Friday, November 14, 2014

Amazon and Hachette Finalize New Contract

Publishers Lunch


Hachette Book Group and Amazon announced jointly on Thursday morning that "the companies have reached a new, multi-year agreement for ebook and print sales in the US." HBG ceo Michael Pietsch 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."

Echoing the etailer's comment on the recent Simon & Schuster contract, Kindle vp David Naggar said in the statement: "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."

New ebook sales terms "will take effect early in 2015." They say 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." Meanwhile, "Amazon and Hachette will immediately resume normal trading, and Hachette books will be prominently featured in promotions."

We first started noticing changes rolling onto Amazon's site early this morning, as pre-orders were restored for Little, Brown titles (but not the rest of the HBG divisions). At the same time, Amazon had also resumed discounting of at least some HBG new release hardcovers across a broader spectrum of the company's books -- including the 4 titles featured on Amazon's 100 Best Books of the Year list, which, as we noted over the weekend, started off as the only undiscounted hardcovers on that list. Significant stocking issues remain, and presumably that will now get corrected, though it may take some time to resupply Amazon's shelves.

The settlement brings to an end the increasingly bitter dispute that first came to public attention in early May, after the operating contract between the two parties expired in March. As with the recent new contract arrived at between Amazon and Simon & Schuster -- which took approximately 5 months to negotiate, one mistaken story notwithstanding -- both parties are able to say they are happy with the terms. What began as a practically existential disagreement over ebook terms, according to multiple publishers, in which Amazon was reportedly asking for substantially larger discounts on ebooks and a bigger share of the ebook-related profits that have been flowing to big publishers, seems to be ending with far finer-level adjustments to terms as big publishers return to an agency model that sounds more like where they started in 2010. (One colleague suggests that we call the new version Agency Classic.)

In both the Simon & Schuster and Hachette agreements, multi-year contracts (read as three or four years) are also ruling the day, which could alleviate the business from constant concern over business terms and business interruption. (Beware of stories that misinterpreted this after Simon & Schuster's contract announcement. Remember that in 2010, when agency was first imposted, it's Amazon that sought multi-year agreements from the agency publishers -- at the time unsuccessfully.)

As we have reported previously, HarperCollins' contract with Amazon should have expired in September, and contracts with Macmillan and Penguin Random House are expected to expire in mid-December, when they become the last two companies to be freed of the restrictions imposed by the consent decrees with the Department of Justice. With the hard-won Hachette agreement coming in relatively short order after the surprise announcement from S&S and Amazon, there is hope that the other publishers will come to new agreements on similar terms on short order. As was the case in 2010, now that the bitter dispute with Hachette is ended and the original agency publishers are clearly continuing to stand with agency, people will start wondering how the now-larger Penguin Random House will play their hand. 

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