Amazon struggle with Hachette may be protracted

Breaking its customary corporate silence, Amazon has launched a defense against a rising chorus of criticism about its decision to limit the supply of books from publisher Hachette Book Group and warned that the tussle could be protracted.

In a statement posted on its website Tuesday, Amazon acknowledged that its pricing negotiations have dragged on and lauded Hachette for operating in "good faith." But the Seattle-based retailer told customers that it's "not optimistic that this will be resolved soon."

"Despite much work from both sides, we have been unable to reach mutually acceptable agreement on terms," Amazon said.

Hachette's books have largely been removed from Amazon's shelves. Amazon is ordering new inventories from Hachette only after customers place orders, curtailing authors' incomes and the usually rapid delivery cycle that the site's fans enjoy.

Amazon is no longer taking pre-orders on summer and fall titles, allowing customers to place an order only after books are released.

Amazon said it's seeking "equitable terms" in pricing, and its tactics are no different than those of big-box retailers that keep only a few copies on hand and choose certain titles to display prominently at the front of their stores.

"Suppliers get to decide the terms under which they are willing to sell to a retailer," it said. "It's reciprocally the right of a retailer to determine whether the terms on offer are acceptable and to stock items accordingly."

Amazon is in a similar fight with a publisher in Germany, the Bonnier Media Group.

Amazon and its CEO, Jeff Bezos, usually reluctant to talk to the press, remained silent after The New York Times first reported the retailer's cutback earlier this month. Its reluctance to respond contributed to the developing narrative of an intractable and inscrutable giant running roughshod over a supplier.

The imbroglio affects only about 1% of Amazon's inventory. But that the popular titles from the fourth-largest U.S. book pu! blisher — home of James Patterson and four of the top 10 titles in the New York Times' current hardcover fiction bestseller list — could be removed so quickly seemed to confirm publishers' worst fears about Amazon's expansive sway over the book business.

Michael Pietsch, CEO of Hachette urged authors and customers to be patient during this "difficult situation."

"Please know that we are doing everything in our power to find a solution," he said in a letter to authors. "I know this is not a comfortable situation for most of you."

As the stalemate persists, other retailers are seeking to take advantage. Books-a-Million, a chain with 258 stores nationwide, is offering 30% discounts on some upcoming Hachette titles.

While Amazon has branched out to digital media and tablets to boost profit, it still relies heavily on books and electronics for revenue. Its profit margins have always been thin, which is both a result of and an explanation for Amazon's ceaseless drive to extract the best prices possible from manufacturers and middlemen. In the first quarter, Amazon's revenue grew 23% to $19.7 billion but its profit margin is less than 1%. Its quarterly net profit totaled $108 million, up from $82 million a year earlier.

Hachette, whose holdings include Little, Brown and Company, is a subsidiary of Lagardère, a French media conglomerate that had about $9.8 billion in net sales last year.