Amazon, Hachette End E-Book Squabble

Amazon and Hachette finally have reached a resolution of their long, highly publicized dispute over e-book pricing, and both are claiming a victory. Certainly the free flow of Hachette books through Amazon's channel will be a relief to the publisher and its authors. As for Amazon, dissipating some of the rancor over its punitive extra-slow delivery of Hachette titles may be priceless.

Amazon and publisher Hachette on Thursday made peace after months of slugging it out toe to toe over e-book pricing, which split the authors’ community and saw Amazon pulling some Hachette authors’ books off its promo list and slowing delivery of others.

Neither company disclosed the specific terms of the deal.

However, Hachette will have the right to set the price of its e-books, while Amazon will begin featuring Hachette authors’ books in its promos, according to a joint statement.

Amazon wanted Hachette to price all its e-books at US$9.99 and hand over a bigger cut of sales.

The settlement does not stipulate the $9.99 price but provides Hachette unspecified incentives to lower prices on some e-books.

Hachette hailed the deal as a victory for writers, while Amazon called it a win for both writers and readers.

However, “I would say that Hachette had to give up something, probably margin, to get this deal — and that, of course, would translate into a certain decrease in [royalties] for the author,” said Mike Jude, a research manager at Frost & Sullivan.

“The win for the authors is that they maintain a very large distribution channel,” he told the E-Commerce Times.

Authors’ Guild Professes Lukewarm Love

“We welcome the end of the Amazon-Hachette standoff as great news for Hachette authors, especially coming in advance of the holiday sales season,” Authors Guild President Roxana Robinson told the E-Commerce Times.

“We’ve heard that this deal is favorable to authors, but we have no way of knowing right now,” Robinson said. “In the meantime, it’s our hope that Hachette — in light of the loyalty its authors have shown throughout this debacle — takes this opportunity to revisit its standard e-book royalty of 25 percent of the publisher’s net profits.”

Guild members, by and large, have strongly supported Hachette and lambasted Amazon.

When Amazon proposed that both companies should give all revenue from e-book sales directly to Hachette authors during the negotiations, Authors Guild President Scott Turow called it a “publicity stunt.”

A House Divided

Many of the Authors Guild members who publicly criticized Amazon are, like Turow, prominent authors, including Stephen King, J.K. Rowling and Stephen Colbert.

“It was heartening to see so many writers rally to the defense of their colleagues,” Robinson said. “We’d like to think that display of communal spirit played a part in bringing the negotiations to an end — and we hope it prevents authors from being dragged into corporate disputes in the future.”

There was, unfortunately, more than one communal spirit called into being because of the dispute.

The Guild wrote a blistering letter to Amazon on the issue, which drew fire from several other authors, including Clifford Irving.

“In the past, Hachette and virtually every print publisher has turned down an offered book of mine,” he wrote. “Amazon has allowed me to publish everything I have submitted. Bravo and thank you, Amazon and Barnes & Noble.”

Hachette author Douglas Preston wrote a letter to Amazon that was signed by 900 other authors, who formed the group “Authors United,” and placed as a full-page ad in The New York Times in August.

Author Lee Goldberg pointed out that those who signed Preston’s letter had said no bookseller should block the sale of books. However, they did not express the same level of outrage at brick-and-mortar stores banning paperbacks from Amazon’s imprint, Thomas & Mercer, from their premises.

The Impact of the Deal

“Fundamentally, this is about margin and who gets it,” Frost’s Jude said. “Hachette has the content and wants to maximize the return on that content; Amazon has the distribution and wants to extract as much revenue as it can from that channel.”

Hachette, like other publishers, is fighting a rearguard action, Robert Enderle, principal analyst at the Enderle Group, told the E-Commerce Times.

“Publishers are on the out in general,” he remarked. “Services like Amazon’s can easily work directly with authors and they control distribution, making publishers redundant. Agreements like this just slow the inevitable.”

While Hachette will be able to set its own prices, readers may balk if they are too high, Enderle said. “Authors will then be motivated to go directly to Amazon, bypassing Hachette, in order to get their reader numbers and royalties back up.”

Richard Adhikari

Richard Adhikari has written about high-tech for leading industry publications since the 1990s and wonders where it's all leading to. Will implanted RFID chips in humans be the Mark of the Beast? Will nanotech solve our coming food crisis? Does Sturgeon's Law still hold true? You can connect with Richard on Google+.

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