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Amazon and Hachette put an end to months-long feud

The two companies were warring over ebook prices, which Hachette will now be allowed to set

Financial trends and news by Steven Loeb
November 13, 2014
Short URL: http://vator.tv/n/3a66

It maybe goes without saying, but the ugly feud between Amazon Hachette over e-book prices was, frankly, not making anyone look good. Nor was it helping either company. Amazon looked like a bully, and Hachette looked money-grubbing. The stalemate, which went on for months, was simply bad for everyone. 

And now, finally, it's over.

It took a lot longer than it probably should have, but the two sides have at last come to an agreement, signing a new multi-year agreement for ebook and print sales in the United States, they announced in a joint press release on Thursday.

As per the new deal, Hachette will be responsible for setting consumer prices of its ebooks. In addition, it will also "benefit from better terms when it delivers lower prices for readers." Meanwhile, Amazon will provite Hachette with incentives for lowering its prices. What those incentives are, though, were not specified. VatorNews reached out to Amazon for further details on the deal, but were only pointed to the press release.

Although the new ebook terms will take effect early in 2015, Amazon and Hachette will resume normal trading immediately, and Hachette books will be prominently featured in Amazon promotions.

The whole thing started back in May, when Amazon removed the option to pre-order Hachette books, instead making customers sign up for email alerts when the books became available. Amazon was accused of purposely withholding the new titles, which included a new J.K. Rowling book. The company was also accused of purposely delaying shipments of purchased Hachette titles for several weeks.

At the time, Amazon and Hachette, the fourth largest book publishers in the United States, were renegotiating Amazon’s cut of ebook sales in the wake of the government’s antitrust ruling against many publishers and Apple. Currently, publishers set their own e-book prices and retailers get a 30% cut, but any discounts the retailer offers will come directly out of their own profits.

Amazon was asking for more money since e-books come with higher margins (no paper, binding, shipping, or warehousing costs) than paperbacks or hardbacks.

Needless to say, the retaliatory moves by Amazon angered not only Hachette, but also a number of high profile authors, including Stephen King and John Grisham, who accused the e-commerce site of holding books hostage. 

The two sides took opposite stands in the fight; while Amazon said it was looking out for its customers, Hachette claimed it was looking out for authors and readers. And those were the sides they took after signing the agreement as well, with Michael Pietsch, CEO of Hachette Book Group calling it "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," he said.

Amazon, on the other hand, cited it as a victory for consumers, who will be getting more competative prices. 

"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," David Naggar, Vice President of Kindle, said in a statement.

(Image source: wired.com)


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