Online retail giant Amazon.Com, Inc. (NASDAQ:AMZN) and movie maker The Walt Disney Company (NYSE:DIS) have been caught in a tiff over pricing control. This has led to the former blocking pre-orders of the latter’s DVDs, including major titles such as ‘Captain America: Winter Soldier’ and ‘Muppets Most Wanted.’ Paul Sweeney of Bloomberg Intelligence discusses this issue with Trish Regan and Julie Hyman on Bloomberg’s Street Smart.
This is latest in the line of disputes between Amazon.Com, Inc. (NASDAQ:AMZN) and its suppliers. Earlier, Amazon went down the same route to tackle Time Warner Inc (NYSE:TWX) which finally submitted to a deal with the e-retailer. Amazon might like to think of itself as a monopoly, but in reality, if a consumer wants The Walt Disney Company (NYSE:DIS) movie title, there are several other places like Wal-Mart Stores, Inc. (NYSE:WMT) where he can get it.
In Sweeney’s own words, “[...] For the studios like Disney and Warner Brothers, it’s not that big a deal because in fact the physical delivery of DVD’s is in decline as the growth of digital delivery of movies and TV shows is growing rapidly [...].”
In protest against Amazon.com, Inc. (NASDAQ:AMZN)’s bullying, about 900 authors, including famous names such as John Grisham and Stephen King, joined hands and took out a full page advertisement in The New York Times claiming that Amazon is holding their works hostage. Amazon responded to the public attack by telling readers that Hachette’s demands were not in the best interest of readers.
This seems to be Amazon.com, Inc. (NASDAQ:AMZN)’s go to line of defense when faced with charges of harassing its vendors.
“Amazon would say, ‘we are doing this for you. We are working for you. We are working to lower our costs so that we can pass along those savings to you’,” said Sweeney.
But the publisher worries are not unfounded. When a similar digital revolution took over the music industry, the record companies lost control over pricing structures which eventually led to their downfall. Publishers are taking measures to protect themselves from such a fate.