Amazon Upsets Customers by Acting For Its Own Profit: ComiXology, Hachette Deals

Assume you own a bookstore. You’d want to decide what titles you sell, right? What you stock and which books to promote? If one publisher is willing to give you a good deal, and if you think those books will sell, you’d want to invest more in that supplier, and if another didn’t, you might decide to cut back on your stock of their titles. Heck, if the discrepancy was big enough, you might even choose not to carry a publisher’s line.

Amazon logo

That might be true even if you were operating on reasons other than economics. You might decide to avoid a publisher just because you didn’t like the way their rep spoke to you, for example. That’s the benefit of having your own business, right?

However, when you’re the “world’s largest bookstore” and you start making these kinds of choices, people get angry. Amazon has been playing hardball in negotiating with Hachette, a publisher whose works include manga imprint Yen Press and Marvel (on the distribution level). Amazon isn’t commenting, but when it comes to that publisher, the online retailer is
* Delaying delivery of their books to customers a number of weeks (instead of the usual couple of days)
* Not discounting the titles, so customers are being charged list price
* Not restocking titles
* Displaying messages suggesting books from other publishers
* Not taking preorders for titles due this summer and fall

Again, this is capitalism at its finest. Nothing says Amazon has to carry their books, or offer them for less. (Heck, weren’t publishers just complaining about Amazon discounting too much, particularly when it came to ebooks?) Customers can easily find Hachette books elsewhere, although perhaps at higher cost than they’re used to, and without the convenience of one-stop shopping.

Affected authors, particularly, are complaining about the tactics, accusing Amazon of abusing their market position. Yes, Amazon is a very large vendor with a lot of customers (estimated to be a third to a half of the book business), but they’re not a monopoly. Not in this field, anyway.

That’s not so much the case when it comes to digital comics. Amazon bought ComiXology last month, and it didn’t take long before they removed a key feature: being able to buy* issues through the digital apps. (*Well, rent, since it’s all DRMed and you don’t own anything.)

You see, if you opened ComiXology on your iPad and liked what you were reading, you used to be able to get more issues without having to leave the app. Except… if you did that, Apple took a 30% cut. Now, you have to buy through the ComiXology website. You can still read on the app, but there’s a huge speed bump put in the way of impulse purchasing, just so Amazon gets more of the money. Again, capitalism!

I am very curious how, in this case, customers will react long-term. There aren’t many public sales figures released, but ComiXology used to be one of the top ten moneymakers on the iPad app store. Now, all that’s gone. More significantly, how much will comic sales drop for publishers? Particularly since the browsing and finding experience is worse on the website than the app used to be? How many impulse buys will be thwarted?

Amazon seems to acknowledge that this was a blow to the customer experience, since they bought everyone off with a $5 credit when they made the change, although the “egift card” was only good for a month. (They expired yesterday.) The Android app wasn’t affected as drastically, although they stopped taking Google Play credit, which annoyed people who liked that gift card form of payment. Again, eliminating anyone else who got a cut.

Perhaps Amazon throwing its weight around will be good in the long run, as publishers will have more incentive to develop alternatives to what had quickly become the de facto monopoly digital distributor. Perhaps we might even finally get a comic reading app that allows you to organize all your digital comics, no matter what the source.

Previously, Amazon put the customer first, and everyone liked that, even Wall Street, which didn’t expect the company to turn a profit. Now, their free ride on the market seems to be over, and analysts are looking for some money-making to justify the high stock valuation. Perhaps that’s why the bottom line matters so much.

There is one positive to cutting Apple out of the equation: no more need to pay attention to their content guidelines, which prevented some popular adult-oriented titles (like Saga) from being sold through the app. And maybe now that they are making more money on the same purchases, they can finally figure out how to add “delete” functionality to your comic list.


12 Responses to “Amazon Upsets Customers by Acting For Its Own Profit: ComiXology, Hachette Deals”

  1. ComiXology Giving Away 20 Digital Comics for Summer » Comics Worth Reading Says:

    […] to convince readers to keep using the system after recent unpleasant changes, ComiXology has launched a “Summer Reading List” event in which they’re giving […]

  2. James Schee Says:

    Yeah the only positive about buying from the site is that I never had to pay sales tax. The site itself is a monster to get through though, while the ap was just quickly flipping through.

