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Amazon and Hachette Resolve Dispute

13 November 2014

From The New York Times:

Amazon and Hachette announced Thursday morning that they have resolved their differences and signed a new multiyear contract, bringing to an official end one of the most bitter publishing conflicts in recent years.

Neither side gave details of the deal, but both pronounced themselves happy with the terms. Hachette gets the ability to set the prices on its e-books, which was a major battleground in the dispute.

“This is great news for writers,” said Michael Pietsch, Hachette’s chief executive. “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.”

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, which we believe will be a great win for readers and authors alike.”

. . . .

While Amazon and Hachette successfully kept the exact terms of the dispute to themselves, Amazon was widely seen as wanting a bigger share of e-book revenue. Since Amazon also wanted lower e-book prices, that was seen by Hachette supporters as a move that threatened to undermine the publisher’s existence.

Link to the rest at The New York Times and thanks to SFR for the tip.

Here’s the text of the joint Amazon/Hachette Announcement:

HACHETTE BOOK GROUP AND AMAZON REACH NEW EBOOK AND PRINT BOOK AGREEMENT

November 13, 2014 – Hachette Book Group and Amazon (AMZN) today announced that the companies have reached a new, multi-year agreement for ebook and print sales in the US.

Michael Pietsch, Hachette Book Group CEO 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.”

“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,” said David Naggar, Vice President, Kindle.

The new ebook terms will take effect early in 2015. Hachette will have responsibility for setting consumer prices of its ebooks, and will also benefit from better terms when it delivers lower prices for readers. Amazon and Hachette will immediately resume normal trading, and Hachette books will be prominently featured in promotions.

 

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128 Comments to “Amazon and Hachette Resolve Dispute”

  1. Hmm. What will AU and their ilk find to occupy themselves?

    • They’ll continue to diss Amazon and Indie Authors, while simultaneously bemoaning the continuing slow death of Literary Culture. Especially since it’s now the winter off-season for writing shacks in Maine. 🙂

    • Taking credit and patting themselves on the back.

      • Yep, inevitably they will pretend that it was their influence and not Hachette’s fear of losing sales over the holiday season that was the deciding factor.

    • Let’s start a pool on how long it takes them to blast Amazon for forcing Hachette to take a rotten deal.

      • If you click through to the full article. Preston says he’s relieved, but that nobody should get comfortable because Amazon goes after market share like Napoleon went after territory. Seriously. I suppose we should be grateful he’s not trotting out the ISIS comparison a la Andrew Wylie. At least not yet.

  2. Looks like Xmas was all the motivation they needed.

  3. ROFLMAO Figured they’d come to an agreement before Black Friday.

    (For those of you outside of the U.S., Black Friday is the day after Thanksgiving and the second biggest b&m shopping day of the year.)

    • I thought it was the biggest. Which day beats Black Friday?

      • It has been #1 for the last few years. IIRC, the last Saturday before Christmas was the usual leader in the early 2000s.

        The biggest days in 2012, according to monitoring firm ShopperTrak:

        Friday Nov. 23 (Black Friday)
        Saturday Dec. 22 (Last weekend before Christmas)
        Saturday Dec. 15
        Saturday Dec. 8
        Wednesday Dec. 26 (Day after Christmas)
        Sunday Dec. 23 (Last weekend before Christmas)
        Saturday Nov. 24 (Small Business Saturday)
        Friday Dec. 21 (Last weekend before Christmas)
        Sunday Dec. 16
        Saturday Dec. 1

        • Things changed last year, partly because turkey day came late in the month, partly because many chains are opening on thanksgiving day, and partly because many retailers are switching to a “black week” strategy and spreading the loss leaders across multiple days.

      • Cyber Monday? (The Monday after the Thanksgiving holiday)

  4. And just in time for Black Friday and Christmas, too! Why am I not surprised? I bet Hachette was the one who caved. Bwhahahaha. 🙂

    • Well if the most triumphant thing HBG can say is that they can set their own prices (as mentioned in the NYT), I think that was always the case. The devil (and we know who that is) is in the detail of how much they’re leaving on the table if they price over $9.99.

      • Yep.

        “Hachette will have responsibility for setting consumer prices of its ebooks, and will also benefit from better terms when it delivers lower prices for readers.”

        So, exactly like the way any KDP author can set any price he or she wants, but gets a better deal if the price is between $2.99 and $9.99?

        If that’s the great Hachette victory, well… I hope the Prestons and Pattersons out there ask some questions.

  5. Now that the epic cultural war is over, I’m looking forward to the Ken Burns documentary.

  6. Amazon’s statement sounds like what they said after they settled with S&S. I’ll bet the incentives pertain to the percentages Hachette has to give up to Amazon, based on their (Hachette’s) pricing.

