Director’s Desk:
Some Warnings on Contracts & Industry Agreements

July 2003
by Jan Nathan, Executive Director, PMA

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We recently sent an e-blast to our members about their business arrangements with the two top Internet retailers. We asked a variety of questions about how members are conducting business with Amazon.com and bn.com. While we’re still tabulating the responses, some eye-opening answers caused me to comment right now.

It seems that a majority of PMA members are in the Amazon.com Advantage Program and typically most of them seem to be offering Amazon a 55% discount. However, in reading through 400 pages of responses in 10-point type, we found that discounts to Amazon actually range from a low of 20% to a high of 65%. Also, the average discount publishers offer bn.com seems to be 40%.

This is what prompted me to write this column. When you, the publisher, are making agreements with retailers, you must offer the same discounts to all retailers of the same type or you are operating illegally. For example: If you are offering Ingram a 60% discount; you must then offer other wholesalers, such as Baker & Taylor, a 60% discount as well, or you are operating outside the law.

Our General Counsel, Jonathan Kirsch, will be covering legal and technical aspects of discount arrangements in an upcoming issue of the PMA Newsletter but I want to alert you now. Consider the discounts you’re offering before you sign or agree to a contractual arrangement with any supplier.

 

The Trouble with Being Casual About Contracts

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