Amazon's First Bookstore Opens in Seattle

[murg]

Originally Posted by AnemicOak

Link to the actual letter...

Is this a real law, or just one of those quaint customs the book industry has?

[Fbone]

Originally Posted by Cinisajoy

Amazon is not a wholesaler. They are a retailer. If they sell to the general public that is a retailer.
Wholesalers sell to other businesses only.
Anti-trust in no way applies to Amazon ever.

Amazon is a publisher not a wholesaler.
Dang, journalists and/or bloggers need dictionaries.
Anti-trust only applies to monopolies.
Mono means one.

A publisher is a wholesaler. In this case, Amazon sells their published titles directly to consumers and to other businesses (B&T, Ingram).

The ABA may be wondering if Amazon is offering Amazon Books preferential terms which may not be permitted under trust laws.

[fjtorres]

Originally Posted by Fbone

I believe wholesalers selling as a retailer (consumer direct) may run afoul of anti-trust laws. For example, B&T and Ingram may not open retail bookstores, Debeers a jewelry store, Inbev a liquor store, Merck a pharmacy, etc.

Whether that applies to Amazon books I don't know.

The ABA seems to be way off base in at least three separate ways.
1- Antitrust in the US is about consumer harm not competitor squeeze.
2- Amazon isn't a wholesaler but it doesn't matter because wholesalers can and do sell to consumers. Think of the generic term for the likes of Sam's Club, BJ'S, and Costco. Wholesale clubs.

https://en.m.wikipedia.org/wiki/Warehouse_club

3- Borders at one time used to run both a wholesale business and retail store as pointed out in the comments at the source.

Plus, not only is Amazon not a distributor of books, they buy the books outright with no return option, unlike the ABA stores who effectively sell on consignment. Nobody gives consignment channels the same terms as no-return channels. Having paid outright for the books, Amazon can do anything they choose with them: (re)sell them, pulp them, or even give them away.

[fjtorres]

Originally Posted by Fbone

A publisher is a wholesaler. In this case, Amazon sells their published titles directly to consumers and to other businesses (B&T, Ingram).

The ABA may be wondering if Amazon is offering Amazon Books preferential terms which may not be permitted under trust laws.

Moot point: remember, ABA stores boycott Apub titles by choice. Thus Amazon is the only B&M source of Apub titles.

[DuckieTigger]

Originally Posted by fjtorres

Moot point: remember, ABA stores boycott Apub titles by choice. Thus Amazon is the only B&M source of Apub titles.

That makes Amazon Books a monopoly concerning Apub titles sold in B&M. If they would raise the prices compared to online Apub sales, then they might appear to abuse their monopoly. So hence they have no choice but to pricematch B&M and online sales to NOT attract antitrust laws being imposed upon them.

[Fbone]

We don't know the exact terms between Amazon and Amazon Books. Are they the same terms that Amazon has with B&T and Ingram or any other store that wishes to buy them?

Amazon is the wholesaler and distributor for their own published titles. As you say they are the only source. However, they do sell them to B&T from which B&N buys them and sells them at the same price as Amazon. It's even possible B&N buys from Amazon directly. The ABA may want the same terms as Amazon Books.

I don't think the ABA has a case either. However, I can see their concern. They don't want a B&M competitor who can sell books cheaper than their wholesaler/distributor.

[DuckieTigger]

Originally Posted by Fbone

We don't know the exact terms between Amazon and Amazon Books. Are they the same terms that Amazon has with B&T and Ingram or any other store that wishes to buy them?

Amazon is the wholesaler and distributor for their own published titles. As you say they are the only source. However, they do sell them to B&T from which B&N buys them and sells them at the same price as Amazon. It's even possible B&N buys from Amazon directly. The ABA may want the same terms as Amazon Books.

I don't think the ABA has a case either. However, I can see their concern. They don't want a B&M competitor who can sell books cheaper than their wholesaler/distributor.

I only see one slight mishap in your logic: If even B&N sells the books at the same price as Amazon, then it might be reasonable to assume that perhaps Amazon sells the books under a agency pricing model. Even if the contract between Amazon and Amazon Books gives Amazon Books a bigger profit margin than other B&M stores, then the ABA still doesn't have a case. It is a contract negotiation - and Amazon Books can, for example, negotiate a higher profit margin in return for being forced to only and exactly buy books that are preselected.

