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Amazon offers Hachette authors 100% of e-book revenues

Amazon attempts to clean up its image while it continues its feud with Hachette

Financial trends and news by Faith Merino
July 9, 2014 | Comments
Short URL: http://vator.tv/n/3809

Sick of being seen as the big, multi-billion dollar bad guy, Amazon is attempting to hijack the narrative surrounding its ongoing feud with Hachette by doing what it does best: taking a loss to undercut the competition.

Amazon reportedly sent out a letter to Hachette authors this week offering them 100% of digital revenues from their e-book sales while the fight between Amazon and Hachette continues.

That would obviously take some of the pressure off of Amazon, which has been accused of holding Hachette authors and their books hostage in an attempt to squeeze more money out of the book publisher, which is the fourth largest in the United States.

Many writers—including those represented by other publishers—have publicly blasted Amazon for its tactics, including the removal of the preorder button on many forthcoming titles (such as The Silkworm, by J.K. Rowling as Robert Galbraith), and purposely delaying shipments of purchased Hachette titles for several weeks (which, now that I think about it, sounds pretty…illegal. DOJ? Anyone?).

Heavyweights Steven King and John Grisham joined hundreds of other writers in signing a petition that calls on Amazon to stop holding books hostage.

“We encourage Amazon in the strongest possible terms to stop harming the livelihood of the authors on whom it has built its business,” the petition says.

The letter that was sent to authors and signed by Amazon’s VP of Kindle content and independent publishing, David Naggar, was also sent to Hachette. The publisher scoffed at the letter and claimed that Amazon was simply trying to make it “commit suicide.”

Amazon’s response: "We call baloney. Hachette is part of a $10 billion global conglomerate. It wouldn't be 'suicide.' They can afford it. What they're really making clear is that they absolutely want their authors caught in the middle of this negotiation because they believe it increases their leverage. ... Our offer is sincere. They should take us up on it."

It’s really bizarre that Amazon keeps referring to revenues, considering the fact that Amazon generates more revenue than Hachette’s parent company.

Hachette is owned by Lagardare, which generated a grand total of €7.2 billion ($9.8 billion) for the entire year of 2013, with a net income of €1.3 billion ($1.77 billion). By comparison, Amazon generated $74.45 billion in revenue in 2013, but with a much smaller profit: just $274 million.

But of course, that’s because Amazon does shit like this: reinvests its profits back into the company to undercut its competitors, even if that means taking a loss, itself.

Amazon wants a higher cut of e-book sales since e-books come with higher margins (no paper, binding, shipping, or warehousing costs) than paperbacks or hardbacks.

That said, publishers make more money off of hardcover sales, and Hachette Book Group’s U.S. revenues have dipped in recent years with the rise of e-book sales.

 


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