Amazon And Hachette Bury Their Differences

The behemoth distributor and the small publishing house settled their long-running dispute over e-book pricing in a deal announced yesterday. While the details of the agreement weren’t made public, David Streitfeld reports that it “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.”

The deal is undoubtedly good news for Hachette’s authors, but Hillary Kelly is disappointed that the publishers “forfeited all of the gains they had made in the larger battle against Amazon”:

While it certainly would have hurt Hachette in the short-term to keep up the battle, they should have. What’s at stake here is much bigger than the price of e-books. If Amazon continues to interfere in publishers’ pricing decisions, publishers will be forced to produce more and more high-revenue yielding books, which means decisions about who gets published and who doesn’t will trend even further toward who can sell a lot of books and who can’t. That means the variety of books in the marketplace diminishes even further, and readers see fewer and fewer high-risk, high-reward books on physical and digital shelves.

Amazon has proven they can turn off the faucet whenever they please. Hachette could have proven that, with enough support from their friends in the publishing industry, they can force Amazon to keep the water flowing. But they missed their opportunity.

Previous Dish on Hachette here.