    In other news, rumor has it that Doug Preston went out to his writing shack today to pen a letter to the DOJ, begging them not to mess with Amazon (the source of most of his income).

    • Preston did write a 5-star “review” of his own book this morning. He wanted to lay full blame on Amazon for delaying his e-book from going live on Amazon until the afternoon of the 11th. Needless to say, the “review” wasn’t up very long.

      • Preston did write a 5-star “review” of his own book this morning.

        That’s pathetic. What a buffoon.

        I used to buy all of Preston’s books as soon as they came out. But after his AU nonsense, I refuse to put another penny in his pocket — from now on, Douglas Preston pays “a**hole tax.”

        His latest, Blue Labyrinth, went on sale November 11th.
        Less than 24 hours later, I was able to download it for free from multiple torrent sites.

        How many millions is Hachette spending to combat piracy? Morons.
        Maybe they should try paying their authors better royalties, instead.

        • I’d still buy preston’s books. He may have been wrong on business. He is a good writer. I like to support writers financially by buying their ebooks… and then sharing with the family. I see he used the review forum at amz to send a message to his readers. I dont blame him for not taking a one star to do it, so as not to skew his book’s ratings. Indies of note have done far worse in the amz review field, far far worse. So, that’s a non-issue.

          To me, the great backwash of Hachette’s ‘new deal’ with AMZ is that the lower prices of H [re better known authors] may/ definitely impact indies who are fledging and have similar and near similar prices. We’ve long speculated that not if, but when the trad pubs jump in the lower price pool, the unknown indies will have to swim much harder. Possibly, most of all, by lowering their already low prices, to basement below basement prices. That wouldnt be good for indie authors who are fledglings. I hope there is a way to protect the new writers who dont yet have a following besides relegating them to the 29 cent pile. They will be increasingly unlikely to earn a living in ratio to necessary time spent writing.

          • How can five stars not skew the rating, yet a one-star would? He could have chosen three stars. Better yet, he could have decided not to post anything. I’d like to know if his claim in his post is correct — that the problem was caused by Amazon, not Hachette.

            • the abuse of the review section has been publicly outed re certain indie author[s]. Preston appeared to be sending his message to his readers. Keeping his rating from going downward seems a choice he chose. Fine. It’s transparent, instead of hidden like we know who. Frankly, the star ‘system’ on amz and anywhere including slams, depends on the winds, some of them from the mind, some from far lower. lol. k.

              The larger issue I think, is what will lower prices by trad pubs do to new indie authors who hope to compete in a market where the divide on prices may be narrowing. They are the ones I hope will be able to swim with the bigger fish. In all, it’s business. business is a competition for dollars. It’ll be interesting to see how it plays out. Just my .02.

              • I don’t know who the “we know who” is.

                • at the moment, unfortunately, I cant think of his name… the travails of being in my seventies… and dont want to make a mistake on the fellow’s name… he’s the fellow who wrote the book on how to make bazillion dollars in ebks, who had actually finagled many of his reviews of his bks on amz and etc. Probably someone else here can recall his name. At the time, a couple years back I think, there were many articles and discussions here at TPV about same. Hope that helps a bit.

                • at the moment, unfortunately, I cant think of his name… the travails of being in my seventies… and dont want to make a mistake on the fellow’s name… he’s the fellow who wrote the book on how to make bazillion dollars in ebks, who had actually finagled many of his reviews of his bks on amz and etc. Probably someone else here can recall his name. At the time, a couple years back I think, there were many articles and discussions here at TPV about same. Hope that helps a bit.

                • You mean the infamous John Locke?

                • I think that is right Suzan. Thanks

      • Wait, for real? Got a screenshot?

        • Yep, finally got one.

          https://flic.kr/p/pLfLZG

          • I thought your comment was satire. Truth really is stranger than fiction. He’s gone over the edge even more fully than before.

            • Reality is always the best satire. I’m glad I figured out how to do screenshots on this tablet. I didn’t think this thing would live long. Dougie either had second thoughts or Ammy blasted it after it was flagged. I’m leaning toward the latter explanation. 🙂

              • Why would he have second thoughts?
                He obviously doesn’t devote much time to the first ones.

                • So true. Besides, he couldn’t pull the trigger on such a beautiful creature as a 5-star review on his own book. Why, that would be murder! 😀

              • What’s particularly funny is that the book (the blue labyrinth) has 10 1-star reviews from people who are angry at Amazon because the book they preordered did not arrive precisely on the release date. Yes, fans of the authors and anticipating the book, they gave the BOOK a 1-star review for this reason.

                Mom always used to say, people are morons.

              • I’ll bet Amazon took it down because authors aren’t allowed to post reviews on their own product pages. And then there’s the pleasure Amazon would take in shutting Preston up.

