Mark Lennihan/Associated PressAmazon is under pressure from Wall Street to improve its anemic margins. At the same time, it is committed to selling e-books as cheaply as possible as a way to preserve the dominance of its Kindle devices.
When the Kindle contract for one of the country’s largest book distributors, the Independent Publishers Group, came up for renewal, Amazon saw a chance to gain some ground at I.P.G.’s expense.
“They decided they wanted me to change my terms,” said Mark Suchomel, president of the Chicago-based I.P.G. “It wasn’t reasonable. There’s only so far we can go.”
With each side unwilling to yield, Amazon pulled the plug, and all of I.P.G.’s books for Kindle disappeared. The physical books were not affected. A spokeswoman for Amazon declined to comment.
The dispute quickly reignited fears in some corners about the power Amazon enjoys as the shift to e-books accelerates. Amazon is dominant in both the physical and electronic markets for books.
“This should be a matter of concern and a cautionary tale for the smaller presses whose licenses will come up for renewal,” said Andy Ross, an agent and a former bookseller. “They are being offered a Hobson’s choice of accepting Amazon’s terms, which are unsustainable, or losing the ability to sell Kindle editions of their books, the format that constitutes about 60 percent of all e-books.”
Amazon’s decision to remove the digital titles was its most drastic such action since it briefly removed the physical books and the e-books published by Macmillan in a pricing dispute two years ago.
That time, Amazon eventually blinked, ceding to Macmillan and the other major publishers the ability to set their own e-book prices. This time, by selecting a group with less leverage, it may get its way.
“Presumably, this is a move Amazon is planning to make with other distributors and publishers as their contracts come up for renewal,” said Lorraine Shanley, a publishing consultant. Unless there is an outcry, she said, Amazon will not be likely to retreat.
The dispute underlines the escalating struggle between Amazon and publishers and distributors over control of the e-book market.
Margins with physical books were traditionally low, which meant that bookstores, publishers and distributors often did no more than scrape by. When Amazon began, it sold books at deep discounts but still had to depend on the good will of publishers.
With e-books, the situation is more fluid. Readers expect them to be cheaper, which Amazon has been able to encourage because it is now a publisher as well.
Traditional publishers, however, have their own modest margins to worry about. They worry that if e-books are priced too low, the public will devalue their worth, and the publishers might wither away — something, they fear, that would suit Amazon just fine.
The only two essential parties in the reading experience, Amazon executives are fond of saying, are the reader and the author. Middlemen like I.P.G. — one of Amazon’s three “distributors of the year” in 2008 — are seen as dinosaurs in this framework.
Among I.P.G.’s 500 clients are the American Cancer Society, Aptly Spoken Press, Bees Knees Books and Change the Universe Press. Until this week, I.P.G. had 4,443 titles available on Kindle.
Mr. Suchomel said the publishers were solidly behind I.P.G. “They were almost unanimously positive, saying, ‘Don’t change your terms,’ ” he said.
I.P.G. is trying not to inflame the dispute. It declined to say precisely what terms Amazon was seeking, although it told its publishers a deal would have “substantially” affected their revenue. On the home page of its Web site, it referred to the issue briefly and discreetly.
On Amazon, the Kindle button for the I.P.G. titles is gone. The classic groupie memoir “I’m With the Band” by Pamela Des Barres was listed as being available only in paperback and an audio edition. But in what might have been a sly message from Amazon, there was a button to click to tell the publisher you would like to read the book on Kindle.
I.P.G. told its publishers to immediately begin stressing that their books were available in other electronic formats, including from the Amazon rivals Barnes & Noble and Apple. It also told them to contact their local independent bookstores and point out that they could now sell something that Amazon would not.
“They’re trying very hard to look on the bright side and make this a David and Goliath situation,” said Ms. Shanley, the consultant.
Mr. Suchomel said that the next step was up to Amazon. “We’re not going to go back to them and say we changed our mind,” he said.