How Much Will Boycott Cost Amazon?
Rally to Restore Sanity and/or Fear (Photo credit: Wikipedia)Amazon's e-book contract dispute with publisher Hachette has led to calls for a boycott. And funnyman, Stephen Colbert, has added his popular voice to those who want you to stop buying from Amazon.
How much will this boycott cost Amazon?
Before getting into this, let's take a look at the dispute. Amazon is pushing Hachette to lower the price at which it will sell its e-books though neither side will provide details. Amazon is putting pressure on Hachette by subjecting many of its books 'to artificial purchase delays, suspended pre-orders of new titles, increased prices, and no longer re-stocking existing ones,' according to Venture Capital Post.
Hachette is paying the price in the form of slumping revenue. According to the New York Times, 'After several weeks, Hachette sales are now dwindling on Amazon. Since Amazon is the biggest bookseller in the country, that is seriously affecting Hachette.'
If you look at what Amazon is trying to do through the lens of consumers, you could conclude that it is doing the right thing. It is using its substantial bargaining power as a big buyer of books - in dead tree and electronic formats - to lower the price that consumers pay for them.
But in the words of 2012 presidential candidate, Willard Mitt Romney, 'corporations are people too, my friend.' And those corporations include publishers like Hachette that employ editors and publicists and pay royalties to authors. Lower prices for e-books will mean less money for those people.
But novelist Barry Eisler defended Amazon in The Guardian on June 4, noting that the publishing industry has been run 'for decades in a way that has benefited the few while stifling new opportunities for the many.'
But Eisler is no match for Colbert whose 2012 book, A merica Again: Re-Becoming the Greatness We Never Weren't, is marked on Amazon as 'usually ships in two to four weeks' and sells there at full price instead of the usual discount, notes the Times.
In his June 4 show, Colbert struck back - urging his readers to download an 'I didn't buy it at Amazon,' sticker from his web site.
Colbert's power was dramatized by viewer response to a guest who appeared on the show. A Hachette author, Sherman Alexie, pushed a Hachette book, 'California,' by Edan Lepucki that Colbert exhorted his minions to buy at the independent Portland, Ore., store Powell's.
After tweeting Together we can #CutDownTheAmazon to his six million followers, California 'immediately became Powell's No. 1 best-seller,' according to the Times.
For Amazon - which sports a net margin of 0.38% - this debate is more than just economic angels dancing on the head of a pin.
Books - paper and e - are not a very big market. In 2013, total book sales were $7.01 billion - down $60 million from 2012. And the e-book segment totaled $1.53 billion - down $10 million from 2012, according to the American Association of Publishers.
Amazon controls an estimated 65% of the e-book market according to The New Yorker. Assuming this figure is correct, Amazon's e-book revenues total about $995 million.
Of that, Amazon keeps a profit margin of 30 percent plus a 'co-op promotional fee' for making an e-book book available on its site, according to . If that is correct, then Amazon takes in a profit of at least $300 million from e-books.
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