Amazon in Penguin Random House dispute

The Guardian

Wed, May 27, 2015 - Page 15

The world’s biggest publisher, Penguin Random House, could block the sales of its books on Inc if it fails to resolve a contract dispute with the online bookseller.

According to industry sources, Amazon, which sells about 90 percent of all books online, and Penguin Random House are in dispute over the terms of a new contract for online sales that could grow into a full-blown row.

Penguin Random House, which publishes 15,000 books a year across 250 imprints, is the last of the “big five” publishers to renew its contract with Amazon on selling titles online. Talks are said to be ongoing, although neither side would divulge details.

Failure to reach a deal could result in freezing pre-orders or slowing down delivery of Penguin Random House titles, the hardball tactics that the online retailer deployed against Hachette last year.

The bitter feud between Amazon and Hachette over the price of e-books dragged on for more than six months and brought a wave of bad publicity for Amazon, with hundreds of bestselling writers accusing the online retailer of hurting authors and misleading customers.

Hachette suffered a sharp drop in e-book sales before the dispute was resolved in November last year, although it said Amazon’s “punitive” tactics were only partly to blame.

Amazon spokesman Tarek El-Hawary declined to comment on rumors about its negotiations with Penguin Random House.

“I can say that we have long-term deals in place already with the other four major publishers and we would accept any similar deal with Penguin Random House UK,” El-Hawary said.

Penguin Random House’s US spokeswoman, Claire von Schilling, sought to play down the negotiations.

“We are in continuous conversation with Amazon, with whom we have an ongoing business relationship. We have no intention whatsoever of ceasing to sell our print or digital titles on Amazon. We want our books to be accessible and available everywhere,” Von Schilling said.

A dispute would be costly for both sides, as Penguin Random House titles are a mainstay of Amazon’s bestseller lists. Some industry watchers think the world’s largest publisher has bolstered its negotiating position, following the merger of Penguin and Random House in 2013.

“With so many books in their repertoire comes tremendous negotiating power,” said Michael Kozlowski, the editor of Web site

“There are not many online digital booksellers that could stay viable if suddenly all of the books published by Penguin Random House were pulled,” Kozlowski said.

According to the Bookseller magazine, the dispute centers on the agency deals that were agreed between Amazon and the UK arms of international publishing houses in the wake of a 2012 competition inquiry by the European Commission into e-book prices.

Under the agency pricing model, which Amazon has been trying to unpick, publishers set the consumer price of e-books, while retailers take commission.