11.14.2014

Hachette and Amazon Bury the Hatchet

RTE has the latest on the deal between Hachette and Amazon:
Hachette Book Group and Amazon.com have reached a multi-year agreement for ebook and print book sales after months of fighting that pitted authors, agents and publishers against the world's largest online retailer. 
Hachette, a unit of France's Lagardere, said the new ebook terms will take effect early next year and that it will have the responsibility for setting consumer prices.
Amazon, which pulled several of Hachette's books from its inventory, will immediately resume selling all of Hachette's catalogue. The books will be prominently featured in promotions. 
The high-profile fight started earlier this year when Amazon and Hachette began negotiations on a new agreement. 
The centre of the dispute involved which party controlled the right to set prices for ebooks.  [my bold italics]
While the negotiations played out, Amazon delayed the delivery and removed pre-order options for several of Hachette's titles, including ‘The Silkworm,’ by Harry Potter author JK Rowling, writing under the pen name Robert Galbraith. 
Amazon is the undisputed main outlet for consumers buying ebooks, and the stand-off provoked an outcry from authors and agents. 
Lagardere CFO Dominique D'Hinnin said during the company's quarterly earnings call with analysts, "We are very happy to have this discussion behind us." 
The French media conglomerate said the deal with Amazon one-book pricing will not have an impact on margins and it expects "significant lift" in book sales in November and December. 
Lagardere has said that Amazon accounts for about 60% of Hachette's digital sales.
In a statement that did not provide further details, Hachette Book Group CEO Michael Pietsch said, "This is great news for writers. The new agreement will benefit Hachette authors for years to come. It gives Hachette enormous marketing capability with one of our most important bookselling partners." 
Amazon Vice President of Kindle David Naggar said in a statement, "We are pleased with this new agreement as it includes specific financial incentives for Hachette to deliver lower prices, which we believe will be a great win for readers and authors alike." 
The agreement was reached a day after Amazon directors and executives, including founder and CEO Jeff Bezos, held a board meeting in Las Vegas, coinciding with its third annual cloud computing summit.

There isn't much analysis on the deal just yet but this much is clear, according to Digital Book World, Hachette had to concede on lower prices:
The agreement covers print and ebook distribution and will take effect early next year. 
Much like Simon & Schuster, which struck a deal with Amazon last month–in a development many saw as increasing the pressure on Hachette to do the same–Hachette’s new agreement allows the publisher to set prices on its ebooks. That means a return–likely to be limited by the specific terms of the deal–to agency pricing. 
In its statement today, Hachette appears to have gained that right by compromising, at least to a certain extent, on one of the key sticking points in its standoff with Amazon: lower prices. The new agreement, the statement says, “includes specific financial incentives for Hachette to deliver lower prices,” something the publisher voiced strong objections to earlier this year. [my bold italics]
Here's JakonRoth putting it all in perspective:
Joe sez: As many had guessed, this was all about discounting. As with S&S, it appears to be an agency model, but one that incentivizes discounting. 
Which is similar to the KDP structure. If self-pubbed authors keep their prices within a certain range ($2.99-$9.99), they get 70%. Outside of that range, they only get 35%. 
What does this mean for the publishing world? 
Not much. The Big 5 are no doubt going to continue to price ebooks as high as they can to protect their paper sales. The majority of Big 5 authors will have fewer ebook sales as a result. The lucky bestsellers who are released in large paper numbers will continue to stay rich. 
Now let's wait for Authors United and the Authors Guild to chime in and take credit for all of the pressure they put on Amazon to force Bezos to take the tough, hard deal he's been giving indies for several years. 

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