Amazon bends in Hachette dispute, floats deal with authors to resume book sales
More than a month after interrupting sales of books from major publisher Hachette in a dispute over e-book pricing, Amazon has proposed a temporary arrangement in which it would return sales to normal and funnel 100 percent of the revenue directly to authors until the two parties reach an agreement.
The deal would see Amazon reinstate discounts on Hachette titles, increase stock levels of print editions, and resume pre-orders for unreleased books from the publisher. Amazon made its case in a Tuesday letter to authors and literary agents, according to the Wall Street Journal, but Hachette must still agree.
Seattle, Wash.-based Amazon began taking action against Hachette in May amid talks over a new contract for the sale of e-books. The retailer first stopped accepting pre-orders for Hachette titles -- including a new release from noted author J.K. Rowling -- and then began to draw down inventory of print editions in what many observers classed as a play to gain more favorable terms.
For its part, Amazon insists that the dispute is good for consumers. "Negotiating for acceptable terms is an essential business practice that is critical to keeping service and value high for customers in the medium and long term," the company argued.
Amazon has taken an increasingly strong stance in negotiations with large and small publishers alike following its recent proxy victory over rival Apple in the U.S. The iPhone maker was found guilty of violating antitrust laws by entering into so-called "agency pricing" agreements with publishers -- which had the effect of raising some e-book prices while increasing competition -- and the resulting changes have allowed Amazon to resume its previous practice of selling e-books at or near cost to gain market share.
The retailer has also been accused of "bullying" independent publishers in the U.K., pushing for new terms including a "most-favored nation" clause in contracts that is similar to the language that landed Apple in trouble with U.S. authorities.
The deal would see Amazon reinstate discounts on Hachette titles, increase stock levels of print editions, and resume pre-orders for unreleased books from the publisher. Amazon made its case in a Tuesday letter to authors and literary agents, according to the Wall Street Journal, but Hachette must still agree.
Seattle, Wash.-based Amazon began taking action against Hachette in May amid talks over a new contract for the sale of e-books. The retailer first stopped accepting pre-orders for Hachette titles -- including a new release from noted author J.K. Rowling -- and then began to draw down inventory of print editions in what many observers classed as a play to gain more favorable terms.
For its part, Amazon insists that the dispute is good for consumers. "Negotiating for acceptable terms is an essential business practice that is critical to keeping service and value high for customers in the medium and long term," the company argued.
Amazon has taken an increasingly strong stance in negotiations with large and small publishers alike following its recent proxy victory over rival Apple in the U.S. The iPhone maker was found guilty of violating antitrust laws by entering into so-called "agency pricing" agreements with publishers -- which had the effect of raising some e-book prices while increasing competition -- and the resulting changes have allowed Amazon to resume its previous practice of selling e-books at or near cost to gain market share.
The retailer has also been accused of "bullying" independent publishers in the U.K., pushing for new terms including a "most-favored nation" clause in contracts that is similar to the language that landed Apple in trouble with U.S. authorities.
Comments
Doesn't sound like a good deal. I hope Hachette does not go along.
EDIT: I'm of the opinion that Amazon shifted their position because the PR image of Amazon blocking sales made Amazon look like the monopolistic bully that it really is.
It makes more and more sense for Amazon to get rid of all of that dead inventory of physical books and go e-book only. Bad for publishers who rely on physical book sales, but come on... it's a dying market.
Physical books are nowhere near a "dying market". There will be a big market for a long time to come.
1) Amazon stops the attrition of customers
2) Amazon resumes physical book sales, which wasn't really the issue
3) Amazon looks good by giving authors 100% of ebook money for the short term
4) Amazon heavily discounts the ebooks so authors come up with the same or less than a properly negotiated deal
5) ?? Hachette gets no portion from the ebooks, because the revenue is routed to the authors?
Isn't this just Amazon's way of cutting out Hachette and dealing directly with the authors? If I were Hachette, I'd make the case to the authors to reject this. If they unilaterally reject it, the authors might be pissed with them. They need to sell it, and then reject it.
Amazon's plan takes all the consumer backlash/pressure off of Amazon -- and then transfers all the remaining pressure on to Hachette.
Doesn't sound like a good deal. I hope Hachette does not go along.
This is exactly what I was thinking - but Amazon has a much powerful hand to deal with - unfortunately there's not much Hachette can do besides play on Amazon's terms or get bled dry.
