Recent news reports and informal messages from several publishers suggest that Amazon is taking more steps to wring money from its publisher suppliers. In the U.K., Amazon has notified many publishers that if they don't meet Amazon's delivery targets, they will be charged 3%-10% of the cost of goods, the Bookseller reported.
"Under the new rules, publishers will be charged 3% of the cost of the goods if fewer than 90% of shipped titles a month arrive to a fulfilment centre within the expected delivery window, or if fewer than 90% of collect orders are ready for pickup by Amazon during the expected ship window," the Bookseller wrote. "The 3% charge will be deducted only for the noncompliant units under the stated 90% threshold."
In addition, Amazon will charge 10% of the cost of goods "if below 95% of 'confirmed or back-ordered products' per month are not delivered before Amazon's system automatically cancels the items."
In a nicely timed twist, around the same time Amazon was notifying accounts about how it will penalize them, it was delaying payments to Advantage customers--those who sell to Amazon on consignment--causing a cash-flow disaster for some publishers. Amazon said this was the result of a technical glitch that has been corrected.
In Germany, Amazon subsidiary Audible, which has an estimated 90% of the German market for digital audiobooks, has told some smaller publishers that they must sell to Amazon on a flat-rate model, according to Der Spiegel. If they don't agree, their titles will be delisted from Audible.
A group of audio publishers are filing a complaint with the German cartel office, a complaint that the Boersenverein has said it would support.
In the U.S., at least one distributor recently received a notice from Amazon that it must lower the prices on several backlist books or Amazon "may reduce or discontinue ordering those items," the company wrote. The titles have been sold to Amazon at 20% and 25% discounts; the company is requiring new discounts ranging from nearly 30% to nearly 50%.
The Bookseller also reported that Amazon.co.uk and Penguin Random House U.K. "are in a dispute over terms" for a new contract. As is customary with these kinds of situations, neither side would discuss terms under negotiation, but Amazon spokesman Tarek El-Hawary wrote in an e-mail to Re/code, "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 U.K."
The negotiations do not include Penguin Random House in the U.S.
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But sometimes Amazon has to cooperate with others. In a striking change in its approach to taxation in Europe, starting this month, Amazon has begun booking revenue on sales made in some countries--the U.K., Germany, Italy and Spain so far--in those countries rather than in its head European office in Luxembourg, where tax rates for the company are much lower, the Wall Street Journal reported.
The European Union and national governments have complained about and launched investigations of tax-avoidance structures used by several U.S. companies, including Amazon, Apple, Google and Starbucks. The U.K. recently passed a budget increasing taxes for companies that appear to be avoiding paying taxes.
The Journal commented: "Amazon's move marks a sea change in its approach to tax in Europe. Depending on how the company allocates costs, it could significantly boost the firm's tax bill in many EU countries. It could also put pressure on other companies to do the same."
In January, the E.U.'s antitrust office said in a preliminary finding that the tax deal Luxembourg gave Amazon in 2003 that has allowed it to pay much lower taxes on its European operations than otherwise expected appeared to amount to "unfair state aid."