Amazon and Hachette Bury the Hatchet

Posted on November 13, 2014

It's official. Amazon.com and Hachette have finally reached a deal. The new contract goes into effect in early 2015, but effective immediately Hachette authors' books will be available for purchase at the same speed as all other books on the site.

The companies issued a joint press release in which they said that "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." Addressing the delay in delivery of Hachette books due to the ongoing negotiations, the companies said, "Amazon and Hachette will immediately resume normal trading, and Hachette books will be prominently featured in promotions."

The New York Times reports that the deal is modeled after the one recently struck between Amazon and Simon and Schuster. In that deal, Simon and Schuster is allowed to set its own ebook prices. But if it prices them lower, Amazon will give the book publisher certain financial incentives and promotion for certain titles.

Neither company would comment beyond a brief statement, but both companies said they are happy with the deal. In an email sent to Hachette authors, Hachette CEO Michael Pietsch wrote, "The new agreement delivers considerable benefits. It gives us full responsibility for the consumer prices of our ebooks. This approach, known as the Agency model, protects the value of our authors' content, while allowing the publisher to change ebook prices dynamically to maximize sales. Importantly, the percent of revenue on which Hachette authors' ebook royalties are based will not decrease under this agreement [emphasis added]."

That last line is pretty interesting. No one at any time during these negotiations suggested that authors were going to see a decrease in their royalty rates. In fact, Amazon pushed really hard for Hachette and other publishers to increase royalty rates for authors. Ebook royalty rates at major publishing houses are scandalously low for most authors, so to throw out a straw man argument that somehow Hachette stopped royalty rates from decreasing is, at best, disingenuous.

During the protracted negotiations bestselling author Douglas Preston led the charge against Amazon.com by founding Authors United. The group is still writing a lengthy letter to the Justice Department to investigate Amazon.com for unfair trade practices. Clearly, it's going to be the longest letter ever written in history.

When asked by the Times to comment on the deal that Amazon and Hachette just reached, Preston was anything but happy. He said, "I'm relieved that Amazon and Hachette reached an agreement. But, if anyone thinks this is over, they are deluding themselves. Amazon covets market share the way Napoleon coveted territory."

So the deal is done. Hachette authors' books are available for shipping as usual with no delays. Ebook royalty rates are still miserably low.