    I wonder if someone else, perhaps even Apple themselves may try to eventually fill the void? I know Apple has IBooks but it is too big, maybe an IComics ap?

    Of course maybe more will do like Image and others, and allow you to buy straight from them DRM free.

    Amazon current practice actually sounds a lot like what Diamond did to small press folks for years.

  3. Anthony Says:

    There are various apps/programs for DRM-free comics available… I use Perfect Viewer for Android and Simple Comic for OS X. But guessing it’ll be awhile, if ever, before DC/Marvel go DRM-free (the main two holdouts I’d see).

  4. AngusH Says:

    Although I’d been buying through the site before the changes as it’s cheaper, I think it’s idiotic and short-sighted of them to make the reading experience more difficult for the majority of users. If the film and music industries have shown anything it’s that consumers want entertainment instantly and at a price they feel is fair compared with other forms of entertainment. If you don’t give them that, it’s far too easy to just steal – right or wrong, that’s reality.

    Of course, Amazon probably don’t care considering that digital comics would make such a small % of their overall profits. It might just be giving the finger to Apple given the ranking of Comixology on their in-app purchases, but again that would be a drop in the ocean for Apple too.

    It’s one thing to hope for this leads to Comixology being replaced by a better service as the market leader, but the fact is that a lot of people have invested a lot of cash into Comixology over the years, and if Amazon just absorbed it and then phased it out of existence due to driving the consumers away, what would happen to all those digital comics you bought?

  5. Jer Says:

    if Amazon just absorbed it and then phased it out of existence due to driving the consumers away, what would happen to all those digital comics you bought?

    They’ll be gone. You’re only renting them. You’re renting them for a length of time with an indefinite end point, but you should get used to the idea that your “collection” on comixlogy’s cloud is a rental, not something you own. (This is why I only buy reading copies on comixology – things that I want to read once and probably will never to want to reread. If I want to have something to re-read, it’s either a physical copy or a DRM free copy from Image – and in fact this has driven me to just go ahead and buy any digital books that I want from Image directly from them.)

    The fact that it’s a rental is surprisingly more true now that they are owned by Amazon than it was when they were independent. A small, independent company was answerable to the small population of comics readers and to the major comics publishers (realistically to DC, but Marvel and Image also had leverage). Amazon isn’t answerable to anyone – they’re a company that tells publishers what to do. So if Amazon wakes up one day and comixology is no longer turning enough of a profit for the folks at the top, they’ll axe it.

    (Cynically, there are days when I think that the comixology purchase was to acquire comixology’s patents and to put a thumb in the eye of Apple by taking away a small revenue source. Realistically I doubt that’s the case but sometimes I wonder.)

  6. Jaylat Says:

    Amazon should have allowed customers to keep buying through the app – at a higher price. That would have underscored just how much Apple is raking off each app purchase.

  7. Johanna Says:

    I’m pretty sure Apple has contract language that won’t let you do that. Amazon, for example, has rules for third-party sellers that says your price on Amazon has to be the same or cheaper as you offer elsewhere.

  8. Thad Says:

    “Not a monopoly” tends to damn Amazon with faint praise. It’s certainly a dominant player in the industry, and capable of manipulating the market in ways no other bookseller in history has been able to. (And once you start getting into ebooks and digital comics, the “monopoly” label may well be accurate — which I assume is what you’re referring to with your “not in this field, anyway” qualifier.)

    Of course, as you say, if customers don’t like it they can and should shop elsewhere; that’s how markets work. I still buy a lot of things at Amazon (electronics and games, mostly), but I’ve become increasingly uncomfortable purchasing books from them. I don’t know the last time I bought a dead-tree book through Amazon, and I’ve never bought a Kindle ebook. I’m happy to pay a few extra dollars to support my local comic shop and independent bookseller.

    Charlie Stross (quite possibly one of the “affected authors complaining about the tactics” you’re referring to) has a post up with the not exactly neutral title “Amazon: malignant monopoly, or just plain evil?” at http://www.antipope.org/charlie/blog-static/2014/05/amazon-malignant-monopoly-or-j.html ; it’s a followup to a previous post called “What Amazon’s ebook strategy means” at http://www.antipope.org/charlie/blog-static/2012/04/understanding-amazons-strategy.html . His eye is more toward ebooks, but Amazon’s behavior in the physical-book sector is relevant to what we can expect from its continuing ebook strategy.

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