                Is there some easy way to get a list of Hachette books at today’s prices and compare those prices with what they’re charging after the first of the year when the agreed pricing formula goes into effect? It’ll be interesting to see what, if any, impact can be seen.

                • Dougie’s new book just dropped from $12.99 to $9.09. Ammy harshed his buzz on his book’s launch day and *now* they drop the price! Hilarious.

                • Hmmm. Isn’t the new pricing structure delayed till Jan.? Is it wrong that this makes happy?

                • January is when it starts. I can’t think of a site other than Luzme that gives you an idea of how the book prices are fluctuating. It doesn’t tell you what date a book is at a particular price but it’s fairly informative.

                • Interesting, looks like every Hachette e-book on my wish list has decreased in price by at least 30%.

                • Remember: Amazon quit disounting when they had no contract. Now that a contract is in place, even if it doesn’t start for a month, they’re discounting again.

                • 30%! Dougie and crew must be popping ulcer pills.

                  I wonder if the price drop is all Amazon’s doing since they no longer have the old contract with Hachette and the new one hasn’t started yet.

                • I don’t have many Hachette books on my wish list but the one I have went from 9.99 to 6.49….

                • I’m pretty sure it’s Amazon’s doing. The price changes have occurred over just the last few hours.

                • That’s what I think, too. I just did a search in the Kindle Store for Hachette books and the prices look to be low across the board. Does this hurt indies, or does it put ’em on more-equal footing with the BPH authors, optics-wise?

          • You made my day, Timothy.

  7. Will the “disappeared” writers be returned to their families before Christmas?

  8. Does this mean our culture is safe? Has Hachette saved us all?

  9. No details I see, but it “sounds” like Amazon managed to get Hachette to agree on a lower remuneration for higher priced titles. I guess we’ll never know the truth.

  10. While Amazon and Hachette successfully kept the exact terms of the dispute to themselves, Amazon was widely seen as wanting a bigger share of e-book revenue

    Does “widely” in this context mean the entire NYT office, do you suppose?

  11. I am sure that both sides will claim victory, but I am guessing that the deal is much closer to what Amazon originally wanted than what Hachette wanted.

    As many has said, the thought of coming Holiday season with their books not being warehoused or discounted probably motivated them more than anything else.

    That and S&S signing a deal probably torpedoed them somewhat.

    • S&S also surely saw NOVEMBER coming up ahead and DECEMBER screaming in their ears. They were not gonna lollygag. Writing on the wall was red and green with silver tinsel.

    • Yeah, looking at the various statements, it looks as though it is structured just like the S&S deal, which Hachette had balked at for all these months. Perhaps the specific numbers moved, but in terms of basic structure, it sure looks like Hachette caved in at the negotiating table.

  12. I just read the full article. It’s pure Streitfeldian-speak, portraying Amazon as the company that was greedy in the dispute and not mentioning what Hachette wants to do to consumers’ pocketbooks even at the expense of their own bottom line.

  13. Heh, I wonder if I wasn’t the only one betting on a Black(out) Friday for Hachette if they didn’t knuckle under and play nice with Amazon … 😉

  14. It was getting lonely out on the tree limb…

    It’ll be interesting to see how quickly HC signs.

  15. Given that Pietsch and his seventy vice presidents are now working in a cube farm and Bezos isn’t, I know where I’d put my money on who actually won.

    • I’ve been on my knees praying for Bezos to have this lovely palm-accented dream of an Amazon South in Miami. How do I get subliminal messages to emanate from his pillows?

  16. Night before last, over supper, Hubby asked me what was up witih Hachette, since I hadn’t ranted in a bit. I said, “Oh, I expect a deal soon. Black Friday and Christmas are nearing. They can’t afford to trash holiday book sales.”

    And look. 😀

  17. Hatchette: “It gives Hachette enormous marketing capability with one of our most important bookselling partners.” — translation, “We’re paying co-op again.”

    Amazon: “it includes specific financial incentives for Hachette to deliver lower prices” — translation, “just like the KDP price structure.

    I’ll wager S&S and Hatchette are agreeing to that because they see that THEY are getting the 70% payout on sub-9.99 books, and their authors are still stuck with their existing awful royalty structure, which, frankly, is an injustice.

    Paper books are going to take it in the gut again. I predict B&N out of business by spring 2016.

    • My prediction:

      All of the Big Five will end up signing similar deals, not liking the KDP-like tiered payout structure they now have to live with, but congratulating themselves that the co-op Amazon lets them buy in these agreements gives them an edge.

      And then Amazon.com will open those co-op options up to KDP indies who can afford them, too.

      Because Amazon is a tech company, and it just makes business sense to do so.

      • We won’t need co-op if they’re pricing their books at $9.99. 🙂

        Also: I’m guessing some ebook MSRPs will go up because of this. There’s a point where the 50% cut creates a dead zone. To not lose money, publishers will have to create a $16.99 tier. Which they are probably happy to do for some titles.

