Thursday, November 13, 2014

Amazon/Hachette Negotiations Finally End

Via Hachette:

Dear Authors and Agents,

I’m very happy to bring you the good news that Hachette Book Group has reached a new agreement with Amazon for ebook and print sales. While the new ebook terms will take effect early in 2015, Hachette titles will be restored as soon as possible to normal availability on Amazon, will be available for pre-order, and will be included in promotions on the site, a very positive development as we head into the holiday shopping season.

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.

Throughout our negotiations, Hachette has strived to reach an agreement that is in the long-term interest of our authors, readers, and this company. The past several months have been difficult ones for the writers Hachette publishes and the agents who represent them.  We send our sincere thanks to you for your patience and support as we conducted this negotiation.  I feel strongly that this new contract reestablishes our positive relationship with Amazon, an important retailer and industry leader, and that this strong relationship will benefit the writers we publish for many years to come.

Hachette and Amazon have just issued the following joint press release:


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.

Joe sez: As many had guessed, this was all about discounting. As with S&S, it appears to be an agency model, but one that incentivizes discounting.

Which is similar to the KDP structure. If self-pubbed authors keep their prices within a certain range ($2.99-$9.99), they get 70%. Outside of that range, they only get 35%.

What does this mean for the publishing world?

Not much. The Big 5 are no doubt going to continue to price ebooks as high as they can to protect their paper sales. The majority of Big 5 authors will have fewer ebook sales as a result. The lucky bestsellers who are released in large paper numbers will continue to stay rich.

Now let's wait for Authors United and the Authors Guild to chime in and take credit for all of the pressure they put on Amazon to force Bezos to take the tough, hard deal he's been giving indies for several years.