Amazon and Hachette Book Group reached an agreement on Thursday, ending one of the longest (and most widely covered) negotiations of sales terms in publishing history. What began as a dispute over the proper discount for HBG’s e-books soon escalated into a nationwide debate over the power of Amazon (which stopped accepting preorders on HBG titles and delayed shipments on some new books during the negotiations) and the future of the publishing industry.
The widespread belief that the agreement would set a precedent for other e-book deals dissipated as the talks dragged on and Amazon reached agreements with other publishers, most notably Simon & Schuster. Only the broad outlines of the HBG and S&S deals have been made public, but the agreements seem very similar: each lets the publisher set e-book prices, both are multiyear agreements, both cover print and digital terms, and both give Amazon the ability to do some discounting.
In a letter to authors announcing S&S’s deal, Simon & Schuster CEO Carolyn Reidy wrote that the agreement “is a return to a version of agency pricing”; HBG CEO Michael Pietsch also referred to the agency model—under which publishers set e-book prices, and online retailers get a fixed percentage of each sale—in his own letter to authors and agents. Pietsch wrote that the agreement “gives us full responsibility for the consumer prices of our e-books.” The agency approach, he added, “protects the value of our authors’ content, while allowing the publisher to change e-book prices dynamically to maximize sales.”
The immediate reaction from agents and authors was relief tinged with some skepticism, since the specifics of the deal remain unknown. Authors Guild president Roxana Robinson used the end of the dispute to urge HBG to revisit its stance on paying authors a 25% royalty on e-book net receipts, in light of the strong support the publisher received from authors. Agent Brian DeFiore, who is a board member of the Association of Authors’ Representatives, observed that, although the agreement will have impact on authors, they were not involved in the negotiations. Without knowing all the details, he said, “I remain concerned at what effect the deal is ultimately going to have on all authors.”
The best guess from industry observers is that the split between HBG and Amazon will be 70/30 for e-books priced at Amazon’s much preferred $9.99 price point (or lower), while the ratio will shrink in the e-tailer’s favor on higher-priced books. Pietsch stressed in his letter that under the new agreement, “the percent of revenue on which Hachette authors’ e-book royalties are based will not be decreased.” He closed by writing, “I feel strongly that this new contract reestablishes our positive relationship with Amazon... and that this strong relationship will benefit the writers we publish for many years to come.”
What the rest of the industry would like to know, and what may never become clear, is why it took so long to reach a resolution.
Amazon-Hachette Book Group Dispute Milestones
May 9
Dispute over e-book sales term becomes public.
May 27
War of words breaks out between Amazon and HBG.
June 3
New York Times editorial board raises the possibility of a DOJ probe of Amazon.
July 21
Author Douglas Preston forms Authors United to protest the damage done to writers caused by Amazon’s tactics.
August 15
In a blog post, the Amazon Books Team urges readers to email HBG CEO Michael Pietsch to ask him to keep e-book prices low.
October 20
Amazon and S&S reach agreement over sales terms.
November 13
Amazon and HBG jointly announce an agreement.
HBG Print Sales By the Numbers*
20: Number of titles among BookScan’s top 200 bestselling books of 2014
34: Number of titles among BookScan’s top 200 bestselling books of 2013
4: Number of James Patterson titles among BookScan’s top 200 bestselling books of 2014
11: Number of James Patterson titles among BookScan’s top 200 bestselling books of 2013
3: Number of David Baldacci titles among BookScan’s top 200 bestselling books of 2014
5: Number of David Baldacci titles among BookScan’s top 200 bestselling books of 2013
3: Number of Nicholas Sparks titles among BookScan’s top 200 bestselling books of 2014
5: Number of Nicholas Sparks titles among BookScan’s top 200 bestselling books of 2014
393,796: Print units sold of The Goldfinch, HBG’s top seller in 2014
343,254: Print units sold of The Longest Ride, HBG’s biggest seller in 2013
* Based on outlets that report to Nielsen Bookscan, through week 45 of both years.
