Thursday, June 6, 2013

European Backlash Against Amazon

 "Everyone has had enough of  
Amazon, which by dumping practices, slashes prices to get a foothold in markets only to raise them as soon as they have established a virtual monopoly," the French minister of culture, Aurélie Filippetti, said in a speech to booksellers, according to the British newspaper The Guardian which reported on how, after the French government pledged financial support to its private brick & mortar bookstores against the "destroyer of bookshops" (aka Amazon), now the British Booksellers Association is calling for its government also to  support the booksellers against Amazon.

Two things stand out here: first, Amazon's overpowering market position (in the U.S. Amazon captured 31% of 2012 book expenditures of approximately $27 billion; the total by US online retailers accounted for 43% up from 39% in 2011; bookstore chains went down from 26% in 2011 to 19% ; and independent bookstores stayed at 6%;) is hardly generating any backlash in the U.S., definitely not from consumers who appear quite satisfied with Amazon's products and service, and only sporadic from booksellers. Secondly,...........

the cultural and legal environment is quite different in Europe, the second largest free market in the world. The French government defends its actions based on the "exception culturelle", i.e. to treat culture differently than other commercial products, but also on the fact that companies such as Amazon aren't subject to the same tax regime as companies physically based in France.

As an independent publisher benefiting from Amazon's ubiquitous presence around the world, I have mixed feelings about this situation. Yes, Amazon has revolutionized and disrupted the world of bookselling and publishing. But it doesn't seem a healthy environment if the brick & mortar bookstores are relentlessly under siege, first by the bookstore chains Barnes & Noble and Borders, after which the bookstore chains got in trouble due to Amazon's competition, resulting in a quasi-monopolistic position for Amazon. And now that the bookstore chains are weakened or have disappeared (as Borders went bankrupt in 2011), the bookstores are now being attacked by Amazon. In the U.K., booksellers are worried that if Amazon continues to grow "there will be high streets without any bricks and mortar book shops left. What sort of society would we be living in if that happened?"

On the other hand, I don't see how "government" support for bookstores in France or the U.K. can actually change a business environment, whereby customers are increasingly looking for easy online shopping. Admittedly, this is a challenge for any kind of store and for any city that is losing its retail stores, but it should force bookstores to become more creative and innovative and not depend on government's handouts.

My sympathy goes to the brick & mortar stores, but my free market instinct doesn't see the solution in French or British government support. If Amazon is breaking any laws, it needs to be stopped from doing so. If Amazon is abusing its power, that too should be addressed. But short of that, every smart bookseller or entrepreneur needs to come up with innovative responses to the attacks from the online retailers: maybe if one of them finds a sustainable model, others can follow suit.

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