Plot Thickens as 900 Writers Battle Amazon

http://www.nytimes.com/2014/08/08/business/media/plot-thickens-as-900-writers-battle-amazon.html?smid=fb-share&_r=0
ROUND POND, Me. — Out here in the woods, at the end of not one but two dirt roads, in a shack equipped with a picture of the Dalai Lama, a high-speed data line and a copy of Thoreau’s “Civil Disobedience,” Amazon’s dream of dominating the publishing world has run into some trouble.

Douglas Preston, who summers in this coastal hamlet, is a best-selling writer — or was, until Amazon decided to discourage readers from buying books from his publisher, Hachette, as a way of pressuring it into giving Amazon a better deal on e-books. So he wrote an open letter to his readers asking them to contact Jeff Bezos, Amazon’s chief executive, demanding that Amazon stop using writers as hostages in its negotiations.

The letter, composed in the shack, spread through the literary community. As of earlier this week 909 writers had signed on, including household names like John Grisham and Stephen King. It is scheduled to run as a full-page ad in The New York Times this Sunday.

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Amazon, unsettled by the actions of a group that used to be among its biggest fans, is responding by attacking Mr. Preston, calling the 58-year-old thriller writer “entitled” and “an opportunist,” while simultaneously trying to woo him and his fellow dissenters into silence.

“Jeff Bezos used books as the cutting edge to help sell everything from computer cables to lawn mowers, and what a good idea that was,” he said. “Now Amazon has turned its back on us. Don’t they value us more than that? Don’t they feel any loyalty? That’s why authors are mad.”

This latest uproar in Amazon’s three-month public battle with Hachette comes at a vulnerable moment for the Internet giant, which is rapidly transforming itself into an empire that not only sells culture but creates it, too.

Amazon does not want to be seen as hostile to content creators, one of the four groups it says on its investor relations web page it is expressly set up to serve. But it also has to price their creations cheaply enough to draw hordes of consumers, while at the same time making enough of a profit to satisfy investors.

It is a complicated balancing act. Some argue it is impossible. Amazon just surprised Wall Street by saying it may lose more than $800 million this quarter, potentially wiping out its profits for the last three years, partly because creating video content is expensive. The prospect of this unexpected loss has raised questions about whether Amazon’s money-losing ways are finally catching up with it — and whether that is the real reason it is making new demands on publishers like Hachette.

Amazon has been forced by the controversy to shed its longtime practice of refusing to comment on anything. Asked about the writers’ rebellion, it issued a statement that put the focus back on Hachette, bringing up the Justice Department’s antitrust lawsuit against Hachette and other publishers in 2012: “First, Hachette was willing to break the law to get higher e-book prices, and now they’re determined to keep their own authors in the line of fire in order to achieve that same end. Amazon has made three separate proposals to take authors out of the middle, all of which Hachette has quickly dismissed.”

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