The deal that Amazon Publishing's New York adult line has been mentioning to agents since it started acquiring has formally come to pass: Houghton Mifflin Harcourt has executed a broad "print licensing agreement" and will issue the unit's entire list in print form in North America, including through Amazon.com itself. HMH will publish the books under a distinct new imprint, called New Harvest. (There is some confusing wording in the press release, so you should be clear on two points: HMH is licensing rights and will be the print publisher, not just the distributor, and the HMH editions will be the print versions available via Amazon.com.)
The deal applies to adult books only from Amazon New York. HMH already has a first-look option on print rights for the Amazon West Coast imprints, and will continue to publish any titles picked up through that arrangement through their Mariner line. One agent doing business with Amazon surmised that "it allow HMH to publish more books, without the risk of putting upfront advances on their side of the deals." The new agreement does not cover the children's titles from Marshall Cavendish that Amazon has a deal to acquire.
Under the new agreement, like any licensee, it is expected that HMH has control over the format and pricing of their print editions. With Amazon New York's first list set to debut this September, HMH publisher Bruce Nichols says he does not expect to add any dedicated staff immediately for New Harvest, and anticipates adding personnel only modestly as the Amazon NY program builds. He indicates that publicity for the titles will be handled by Amazon's new team.
As a licensed HMH imprint, rather than a distribution agreement with print books physically published by Amazon, the arrangement may affect how retailers approach stocking the titles that Amazon NY has been signing, including high-profile books by Tim Ferris, Penny Marshall, Deepak Chopra and James Franco. For those who want to carry the high-profile titles, it allows them to do business with HMH rather than a retailing competitor. To clarify another important point of confusion, an Amazon executive confirms to us that the New York list will be made available in all major ebook formats as well; the titles will not be Kindle-exclusive (contrary to how the Amazon West Coast ebooks have been handled so far). Amazon has not finalized the technical and vendor details for how those general market ebook files will be handled yet.
That decision will put Barnes & Noble in an interesting position on the New Harvest print list as well as the ebook editions, however they come to market. In the past, BN spokesperson Mary Ellen Keating has said "our policy is that unless we receive all formats of a title to make available to our customers, we will not sell those physical titles in our stores." BN chief merchandising officer Jaime Carey has said that "to sell and promote the physical book in our store showrooms, and not have the ebook available for sale would undermine our promise to Barnes & Noble customers to make available any book, anywhere, anytime." Those statements certainly imply that BN would carry product that is available to them in both physical and digital form.
As an additional, practical consideration, the licensing agreement with HMH also spares Amazon creating any sales tax nexus via additional warehouses or sales reps.
As a licensing arrangement, it does naturally raise questions about how authors' compensation will be handled (since under a standard print sub-license, the originating house would retain a substantial share). Amazon New York publisher Larry Kirshbaum says that "the authors get full royalties," however (after any earn-out, we would expect). In the press release, Kirshbaum notes, "Our goal has been, and remains, to introduce authors to as many readers as possible. This new agreement with Houghton Mifflin Harcourt enables us to broaden our distribution and get our books into more readers' hands."
Tangentially, as some reports have noted, Moody's downgraded their rating on the debt of Houghton Mifflin Harcourt last week, to Caa2 from Caa1, with a "negative" outlook.