Small independent publishers have reacted angrily to what many of them see as strong-arm tactics being used by Amazon.com to get them to agree to the e-tailer's latest co-op advertising initiatives. According to a number of publishers, Amazon has stated in its newest advertising contract that were drawn up earlier this spring that publishers that don't comply with Amazon's terms will be treated differently from those that do participate. Publishers that decline to take part could lose their partnership status, which would subject them to such changes as Amazon not selling their books at a discount and not having their titles "surface" in various merchandising and advertising programs. Amazon also may turn off the search options to publishers' books, making it possible to find a title only when the correct name of the book or the ISBN is entered.
Publishers said Amazon wants them to act on the proposals quickly, although there is no firm deadline for when the e-tailer may make good on its threats to cut back on services for noncompliant houses.
Dennis Johnson, owner of Melville House, said Amazon's proposal isn't co-op but "blackmail. What they are saying is pay up or disappear." Another publisher said he was offended by Amazon's tone and rejected the proposal, noting, "I don't respond well to threats."
Johnson has never done co-op advertising with Amazon and said that less than 10% of his sales come from the online bookseller. While not participating in the co-op program may cost Johnson some sales, his bigger concern is that if Amazon limits the way his titles appear on the site, they will lose visibility in the entire marketplace. Johnson, and nearly every other publisher contacted by PW, said Amazon's database has become an important source of bibliographic information about books for both the public and the industry.
Amazon is asking publishers to agree to provide co-op funds in the amount of between 2% and 5% of net dollars earned from the e-tailer in 2003. Amazon has had co-op programs for years, and several publishers said that the programs do boost sales. But even publishers that have worked with Amazon in the past said they view the most recent negotiations as heavy-handed.
The head of an independent house that has never done co-op with Amazon before said he would like Amazon to demonstrate "what we're getting for the money, and how much will it increase our business." Amazon's tactic, this publisher said, will make him work more aggressively with other online stores, such as Barnes&Noble.com, which he, and other publishers, see as much more publisher-friendly. And while he said he would prefer not to, this publisher said he will devote more effort to selling through his company's own Web site. "Booksellers are forcing publishers to go directly to consumers. We have to make up margin somewhere."
Citing company policy, an Amazon spokesperson declined to discuss its negotiations with publishers. As part of a statement, she said Amazon "works with all publishers the same, big or small, to maximize their sales."
Small publishers said the pressure over co-op was particularly painful because of the site's history. Said one: "Amazon moved from a cure-all for small publishers by leveling the playing field to a company where it's something new every day."