Amazon

In a move that signifies Amazon’s determination to tighten its reign over the high stakes e-book market, the retailer removed a staggering 5,000 titles from its Kindle store because a Chicago distributor would not agree to new terms.

Independent Publishers Group claims the new electronic book agreement was too friendly to Amazon. The second largest distributor of independent books rejected the contract after the one in place came up for renewal. The proposed terms “increasingly reduce already narrow margins,” wrote IPG’s president Mark Suchomel in a book industry newsletter. He did not elaborate. Suchomel told the Chicago Tribune that Amazon accounts for only 5 percent of IPG’s business, which represents 500 indie presses and distributes titles such as “Boardwalk Empire.”

Beyond the headlines, IPG’s dispute with Amazon is a minor skirmish in a much larger battle over the future of digital publishing. The industry is still a fluid, competitive field, despite lagging sales and increased competition from gaming and other media. As a result, long-time participants in the notoriously fickle book business are jockeying to position themselves lest they risk losing even greater market share. IPG, the second largest distributor of independent books, is just one of many stakeholders that is not so quietly eyeballing Amazon’s dominance. Apple, Barnes & Noble, independent distributors like IPG and traditional publishers are part of the brigade.

Early on, Amazon’s playbook was fairly simple. Its standard $9.99 e-book offering cornered the market early with the creation of the first e-book reader. The Kindle Store now offers more than one million titles. To put this in perspective, Amazon has a stock of about 2 million print titles. But Amazon was a relative newcomer to publishing. Veteran publishers and distributors recoiled over a business model that lowered the price of books and minimized their gains.

Traditionally, publishers set guidelines for prices in a macabre dance that is fairly arbitrary. Ideally, they are designed to reflect what the market can bear. But once bookstores purchase books from wholesalers, sellers can set prices at will. When Amazon appeared and priced e-books so low, the industry’s lead publishers didn’t take kindly to the skimmed profits. And once the iPad was released in 2010, they switched to the so-called agency model that allowed them solely to determine prices. For each sale, Amazon and Apple would get a cut.

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The upheaval in the e-book arena only continues. Barnes & Noble announced earlier this month that it is refusing to sell books published by Amazon because of its efforts to sign exclusive deals. In December, the Justice Department revealed that it is investigating whether e-booksellers engaged in unfair, anti-competitive practices. Regulators at the European Commission’s antitrust division also are investigating the e-book pricing system of Apple, Harper Collins, Simon & Schuster and other mainstream publishers. Meanwhile, a class action suit also filed against Apple and five publishers alleges a “price-fixing conspiracy” to thwart Amazon’s competitive threat, according to the plaintiff’s lead counsel.

Despite Amazon’s strong-arm tactics, it’s hard to fault the retailer for leveraging an opportunity in an industry ripe for disruption. Amazon has been an innovator in a field that has dinosaur leanings. Its genius has been its cheap, varied and seemingly limitless offerings from the likes of Random House to the solo book purveyor nestled in the midlands of England. And it pioneered new concepts in publishing, such as “Author Stores” and an imprint that will work directly with authors.