I smell a rat. Authors get to keep 100% of ebook sales while they negotiate, but Amazon gets to continue heavy discounting. So, in effect:
1) Amazon stops the attrition of customers
2) Amazon resumes physical book sales, which wasn't really the issue
3) Amazon looks good by giving authors 100% of ebook money for the short term
4) Amazon heavily discounts the ebooks so authors come up with the same or less than a properly negotiated deal
5) ?? Hachette gets no portion from the ebooks, because the revenue is routed to the authors?
Isn't this just Amazon's way of cutting out Hachette and dealing directly with the authors? If I were Hachette, I'd make the case to the authors to reject this. If they unilaterally reject it, the authors might be pissed with them. They need to sell it, and then reject it.
How's that work?... Hachette edit and market the books etc but don't deserve a cut of the profits... assuming there are profits.
Physical book sales have increased in several European countries over the last 3-4 years, and eBook sales are still only a tiny fraction of the market. This market is not going anywhere yet. I even know several early adopters who went back to physical books, mainly for quality reasons (sometimes hundreds of scanning / OCR errors in legacy titles that were not properly edited), but also because they can be lend more easily, they can be taken to the pool or beach without taking a $500 - $1000 device there etc.
Media is fixated on stuff like eBooks and media streaming and subscriptions. In the real world, it is still physical stuff (books, CDs, DVDs) that account for the vast majority of sales. Out of these, books may last the longest.
The DOJ should waste no time in opening another investigation into Apple...
Absolutely! Amazon didn't lose here, Hatchette did. Amazon loses very little by shipping books, and allowing downloads. But Hatchette loses significant income from the sale of those books and downloads. But how can it refuse this? It's politically correct to give in. How can they say no to giving authors 100% of the sales?
Amazon has done a very good amount of marketing here, while keeping all of the pressure on Hatchette, and taking it off them. Authors, who are not always the brightest people when coming to business, will hopefully not be fooled by this, and push for Hatchette to give in.
Absolutely! Amazon didn't lose here, Hatchette did. Amazon loses very little by shipping books, and allowing downloads. But Hatchette loses significant income from the sale of those books and downloads. But how can it refuse this? It's politically correct to give in. How can they say no to giving authors 100% of the sales?
The authors have existing publishing deals with Hachette, not Amazon.
That has nothing to do with it. This is a publicly announced proposal, and the public will take it that way.
Amazon, the new Walmart. First, move into area. Next, undercut local stores and make yourself a Monopoly. Finally, lower the boom and charge whatever you want, on your terms. Don't like it? Too bad, you have no other choice.
The biggest problem with Amazon is that the company is a bubble waiting to pop. The business strategy is to bleed money. That cannot last.
Greedy consumers (or a greedy Amazon proxy) could drive down profitability for authors and publishers. Those that don't exit the business or don't concentrate on more profitable genre or authors (in the case of publishers) will be forced to reduce product quality by cutting down on editorial, printing and advertising. In the long run, if publishers and authors are squeezed hard enough, the consumer will "benefit" with lower quality product, less of it, and less variety. In addition, new authors will be hard pressed to even survive, much less find an audience for their works.
I'm all did better prices but I'm also for a fair return to book producers.
Amazon doesn't really care one whit about the consumer, they want to control the market and they want all the profit.
I urge you to buy your books through other outlets. They are easy to find if you look.
I smell a rat. Authors get to keep 100% of ebook sales while they negotiate, but Amazon gets to continue heavy discounting. So, in effect:
1) Amazon stops the attrition of customers
2) Amazon resumes physical book sales, which wasn't really the issue
3) Amazon looks good by giving authors 100% of ebook money for the short term
4) Amazon heavily discounts the ebooks so authors come up with the same or less than a properly negotiated deal
5) ?? Hachette gets no portion from the ebooks, because the revenue is routed to the authors?
Isn't this just Amazon's way of cutting out Hachette and dealing directly with the authors? If I were Hachette, I'd make the case to the authors to reject this. If they unilaterally reject it, the authors might be pissed with them. They need to sell it, and then reject it.
I consider publishers middlemen anyway, so why not form direct deals with authors?
Publishers add value. They edit and often improve books. They reduce the publishing risk and/or enhance the return for authors. They advertise and give new authors a voice they may not otherwise get. As long as they add value, they need to be in the mix.