Keith Gessen in Vanity Fair:
This past year has seen hostilities between Amazon and the publishers, which had been simmering for years, come out into the open, filling many column inches in The New York Times and The Wall Street Journal, not to mention numerous online forums. The focal point of the dispute has been a tough negotiation between Amazon and the publisher Hachette, with some public sniping between the companies’ executives (who have otherwise kept out of view). Hachette, it should be said, is no slouch: it is owned by the large French media conglomerate Lagardère. The other big publishers are similarly well backed. HarperCollins is owned by Rupert Murdoch’s News Corp. Simon & Schuster is a part of CBS. Macmillan and Penguin Random House are owned, or co-owned, by hefty German corporations. Nonetheless, all the publishers feel bullied by Amazon, and Amazon, in turn, feels misunderstood.
It wasn’t always this way. When Amazon first appeared, in the mid-90s, mailing books out of the Seattle garage of its founder, Jeff Bezos, it was greeted with enthusiasm. The company seemed like a useful counterweight to the big bookstore chains that had come to dominate the book-retailing landscape. In the late 1990s, the large chains, led by Borders and Barnes & Noble, controlled about a quarter of the adult-book market. Their stores were good. They may have lacked individuality, but they made up for it in inventory—a typical Barnes & Noble superstore carried 150,000 titles, making it as alluring, in its way, as the biggest and most famous independent bookstores in America, like Tattered Cover, in Denver, or City Lights, in San Francisco. Now a person on a desolate highway in upstate New York could access all those books, too.
The big chains were good for publishers because they sold so many books, but they were bad for publishers because they used their market power to dictate tough terms and also because they sometimes returned a lot of stock. People also worried about the power of the chains to determine whether a book did well or badly. Barnes & Noble’s lone literary-fiction buyer, Sessalee Hensley, could make (or break) a book with a large order (or a disappointingly small one). If you talked to a publisher in the early 2000s, chances are they would complain to you about the tyranny of Sessalee. No one used her last name; the most influential woman in the book trade did not need one.
More here.