Amazon uses delay tactics to bring German publishing group to book

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 apologise 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 US retailer 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 ebook market," says Matthias Landwehr, a literary agent who represents many of the authors affected.

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

In Europe, where the clout of US internet giants is already deeply resented – whether on grounds of privacy or for their sheer marketing might – Amazon may find itself facing a level of resistance it has not encountered in the US.

Set an example

So far, Amazon’s actions in Europe seem to be confined to Germany; countries such as

France

and Britain, for example, do not appear to be affected. Nor have other leading German publishers been targeted.

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

Amazon is using the Bonnier imprints “to set an example”, according to Landwehr, who says the online retailer is “counting on the fact that publishers are not allowed to speak with one another”. Amazon cites potential concerns about competition on the publishers’ part if they compared notes, but if publishers can get Amazon “to change the existing conditions with one publisher, it would trigger a domino effect”, says Landwehr.

Amazon did not respond to requests seeking comment.

‘Anti-Amazon law’

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 per cent discount on books.

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

But this latest 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 ebooks.

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

Strong hold

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

Germany’s book-order business – including online sales but excluding over-the-counter sales – grew 4 per cent last year to €2.7 billion, according to the Federation of Mail-Order Booksellers. Amazon towered above its competitors, controlling 70 per cent of the German market, with sales of €1.9 billion.

Amazon has an even stronger hold on the German ebook market, despite attempts by German publishers to create an alternative opensource platform to compete with the Kindle format. Sales of ebooks in Germany grew 200 per cent from 2012 to 2013, and experts predict that number will only increase.

But given German price-setting laws, Amazon has little wiggle room for increasing its share of the income generated by ebooks in Germany. While it receives a 50 per cent cut of all printed books sold in Germany, the standard rate for ebooks gives Amazon just 30 per cent 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, says Christian Russ, an attorney specialising in publishing law.

“The publishers are not allowed to react under the current antitrust [competition] laws,” he says. “Every individual publisher is forced to deal with these demands, because they cannot break with a company that accounts for 50 per cent of the market.”

Band together

The German booksellers’ association has called on lawmakers to adapt competition laws to better fit the digital market, which would allow publishers to band together. It is also pushing lawmakers to grant ebooks the same VAT exemptions printed books receive (the tax on ebooks is 19 per cent, compared with 7 per cent for printed books).

The European Commission has ruled against allowing member states to lower VAT rates on ebooks, although France and Luxembourg 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 Amazon ultimately wants to drive authors away from the traditional system of agents and publishers and have them sign directly with its Kindle Direct Publishing.

He advises authors against such arrangements, he says, 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, writes Siv Bublitz, chief executive of the Ullstein publishing, 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."

© 2014 New York Times News Service