Publishing Industry

Lord Lucas Excerpts

Wednesday 6th February 2013 Grand Committee

[Lord Lucas]

My Lords, I am a publisher but take a very bleak view of the future of publishing if Amazon goes unchecked—not that it will harm me, but it will kill most of the rest of the industry.

Amazon is an amoral monopsony in its growth phase. It is using extremely low margins to drive market share. It is using aggressive tax avoidance to afford those low margins. It is not just us that it does not pay tax to; it does not pay tax to anybody. It is being allowed by Governments to do this because it is seen as a nice, friendly company to consumers. Indeed, in the days when I shopped with Amazon, I found it a comfortable place to shop but it is coming to dominate the book industry. It is clear that it will soon have over half of all the book trade, physical and virtual. It is causing taxpaying businesses to die. One has just to look at what happened to HMV, which has died largely because of tax competition. A lot of that came from the likes of TheHut out of the Channel Islands but a good deal of it was mediated by Amazon. We now have nowhere to shop on a large scale. The internet retailers have control and the internet retailer that will have control above all is Amazon.

Suppliers will then become dependent on the one retailer. It is clear where Amazon intends to go after that: it intends to take out the publishers. It is already doing that in the States, forming its own relationships with authors and publishing its own exclusive-to-Amazon books. At the end of the day, what need has a company with three-quarters of the book trade of independent publishers? It can do everything itself.

It will continue to use a wide range of predatory tactics to do that. Amazon trawls the web to make sure that it always offers the lowest price on anything. It compels suppliers to charge it less than they do anybody else, on pain of being dropped—either individual projects or entirely. It runs this thing called Amazon Marketplace, where little traders can go, but it knows everything that happens in that marketplace: all communications between a business and its customers, what is being sold and at what price. When it sees a good opportunity, it goes to the supplier and undercuts the trader.

If you use Amazon fulfilment, it will clean up your complaints file so that bad notices will not remain for others to see. If you do not use Amazon fulfilment, it will not. It provides a home for people who are breaching copyright by importing books from outside the appropriate area. It provides a home for people who are running VAT scams. In one way or another, if we do not do something as a Government to remove the tax bias that benefits it, to enforce our existing laws and to put it through the Competition Commission, we will find that we have been steamrollered by Amazon.