Amazon and Hachette Resolve Dispute
Amazon and Hachette Resolve Dispute
Hachette won an important victory on Thursday in its battle with Amazon: the ability to set its own prices for e-books, which it sees as critical to its survival. But even as the publisher and retailer announced a negotiated peace after sparring since January, hardly anyone seemed in the mood for celebratory fireworks.
The conflict, which played out in increasingly contentious forums as the year progressed, left wounds too deep for that. Amazon has been cast as a bully in publications across the ideological spectrum, and a large group of authors is calling for it to be investigated on antitrust grounds. Its sales were hit by the dispute, analysts said.
Hachette, too, revealed its vulnerability.
Amazon's supporters publicly questioned the need for Hachette, the fourth largest publisher, to exist in an era when authors can publish themselves digitally, an accusation Hachette was reluctant to respond to.
And even if Amazon got less in the deal than it originally wanted, it still controls nearly half the book trade, an unprecedented level for one retailer. And the dispute showed it is not afraid to use its power to discourage sales.
One common feeling among those who produce, sell, market and publicize books: relief.
"The fact that these two companies are no longer shooting at each other is a really good thing for all of us," said Jane Dystel, president of Dystel & Goderich Literary Management.
Len Edgerly, who is host of an independent podcast, the Kindle Chronicles, called the brawl "a painful ordeal."
"As a longtime Kindle enthusiast, I have been in Amazon's corner throughout the struggle, but I never doubted the other side's sincerity in wanting what's best for authors and readers," Mr. Edgerly said.
What began as a spat between supplier and retailer — completely routine, Amazon said — soon became a public standoff. Depending on where you stood, it was a struggle between the future and the past, the East Coast and the West Coast, culture and commerce, the masses and the elite, technologists and traditionalists, predator and prey.
James Patterson was a forceful voice against Amazon during the dispute. "Books and publishing need to be preserved if not protected in this country," said Mr. Patterson, a best-selling Hachette novelist. "For the moment, this deal helps do that."
The multiyear agreement, which includes both e-books and print books, broadly follows a deal Amazon recently worked out with Simon & Schuster. A source with knowledge of that deal said it was negotiated relatively quickly and gave the publisher control over most of its pricing but offered incentives to sell at lower prices. Amazon got increased co-op funds, the payments for placement on the retailer's website. Simon & Schuster declined to confirm the terms.
James L. McQuivey, a Forrester analyst, said that if Hachette won in the short term, it would be a different story in the long run.
"Hachette got Amazon to allow them to control pricing while also cutting the amount of money Amazon takes if the publisher does engage in discounts, which appears like a victory," the analyst said. "But in the end this all cements Amazon's ultimate long-term role in this business, which will only put Hachette right back in this situation every time they are up for renegotiation."
Neither side gave many details of the deal, but both pronounced themselves satisfied.
An Amazon executive, David Naggar, said Amazon was "pleased with this new agreement as it includes specific financial incentives for Hachette to deliver lower prices."
Amazon feels publishers get too much of the revenue from e-books, so that was another major area of contention. In a letter Thursday to authors and agents, Michael Pietsch, Hachette's chief executive, said the percentage of revenue on which Hachette authors' e-book royalties are based "will not decrease under this agreement."
The change for consumers might be slight.
"What does this mean for the publishing world? Not much," J. A. Konrath, a fierce critic of traditional publishing houses, wrote on his blog. The big New York publishers, he added, "are no doubt going to continue to price e-books as high as they can to protect their paper sales."
The deal will bring relief to Hachette's bottom line. United States sales for the Hachette Book Group were down 18.5 percent in the third quarter compared with a year ago, its parent company, Lagardère, reported on Thursday. One reason cited by the company was "the difficult situation with Amazon."
When Amazon raised the stakes in late spring by discouraging sales of Hachette books, that incited the ire of the publisher's authors and eventually other members of the literary community. Among Amazon's tactics was preventing advance sales, and causing weekslong shipping delays.
Douglas Preston, a thriller writer published by Hachette, formed Authors United, a group with about 1,500 members, including some of the most prominent and popular writers in the country.
"I'm relieved that Amazon and Hachette reached an agreement," Mr. Preston said. But he added: "If anyone thinks this is over, they are deluding themselves. Amazon covets market share the way Napoleon coveted territory."
Authors United and the Authors Guild, which has 9,000 members, are in the midst of writing a lengthy letter to the Justice Department urging an investigation of Amazon on antitrust grounds. Mr. Preston said that effort would continue.
Hachette writers had varying responses.
"Thank God," Dave Cullen, the author of "Columbine," wrote on Twitter. "But #EvilAmazon still a menace. Continue boycott."
Meryl Gordon, author of "The Phantom of Fifth Avenue," said she was "delighted and relieved." She added: "I hope that Amazon has learned that books are not commodities like dishwasher detergent.I'm looking forward to buying books again on my Kindle."
At least some Hachette books still showed shipping delays as of Thursday night. Several popular Malcolm Gladwell titles all showed delays of one to three weeks. Mr. Preston and Lincoln Child's thriller "The Lost Island" was described as taking as long as four weeks.
Mr. Preston, who proved quite a thorn in Amazon's side, said the retailer and publisher were at odds until the last minute. He wrote in an email that his new novel with Mr. Child, "Blue Labyrinth," was released this week but that some buyers found it impossible to download the e-book version on Amazon. Buyers lashed out with one-star reviews.
"When customers complained Amazon sent them a note saying it was Hachette's fault," Mr. Preston wrote. Other Hachette books had similar troubles.
Was this a digital hiccup, or a final reminder by Amazon of its power? Neither Amazon nor Hachette responded to a request for comment.