Because online retail is extremely important to the book world, publishers must play nice with major e-retailers. That’s why it’s noteworthy that the world’s largest consumer book publisher (Penguin Random House) and the world’s top seller for books online (Amazon) — two entities that were once involved in a big e-book pricing dispute — recently came to an agreement concerning the sale of books in the US and the UK.
The deal between the two players is the culmination of negotiations over the pricing model for online book sales, though specific details were not released. Penguin Random House is the last of five major book publishers to renew its sales contract with Amazon. The other four publishers — Hachette Book Group, HarperCollins, Macmillan, and Simon & Schuster — maintain the prerogative to set the consumer price for their e-book titles and Amazon takes a commission. (Penguin Random House was not the only major publisher to feud with Amazon before reaching an e-book deal; Amazon ended a similar dispute with book publisher Hachette last year.)
Some speculate Amazon was motivated to more quickly come to terms with Penguin Random House because the retail giant faces an antitrust investigation into its e-book business in the European Union. European regulators are investigating whether Amazon used its dominant position in the region’s e-book market to favor its own products over rivals.
Regardless of the outcome of the EU’s investigation, Amazon’s market dominance is clear. As reported in a recent New York Times article, the online retailer is estimated to sell about eight out of every 10 e-books in Britain, just under half of all e-books in Germany, and about two-thirds of e-books in the US.
By 2018 e-books are forecast to account for about 40% of book sales in North America; 20% in Europe, the Middle East, and Africa (EMEA); and 15% in the Asia/Pacific region, according to PricewaterhouseCoopers‘ Global Media and Entertainment Outlook 2013-2017. Amazon’s deal with Penguin Random House cements both companies’ power in the e-book industry.
Amy Schein is an Industry Specialist at First Research, where she covers various aspects of the media industry. She earned her BS and MA in media studies at the University of Texas at Austin. Follow Amy on Twitter.