They’re using Booksurge as part of a larger plan.

  21. 21
    DianeH says:

    Janeane, You are right. 

    What was initially making the rounds of “oh isn’t this bad” is that Amazon wants POD suppliers to either use its Amazon-owned POD or supply POD books directly to its warehouse.  There was a lot of focus on Amazon’s POD contract, and it seemed not out of line with other wholesalers to me.

    It will be very, very interesting to see how far the legal system will allow Amazon to set its own rules (re:  We own the play ground and get to set our own rules, because you can always go play elsewhere).

    Have you read any good legal articles on it?

  22. 22
    Retire says:

    very good post, big companies always try to be the bosses.

  23. 23
    Frank says:

    Some big companies try to monopolize..and then they run those snobby toned scouts around the Internet looking for their keywords from people talking about them.

    If you’re in USA , feel free to have an opinion. Some of those snotty mono-tone insiders-club types might try to use their ‘poncho in the rain’ mentallity.. but if you make it rain long enough,  they’ll get tired of being drenched. :)

    Frank
    Full Color Printing

  24. 24
    Skyros says:

    Very interesting and beautiful blog. It is a lot of ful information. Thanks.

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