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March 26, 2009

Amazon holds payments for ransom

This is pretty bold and dark. Amazon has created what it calls its “Advantage” program. The cost? An additional 2% on each title sold. The advantage? Getting paid in a timely manner. So in essence, you need to give up more of your already deeply cut profit in order to see any money at all before 60 days. I know 90 days is common, but this thing just reeks of a cash grab.

Amazon.co.uk is offering publishers who participate in its Advantage scheme an “early payment” option of 15 days, in exchange for an extra 2% on top of the current discount given by publishers. But publishers have claimed that Amazon is trying to pinch an extra month.

Those publishers who do not offer the extra discount will see their payments made on Amazon’s “standard terms”—effectively 60 days. This means a publisher who sells a book through Amazon in April would not be paid until the end of June. Under the revised terms, a publisher would be paid on 15th May—a full 45 days earlier.

Publishers have hit out at the new terms. One said this early payment, which becomes effective from 1st April, is “more or less what they pay us on now”. The publisher added: “At the moment, if you sell in February, you get the report at the start of March and payment at the end—which is in effect what they are saying will happen here. If you don’t give the extra discount, payment would be sometime in April.” He continued: “[Amazon is] trying to take an extra month . . . In these tough times, it’s absolutely outrageous picking on small guys.”

“Advantage” narrowly won out at the meeting that formed the program over other suggested program names, including: “Pretty Extortion”, “Fuck You, Peons”, and “Once More, This Time Without Lube”.

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2 comments on “Amazon holds payments for ransom”

  1. Lilian Nattel says:

    There’s a word for that: usury.

  2. Jack says:

    It’s a bit nasty, George, but your explanation of the program is off.

    Amazon have had the Advantage program for years. It’s a program that lets small presses get in the door without going through a distributor. They pay a flat annual fee, take a big discount of 55%-60%, and then take your books on consignment. It’s mainly used by self-publishers, and by small presses who either don’t have distribution at all or find it easier to work directly with Amazon. I know a couple of very well-established publishers who use Advantage to deal with the US Amazon site. Selling direct and non-returnable on that kind of a discount isn’t actually as horrible as it looks.

    Since many large booksellers typically pay after 90 days or 120 days, 60 is pretty good to begin with. So long as your books are moving steadily, it shouldn’t matter.

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