Amazon-Hachette Ebook Deal: Winners and Losers
Authors United and James Patterson shine, Amazon and Jeff Bezos get bruised
The long-running fight between Amazon and publisher Hachette over e-book prices ended on Nov. 13.
The agreement between the two companies appears to be for a modified version of agency pricing (the publisher sets the price, Amazon gets a set percentage of the sale price but Hachette has financial incentives to adopt Amazon’s preferred $9.99 price point).
The deal brings a momentary truce in the ongoing fight between Amazon, publishers and authors about the appropriate price and royalty rate for books in the digital age — but this is just a battle in what promises to be a longer war. Expect more conflict in the future as digital print grows and matures as a format.
Here’s a brief assessment of five winners and losers from the Hachette-Amazon fight and how they affect the future.
A high-profile group of authors led by Douglas Preston (Relic and The Lost Island with partner Lincoln Child) and including James Patterson, Lee Childs, Donna Tartt and some 900 other writers gained a lot of publicity for its criticism of Amazon and its strategy of asking people to write CEO Jeff Bezos and the Amazon board directly. Even with the settlement, the group plans to continue its efforts, starting with pushing the Department of Justice to begin an anti-trust investigation into Amazon’s book business. The group could also turn its attention to publishers since most authors think the e-book royalty rate of 25 percent is too low, considering the minimal costs involved in digital production. If they can maintain focus and solidarity, Authors United could turn into an important advocacy group.
Perhaps because he almost seems like his own one-man publishing company with his multiple series and multiple co-authors, Paterson would seem to be an unlikely critic of Amazon. But he was as vocal as anyone, appearing on a panel at the New York Public Library and speaking out in the press. His activism cast new attention on his charitable donations to save independent bookstores ($1 million in 2014) and to promote literacy (another $1 million), burnishing his reputation as a champion of books and reading.
The e-tailer picked a big nasty public fight and only managed a small win. Opponents successfully cast it as a monopolistic bully, reinforcing the most negative images of the Internet giant.
At a time when his public image should be shining for his willingness to buy and invest in the Washington Post, the Amazon CEO came across as a rapacious monopolist and was the subject of widespread negative press (most notably a New York Times piece about his little-known “Campfire” author retreats that came across as an effort to buy off big-name authors).
Winner and Loser
The publisher kept the right to set e-book prices, its main concern, but sales took a hit (down 18 percent in the third quarter, though not all attributable to the fight). More importantly, the company never figured out a positive PR strategy for itself, mostly succeeding by casting Amazon as the villain. On top of that authors are pushing to have the standard 25 percent e-book royalty rate raised, which could lead to another big fight.