Amazon.com defended its tough tactics in a contract dispute with the Hachette Book Group as some critics called for boycotts of the giant online retailer and authors continued to ask for government intervention to blunt the company’s market power.
In its first comments on the spat, Amazon said in a post on its Web site Tuesday evening that it was entitled to seek better terms in negotiations with Hachette and asserted that it was “doing so on behalf of customers.”
It added that it was no different from other retailers seeking favorable terms from suppliers. “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,” Amazon said.
For those who cast Amazon as a behemoth locked in battle with a smaller firm, Amazon reminded customers that Hachette is “part of a $10 billion media conglomerate,” the French-based Lagardère. While it praised Hachette for negotiating “in good faith,” Amazon said “we are not optimistic that this will be resolved soon.”
“This is a monumental game of chicken,” said Davia Temin, a crisis-management and media strategist at Temin and Co. in New York. “We’ve seen it before with CBS and cable stations, and other instances where the public has been disadvantaged because of a battle of titans where both of the titans seem to put the consumer last.”
Amazon’s defense came amid a chorus of criticism from authors, agents and others in the publishing business who have said the giant online retailer’s tactics are hurting Hachette’s sales, and thereby the publishing house’s authors and readers. The publisher’s authors have said that Amazon has kept their book prices high, stretched out delivery times and tried to direct customers to books published by other firms.
Amazon, whose chief executive, Jeffrey P. Bezos, owns The Washington Post, acknowledged that it is keeping smaller inventories of Hachette titles than it ordinarily does and that it is “no longer taking pre-orders on titles whose publication dates are in the future.” The company said that if there is no stock on hand, customers could place orders as soon as Hachette fills inventory orders.
But the online retailer said that “suppliers get to decide the terms under which they are willing to sell to a retailer. It’s reciprocally the right of a retailer to determine whether the terms on offer are acceptable and to stock items accordingly.”
Many analysts have questioned whether Amazon is hurting its hard-won reputation for speedy delivery and convenience by trying to turn customers away from Hachette’s books, which include bestselling authors such as T.D. Jakes, James Patterson, Malcolm Gladwell, J.K. Rowling and Stephen Colbert.
Amazon said that Hachette titles made up only a tiny portion of its sales. “If you order 1,000 items from Amazon, 989 will be unaffected by this interruption,” it said. “If you do need one of the affected titles quickly, we regret the inconvenience and encourage you to purchase a new or used version from one of our third-party sellers or from one of our competitors.”
But some analysts said that Amazon risks driving customers away from other products.
“The minute some question your motive, your ubiquity, you’re cracking your facade,” Temin said. “I wonder how good a strategy it is for your customer relations, especially since the core audience of Amazon started around books and a reverence for books.”
Earlier on Tuesday, before Amazon posted its response, Reuters media columnist Jack Shafer proclaimed that he was going to stop purchasing goods from Amazon until it justified or ended its tactics in the Hachette dispute.
“Amazon doesn’t owe me access to Hachette titles, and I don’t owe Amazon my business,” he wrote. “So I’m stuffing my 1-click button into my drawer of abandoned devices and chargers and won’t reclaim it until Amazon makes this thing right.”
Tom Scocca, an editor for the Web site Gawker, said “Amazon has gone too far,” although he acknowledged the inconvenience and difficulty of shopping elsewhere in a piece titled “Let’s Boycott Amazon! Now Where Do We Buy Stuff?”
Some analysts noted that publishers also strive to drive hard bargains, and that they have been doing well on the rising sales of e-books. Lagardère said in an earnings presentation this year that e-books made up 30 percent of Hachette’s net U.S. sales in 2013.
Amazon said it would be willing to evenly split with Hachette the cost of a fund “to be allocated by Hachette to mitigate the impact of this dispute on author royalties.” It said it did this during a dispute with the publisher Macmillan.
Hachette issued a statement Wednesday saying, “It is good to see Amazon acknowledge that its business decisions significantly affect authors’ lives.” It said it would “spare no effort” to reach a deal with Amazon. Hachette said, “Once we have reached such an agreement, we will be happy to discuss with Amazon its ideas about compensating authors for the damage its demand for improved terms may have done them, and to pass along any payments it considers appropriate.”
Despite the obstacles Amazon erected for customers seeking Hachette books, many of the publisher’s titles continue to sell well. Its imprints captured three of the top four spots on the current New York Times bestseller list for hardcover fiction and the number seven and eight spots for hardcover non-fiction. High Hachette sales could undercut arguments that Amazon possesses undue market power.