A settlement has been reached between Hachette and
Amazon, in which both sides claim to be happy with the results. While this may
be true, is it efficient for a company that has monopsony issues with Amazon to
settle disputes individually? What about for smaller companies who have fewer
resources to fight Amazon? Will this settlement prevent Amazon from abusing its
monopsony power in the future? What else can/should be done?
“I’m
relieved that Amazon and Hachette reached an agreement,” Mr. Preston said. But,
he added: “If anyone thinks this is over, they are deluding themselves. Amazon
covets market share the way Napoleon coveted territory.”
I think Amazon may ultimately be the loser. Consumers (I think) are starting to realize Amazon's power and disingenuous business. From what I have gathered, some consumers seem to be turned off from Amazon and are turning elsewhere even if it is more expensive. However, to advocate for Amazon, I understand from a business perspective that Amazon didn't want Hatchett to take the bulk of profits. Ultimately, Amazon may have deterred some consumers in the process, but the business still thrives and its monopoly like power is threatening.
ReplyDeleteI don't think that this is an efficient way to handle monopsony issues because Hatchette is able to renegotiate their contract since they are one of the largest publishers. Smaller publishers will not have the needed resources to be able to take a dispute with Amazon to court and may have to suffer with a loss in profits. However there are an increasing number of cases where Amazon is being accused of having monopoly power so it will be interesting to see if and how this issue will be handled. If it is concluded that Amazon is a monopoly, then will new regulations on pricing be put into place or will Amazon be forced break up into several smaller corporations?
ReplyDeleteCam has a point. Nowadays, consumers are more willing to buy elsewhere (where it may be more expensive) if they believe a company is mishandling its power. Sure, consumers would prefer to buy goods and services at the lowest price, but they also want to support the companies with good and wholesome reputations that share similar ideologies with themselves. In going back specifically to this article, it makes sense that Amazon would not want other publishers setting their own prices. Additionally, publishers could continue to increase the price of ebooks to promote printed sales. Regardless, Amazon is massive and still holds a lot of the power in the book market. Overall, I don't think that consumers who take their business elsewhere because they don't like some of Amazon's actions will have that much of an effect on Amazon's sale or power.
ReplyDeleteCam has a point, but I think he is still a bit too optimistic for reality. You would expect that consumers if are realizing the disingenuous business of Amazon, they would leave. This still isn't the case. I've heard a number of people acknowledge Amazon's business practices then buy something because of free two-day shipping and a low price. Lower prices are going to dominate the market place. The reason Amazon will lose out is not because of their poor business practices, but because they cannot get the rights from publishing companies and movie producers to use their works for their new services.
ReplyDeleteI really don't see Amazon as any sort of loser in this situation. The author mentions that anytime Hachette is up for renegotiation they will have to take on a completely different case. I think this only reflected Amazon's power in the market, and given their disposition to strive towards market share growth, I'd say they'll be big players in the market for quite some time.
ReplyDeleteI also don't think that Amazon is going to be hurt by the situation at all. They may be hurt in the short run, but ultimately I think that the prices for ebooks will eventually drop. I do not think that book readers will all switch over to ebooks. I think there is a difference in read a real, paper bound book that serious readers will appreciate. However, with that said, I think that many people will switch to buy from Amazon simply because it is cheaper and easier.
ReplyDelete