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

Responses to the e-blast also seem to be showing that most PMA members have never actually signed any agreement with either bn.com or Amazon.com, which is a strange way of doing business.It all seems to be so casual until some of the rules begin to change, and then everyone wonders what they had agreed to before.

This is what happened recently to many independent publishers within the Amazon.com fold who received the following communication:

Update: Changes to the Amazon.com Advantage Limited License Grant

The following are changes to the Amazon.com Advantage Limited License Grant.

Your continued membership in the program after Amazon.com’s posting of any changes will constitute your acceptance of such changes or modifications. If you do not agree to any changes to this agreement, you must terminate this agreement in accordance with Section 14 of the Membership Agreement.

The text of the Limited License Grant has been replaced with the following:

By submitting content and other tangible or intangible materials to us (collectively, “Content”), you grant to Amazon.com and its affiliated companies a royalty-free, nonexclusive, worldwide, perpetual, irrevocable right and license to: (a) use, reproduce, perform, display, and distribute any copyrightable works (e.g., creative text, images, and artwork), trademarks, or trade names included in the Content; (b) adapt, modify, reformat, and create derivative works of any Content; and (c) sublicense the foregoing rights. By submitting materials, you warrant that you have full authority to grant the licenses described above and that Amazon.com’s and its affiliated companies’ exercising of their license rights will not violate any proprietary right of any third party. You agree to indemnify, defend, and hold harmless Amazon.com and its affiliated companies from all claims, judgments, damages, and expenses (including reasonable attorneys’ fees) that may arise out of any alleged breach of this warranty. As used in the preceding paragraphs, the term “affiliated companies” includes any company that controls, is controlled by, or is under common control with Amazon.com, and any individual or entity that enters into a joint marketing or referral relationship with Amazon.com (such as members of Amazon.com’s Associates program).

The foregoing license does not extend to use by us of any of the content contained in the media products you deliver to us except for any use that may be permitted by applicable law.

The negative option acceptance of any type of contract is more than questionable. Again, PMA’s General Counsel will address the wording in this contractual agreement in an upcoming issue of the PMA Newsletter