Hachette, Amazon Settle Contract Dispute

Hachette and Amazon's bitter months-long dispute over ebook and print contract  terms came to an abrupt end today with the news that the two had buried the hatchet.

The specifics of the deal were not disclosed, so we do not know in whose back the hatchet was buried, but in a statement Hachette CEO Michael Pietsch said that "this is great news for writers".

On the face of it the deal would appear to be a win for Hachette, which according to the statement "will have responsibility for setting consumer prices of its ebooks". Curiously, the statement goes on to say that  the publisher "will also benefit from better terms when it delivers lower prices for readers".

The new terms will go into effect in early 2015, but Hachette CEO Michael Pietsch also said in a letter to authors (scroll down) that " 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".

In short, it looks like Hachette has signed a deal very similar to the one signed by Simon & Schuster a few weeks ago. The details for that deal were not publicly disclosed either, but pundits parsed out what little was said by Amazon and S&S and concluded that that contract likely resembled the terms offered for KDP, where Amazon offers better terms for ebooks priced between $9.99 and $2.99.

So Hachette went through 8 months of financial pain (as Amazon stopped providing services which were no longer covered under a contract), and undertook a vicious media campaign, and all they got was a contract that S&S got through negotiating patiently and honestly.

Whoops.

The letter from Plietsch:

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.

--Michael

image by cogdogblog

Nate Hoffelder

View posts by Nate Hoffelder
Nate Hoffelder is the founder and editor of The Digital Reader: He's here to chew bubble gum and fix broken websites, and he is all out of bubble gum. He has been blogging about indie authors since 2010 while learning new tech skills at the drop of a hat. He fixes author sites, and shares what he learns on The Digital Reader's blog. In his spare time, he fosters dogs for A Forever Home, a local rescue group.

20 Comments

  1. Daniel Vian13 November, 2014

    If it’s KDP terms, then Amazon and readers win since the pressure will be on to keep ebook prices below $10. Now the Hachette authors need to push Hachette to give them a better contract cut of ebook sales. In any case, Authors United now looks like an imbecile operation and the NYT hacking for Hachette now looks silly.

    Reply
  2. Gary13 November, 2014

    Does this mean that the world isn’t going to end after all?

    What will we find to talk about, if we can’t take sides in the great Amazon vs. Hachette battle?

    Reply
    1. puzzled13 November, 2014

      Ummmm….Ahhhh….Ummmmm…I got nothing….

      Reply
    2. fjtorres13 November, 2014

      Oh, there will still be the generic Amazon is evil manifestos.
      But we may run out of easily mockable targets if Preston and Patterson take the opportunity to stfu.
      We’re going to have to work harder to stay in top snark form.

      Reply
      1. Timothy Wilhoit13 November, 2014

        Preston STFU? Never!

        https://flic.kr/p/pLfLZG

        Reply
        1. Nate Hoffelder13 November, 2014

          That is a good find. I’m going to post it. Thanks!

          Reply
  3. fjtorres13 November, 2014

    The WSJ confirmed that Hachette gets lower rates when they price higher, so its very much like KDP.

    Reply
    1. Nate Hoffelder13 November, 2014

      That’s what Amazon said in the statement.

      Reply
      1. fjtorres13 November, 2014

        Should be tolerable for readers into Hachette stuff, I suppose.

        Reply
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  5. Ebook Bargains UK14 November, 2014

    “So Hachette went through 8 months of financial pain (as Amazon stopped providing services which were no longer covered under a contract), and undertook a vicious media campaign, and all they got was a contract that S&S got through negotiating patiently and honestly.”

    Nate, be serious.

    Amazon could not afford another long public spat just as it was about to announce a half billion dollar loss, so it settled with S&S on terms totally different from what it was demanding from Hachette.

    After that it was obvious Amazon would then have to settle with Hachette on similar terms.

    What happened to Amazon desperately begging indie authors to write to Hachette telling them to let Amazon price so suit Amazon’s needs? Is that total PR failure now to be brushed under the carpet and forgotten?

    Reply
    1. Dan Meadows14 November, 2014

      But Amazon’s own statement months ago implied they were looking for a KDP-type deal with Hachette and Hachette’s response showed resistance to that. I think it’s more likely S&S took them up on it then Hachette fell in line to avoid losing the holiday season.

      Reply
      1. fjtorres14 November, 2014

        Exactly.
        There is a difference between what Amazon said they wanted and what the astroturfers said Amazon wanted.

        So far, Amazon seems to have maintained the ability to do at least some discounts and obtained a tiered discount system where higher priced books carry higher margins for Amazon. Which, btw, is a standard retail business practice: more expensive products generally come with higher margins than the cheaper ones.

        Btw, since the hang up has always been hachette’s refusal to negotiate at all, the fact that the deal comes less than a month after the S&S deal, and on similar terms, makes it clear who blinked.

        The Hachette plan was to hold out until the other BPH contracts expired but once S&S made a separate peace they were facing nine more months of lost sales before HC could join in. Assuming they did join in.

        Contrasting the tone of yesterday’s WSJ report (and the way they characterized Patterson and Preston) with earlier pieces on the dispute it is pretty clear News corp is not going to the mattresses any more than S&S did.

        So much for “collusion by procrastination”.
        Better luck in 2017 hachette men.

        Reply
        1. Bara Minata14 November, 2014

          Of course the NY Times with their Apple branded reality distortion field has to paint it as a Hachette “victory.”

          Reply
    2. Nate Hoffelder14 November, 2014

      “What happened to Amazon desperately begging indie authors to write to Hachette telling them to let Amazon price so suit Amazon’s needs?”

      That got lost in the shadows of Hachette’s massive coordinated media campaign.

      Reply
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