[Fbone]

I don't know if Amazon's print books have Agency pricing or B&N is price matching. Or B&N is buying directly from Amazon.

I'm not sure if a company (wholesaler) can sell an item to itself cheaper than to a competitor.

[HarryT]

Originally Posted by Fbone

I'm not sure if a company (wholesaler) can sell an item to itself cheaper than to a competitor.

Unless it's in a monopoly position in the market, I don't believe there would be any law preventing it from doing so. I works for a large multinational IT company that makes laptops in one of its divisions. The IT consultancy division of the company, in which I work, gets the laptops at much cheaper prices than they are sold externally for.

By comparison, the phone company in the UK is called British Telecom, and is (effectively) a monopoly. It is required to sell network capacity to its own ISP on the same commercial terms that it sells capacity to other ISPs.

[DiapDealer]

Originally Posted by DuckieTigger

That makes Amazon Books a monopoly concerning Apub titles sold in B&M.

I'm fairly certain it doesn't work that way. If everyone else chooses to not sell your product, they can't then point and claim "monopoly!"

[fjtorres]

Originally Posted by DiapDealer

I'm fairly certain it doesn't work that way. If everyone else chooses to not sell your product, they can't then point and claim "monopoly!"

Exactly.
For that matter, some companies choose to sell through their own channels exclusively and still aren't monopolies. SEARS and CRAFTMAN tools through the ages. Just one of many examples.

This whole thing just smacks of panic and desperation.

First, as one of the comments at the source points out: one store with only 5000 books on the shelves is hardly a threat to anybody.

Second, nobody knows if the store is an experiment (in tracking shopper behavior, for example) and intended as a one-of, or if it is a pilot for a future chain. Or as a challenge to their competitors to stop boycotting Apub titles.

Third, making this stunt about Apub (which the ABA isn't--they are complaining about *all* the books at the store) ignores history: before the multinationals took over Manhattan Publishing, DOUBLEDAY operated its own chain of stores and its own Book Club operation that sold heavily discounted copies of its own books.

Nothing Amazon is doing is all that unusual legally; it has all happened before and it will all happen again. With nary a legal problem.

Now, as to the terms Apub offers Amazon LLC, that is naturally confidential but there is a good hint in the public terms disclosed for the Scout program. And those terms match what Amazon said publicly during the Hachette catfight: 35% author, 35% publisher, 30% retailer. Apub contracts have other provisions, like for Kindle First, which is a lump sum payment but substantial enough, apparently.

I see lots of hyperventilation but little legal issue.
But that is just me going by the historical record. Let's see what happens as the story spreads and lawyers chip in.

[HarryT]

Originally Posted by fjtorres

Third, making this stunt about Apub (which the ABA isn't--they are complaining about *all* the books at the store) ignores history: before the multinationals took over Manhattan Publishing, DOUBLEDAY operated its own chain of stores and its own Book Club operation that sold heavily discounted copies of its own books.

We have publisher-owned bookshops in the UK, too. Eg. Cambridge University Press have their own shop in Cambridge.

[darryl]

I'm no expert on US law, Federal or State, let alone US anti-trust laws. But given the source I would not lose any sleep at this stage. And in any event, at the moment Amazon has a single physical store which I think we can regard as somewhat of a test. Amazon no doubt has excellent lawyers and I cannot see them placing themselves in a position like, say, the price-fixing cartel of publishers. It may be that we have lawyers looking for lucrative new clients pitching to an industry devoid of ideas and desperate. The position now being a very public one, I'm sure it won't be long before we hear from a real expert or two. I would, however, observe that the purpose of anti-trust law is not to protect legacy players from competition.

[fjtorres]

Originally Posted by darryl

It may be that we have lawyers looking for lucrative new clients pitching to an industry devoid of ideas and desperate.

Quite possible.
We already saw one instance of this:

http://the-digital-reader.com/2013/0...g-6-pubishers/

They were practically laughed out of court.
OpenSource DRM!

[darryl]

Originally Posted by fjtorres

Quite possible.
We already saw one instance of this:

http://the-digital-reader.com/2013/0...g-6-pubishers/

They were practically laughed out of court.
OpenSource DRM!

I believe all DRM should be open source! Of course, it would be rather ineffective, but that does not seem to have presented too much of a problem for the existing DRM schemes.