        • In the absence of any data to the contrary–and given Amazon’s statements during the dispute–it feels safe to assume that S&S and Hachette are now looking at a KDP-like 70% payout for books priced $2.99 – $9.99.

          What I’m wondering is, do they earn 35% above & below that range?
          Or is the out-of-sweet-spot payout for them more like 40%-50%?

          Because if they are getting 35% above $10 and 70% below, then they’d have to price ebooks above $20 to exceed what they’d earn pricing them at $9.99.

          Imagine what the indie market share would look like after a year of that… 🙂

          • They wouldn’t bother with the $2.99 cut-off. They don’t have to worry about publishers pricing below that.

            My guess is 50% for titles above $9.99.

            There are other ways they could have structured this. Amazon might look at average price points. Or number of titles above $9.99 are limited. Or it’s only for 30 days of release of the hardback, and then it has to come down, or Amazon refuses to stock that title in the warehouse. Or Amazon refuses to stock in their warehouse any physical edition of an ebook priced over $9.99.

            • Makes a lot of sense.

              My gut sense is that Amazon would want to avoid extra complexity like averages and title counts in the contract terms.

              Those types of constraints throw sand in the gears of Amazon’s discounting and recommendation algorithms, which will do a more efficient job of optimizing the overall ecosystem if all books can be treated individually and more or less “equally.”

              Although, if Amazon has no discounting control over these Big Pub titles, that may be moot.

              Your 50% feels quite logical. I doubt any of the Big Five would sign any deal with a 35% tier 😉

            • Or Amazon refuses to stock in their warehouse any physical edition of an ebook priced over $9.99.

              Good one, Mr. H!

            • @Howey

              They wouldn’t bother with the $2.99 cut-off. They don’t have to worry about publishers pricing below that.

              I doubt Jeff Bezos worries about it, but publishers do price ebooks below $2.99. For example, Dale Brown, A Time for Patriots, originally published by Harper Collings, now offered in reprint edition (whatever that is) by William Morrow for $1.99.

              BookBub lists other backlist works for $1.99, which I think is an odd price point. I suspect they have contractual arrangements with Amazon to which I am not privy.

  18. So I guess literature, culture, and kittens are saved?

  19. What are the odds Amazon chips in any money to help out impacted Hachette authors?
    I’d like think zero but…

    • Didn’t they offer to do so and Hachette responded with silence?

    • It would really be a twist of the knife if Amazon just mailed them all a check anyway.

      I wonder how many of them would refuse to cash it.

    • I don’t want them to. The authors took their side. If they want remuneration, they can ask for it from Hachette. All 3 good-faith offers were snubbed. Amazon did their part. Hachette dropped the ball. As a loyal Amazon customer, I’d be pissed if they wrote anyone a check now, after all the AU nonsense.

      Tony, they’d cash it. They’d think it was their due. That the Big Bad Seattle Wolf robbed them of it.

  20. I am so glad that this is over. Had my fill of the hype and hyperbole and hysteria.

    Authors United should retire now, claiming an unbeaten record of 1-0. (At least that will be the score in their imaginary world)

  21. More whale math from Publishers Weekly
    “The agreement ends a dispute that drew national headlines, inspired editorials from major media outlets, and pitted industry members who supported HBG against those, relatively few, who took Amazon’s side in the fight.”

  22. James Patterson was another forceful voice against Amazon during the dispute. “Books and publishing need to be preserved if not protected in this country,” the best-selling novelist said in an interview. “For the moment, this deal helps do that.”

    Wrong and wrong, Mr. Patterson.

    • How did the guy who doesn’t write his own books become the voice for literature?

      Is it because he makes $90,000,000 a year and can afford to bribe bookstores with “grants” and take out NYT ads? I guess publishing is just as beholden to money as politics. 🙁

      • How did the guy who doesn’t write his own books become the voice for literature?

        Because he spoke up immediately, if not sooner. 🙂

      • Do NONE of you people know your whale math?

        Patterson is the Voice of Literature because of the simple Whale Math formula (now pay attention!):

        X published Patteron books per year NOT actually written by Patterson > X(X) self-published books per year actually written by the authors whose names are on the cover, because: whales

  23. So…. Does this mean that PG can take another vacation?

  24. My guess is the pricing structure and incentives Amazon is giving publishers are designed to foster competition among publishers. If I can make more money by cutting price, and take market share from the other guy, I do it.

  25. Was I the only one who found the use of the word “responsibility” as odd in the statement, “Hachette will have responsibility for setting consumer prices of its ebooks,”

    I know a lot of people who have “responsibility” for certain things but no real power to do the actions required to fulfill that responsibility.

    For instance, a line worker has “the responsibility” for quality, but usually can’t shut down the line if the equipment or stock is producing poor quality.

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