Amazon (AMZN) is reportedly close to ending a short standoff with Walt Disney Co (DIS) over sales of popular Disney movies like "Maleficent" and "Captain America." But resolving this minor tiff over videos doesn’t mean Amazon is any closer to resolving its much higher stakes battle with book publisher Hachette.
For a couple of months, Amazon had stopped taking preorders for Disney movies coming out on DVD and Blu-Ray. Now the preorder buttons are back and the Wall Street Journal reports that the dispute, centered around wholesale pricing and promotional discounting, is about to be resolved. Neither side is talking about who got what, so it’s difficult to declare a winner.
The outcome mirrors a similar battle between Amazon and Warner Home Video. For a few months in the spring, Amazon stopped taking preorders of the Time Warner (TWX) unit’s movies, only to restore them in June. Neither side commented on the outcome.
By contrast, the battle with Hachette, which first became public in May, has been broader, more scrutinized and much, much nastier. That’s because the two sides have far more at stake and Amazon is a much more powerful presence in sales of books than videos.
In the case of video disc sales, Amazon trails behind Wal-Mart (WMT) and other retailers. Its digital video offerings lag Apple’s (AAPL) iTunes for downloads and Netflix (NFLX) for streaming. But in books, Amazon is the leader, controlling an estimated 40% of the total U.S. consumer market, including almost 70% of the ebook segment.
The dispute with Hachette also concerns more critical terms, like fundamental control over wholesale and retail pricing of most ebooks. And the resolution likely won’t affect just Hachette, owned by French media giant Lagardère, but also the other major book publishers, News Corp's (NWSA) Harper Collins, CBS’s (CBS) Simon & Schuster, Penguin Random House, owned by European publishers Bertelsmann and Pearson, and Macmillan, owned by German publisher Verlagsgruppe Georg von Holtzbrinck.
Not surprisingly, Amazon has taken steps to put far more pressure on Hachette than on any of its video suppliers. In addition to yanking preorder buttons, Amazon has stopped stocking many Hachette titles in its own warehouses, leading to major shipping delays for customers, as well as cutting the discounts it offers on Hachette books.
Although such tactics are common in the cutthroat retailing business – Barnes & Noble did much the same to Simon & Schuster last year – Amazon’s tactics have drawn massive criticism from the publishing industry and some of its leading authors.
Amazon says Hachette should reduce the price of its ebooks to $9.99 or less in most cases to spur higher sales. Hachette says Amazon wants more profits and threatens to destroy the traditional publishing industry and physical bookstores with cheap ebook prices. Both sides have taken to firing off incendiary posts about the other.
That won’t help resolve the dispute any faster, even if Disney fans got their preorder button back this week.