Book trade cautiously welcomes Amazon's new e-book deal

The book trade has generally welcomed Amazon’s new e-book offer, but questioned the five year cap for the new deal and raised concerns over whether it will hold in the UK in a post-Brexit world.

Amazon offered to rescind the controversial Most Favoured Nation (MFN) clause in its e-book contracts yesterday (24th January) along with a range of other measures to appease publishers following a European Commission investigation which preliminarily concluded that the contracts constituted an abuse of a dominant market position.

The clauses, first reported by The Bookseller in 2014, forced publishers to offer Amazon any new alternative business models it offered to competitors, such as using different distribution methods or release dates, or making available a particular catalogue of e-books.

The retailer has committed not to include these clauses for any publisher in the European Economic Area in any new e-book agreement with publishers for a period of five years and has said it will also appoint a trustee to monitor that it is complying with its pledges. The EC has now given publishers one month to respond to the proposals.

Publishers The Bookseller has spoken to are generally pleased and relieved at the news, although some have questioned why the deal is only being offered for a five year period, while others have expressed concern that it won’t be implemented after the UK leaves the European Union.

Juliet Mabey, publisher at double Man Booker-winning publisher Oneworld, said: “Amazon's offer has to be a very good thing for the industry, it’s good for everybody. I never thought that having one dominant player is good for readers, which is what Amazon has always argued. I don’t think that is good for anyone.

“I think Amazon should have to drop the clauses altogether, though. I can’t see how it would be in anybody’s interests, other than Amazon’s, to reinstate it in five years’ time. I think it should be a permanent offer on Amazon’s part rather than five years. I can’t see any other company denting its dominance very much in five years. I would have thought it is something it should agree is anti-competitive and taking advantage of its dominant position and should drop it completely.”

On the implications of the deal following Brexit, she added: “I would like to think in future those protections we’ve enjoyed in Europe will be reinstated in British law, but how they can do that in every field on every level, they’d need and army of lawyers, so I’m not sure." 

Will Atkinson, m.d of Atlantic publishing house, praised the EC for bringing the investigation. “If there’s no competition, then there has to be regulation,” he said. “That’s something the European community understands and unfortunately our government tends not to, so that will be one of the bad things about Brexit. I’m not a great interventionist, but the EU las led where the British government probably wouldn’t have done.” However, he added that it  "it looks as if most [EU] legislation will carry on [in British law]”.

Yesterday an Amazon spokesperson said the company was pleased to have reached an agreement with the European Commission, but it disagreed with the suggestion in the EC's preliminary assessment that there was a separate market for print and e-books and said that the notion less choice was given to readers by its strong e-book market was "simply wrong".

Atkinson agreed with Amazon on this point. “I would also say that Amazon is not entirely wrong either in that there is clearly a link between physical books and e-books,” he said. “…Publishers aren’t publishing physical books and then with another publisher publishing the same copyrights in e-book. Physical and 'e' are coming out of the same publisher. We think of them as if they’re different products and they’re different channels; yes, Amazon happens to own one of the channels, and is monopolistic in its behaviour, but clearly they [physical and ‘e’] are joined. Amazon is trying to monopolise what they are strongest in, as that’s the history of the company.” 

Karen Sullivan, founder of Orenda Books, meanwhile, said she welcomed Amazon dropping the MFN clauses, in particular being obligated to reduce prices to match deals with other retailers. “It will allow us to be much more flexible in our marketing without these types of restrictions,” she said.

Stephen Lotinga, chief executive of the Publishers Association, took a more cautious approach. He welcomed Amazon’s recognition that that changes in practice were needed, but said the trade body would now be scrutinising “exactly what commitments have been made to consider whether it will have the desired impact on the industry, e-book market and consumer choice”.

For retailers, meanwhile, the Booksellers Association (BA) has welcomed the news, which follows its initial complaint to the EC in 2015. However, it also expressed lament it took so long for this new deal to be offered, with several retailers closing their e-book businesses in the process, such as Waterstones and Sainsbury’s. For many retailers, “the damage has already been done,” said Giles Clifton, head of corporate affairs at the BA.

It also renewed its calls for the EC to widen its investigation into Amazon’s position in the print market too.

Clifton, said: “We are delighted that some eighteen months after the BA complaint was formally submitted we are beginning to see some solid action undertaken by the commission. Our contention was always that the MFN clauses were anti-competitive and we gave very many examples of what we regarded as Amazon’s unfair and anti-competitive terms and conditions.

“However, we are disappointed that it has taken this long to reach this stage. For a small commercial competitor of Amazon, the damage has already been done, and is difficult if not impossible to retrospectively make right. The BA complaint was by no means limited to the e-book market but covered the far larger, and more important, print book market. We renew our calls for the appropriate competition authority to look at this. As with our views on e-books, we believe that a proper investigation of the print book market would uncover irregularities, and we urge action to be taken in this area now.”

Publishers have one month to respond to the proposals.