Amazon shocked investors after the close last Thursday when it announced a $437 million loss for Q3 vs. a $41 million loss a year ago, and said that it would lose another half billion dollars or so during the holiday quarter on slowing growth.  Yes, that’s right, during the holiday quarter, the quarter when retailers are supposed to make their profits for the year. 

Amazon’s news came as its long-running dispute with Hachette over e-book pricing (see "Amazon-Hachette Fight Over Prices") drags toward its six month with no sign of a resolution in sight, and may be contributing to slowing growth and earnings declines.  Amazon reported that its “media” category, which includes book, movie, and music sales, was up 4.8% from 2013 in Q3, vs. a 17.8% growth rate for the media category in the year-ago period.  That’s the lowest growth rate in the media category in over five years, according to Time, and while Amazon attributed the slowing growth rate to a decline in textbook sales, there’s plenty of reason to think that its supplier disputes may also be having an impact. 

Hachette is a Big Five book publisher, and taking steps that seem likely to have cut sales on Hachette imprints by 80% or more may be big enough to have a measurable impact on Amazon sales.  And perhaps just as importantly, Amazon has been under a withering barrage of criticism over its stance with Hachette, and publicity surrounding a number of other supplier disputes has expanded the narrative.   Are book buyers, who are often loyal to their authors, altering their purchases not only on Hachette titles (since they’re tough to order from Amazon), but also on other lines as well?

Authors United, a group of over 1000 authors, petitioned Amazon’s board last month to resume selling Hachette titles, and also ran an ad in the Sunday New York Times urging readers to contact Amazon CEO Jeff Bezos (see "Hachette Writers Go to Amazon’s Board").

More recently, economist Paul Krugman, writing in the Sunday New York Times last week, said "Amazon.com, the giant online retailer, has too much power, and it uses that power in ways that hurt America."  Calling Amazon a monopsonist, "a dominant buyer with the power to push prices down," Krugman asks, "Can we trust Amazon not to abuse that power?" and answers, "The Hachette dispute has settled that question:  no we can’t."

Amazon has settled a dispute with another Big Five book publisher, inking a multi-year deal with Simon and Schuster, with which it had been fighting for nearly two months (see "Amazon-Hachette Fight Over Prices"), according to Business Insider. 

And on the video front, Amazon settled disputes with Warner Home Video in July (see "Amazon Supplier Wars Update"), and with Disney earlier this month (see "Amazon Suspends Hostilities with Disney").

The stakes for both companies are rising daily.  A lot of books are sold in November and December, but if there’s no settlement in the Amazon-Hachette dispute, those books may not be sold by Amazon.