Amazon and Simon & Schuster reach a deal

Amazon and Simon & Schuster reach a deal

There is a future for Big Five books in the Kindle store.

That certainly seemed like the most likely outcome, although the day may come when Amazon doesn’t need them any more.

Why even doubt that the biggest bookstore would carry books from the biggest publishers?

Well, Amazon has been in a dispute with Hachette, another of the Big Five…for more than six months. What I call the “Hachazon War” certainly enters another phase with Amazon reportedly reaching an agreement with Simon & Schuster.

It makes it much harder for Hachette to paint Amazon as an “impossible to negotiate with” Big Bad.

It gives authors something to consider…how much of the stand-off is Hachette’s fault? When their deals with that publisher are done, should they be shopping? Douglas Preston, an author who has led the authors who have publicly expressed concerns with Amazon, wants to know the e-tailer has offered the same deal to Hachette. If it has…why didn’t Hachette take it? Retailers don’t have to give the same terms to everybody, of course.

It also changes the dynamic if there is a Department of Justice investigation of Amazon’s negotiating tactics (Authors United has asked for at least a look into it). If nobody can make a deal with you, that makes it a lot worse than a fifty/fifty split.

I’m going to link to stories on this, but I’ve seen both that this will be a return to the “Agency Model”, and that Amazon will be able to discount the books.

Those aren’t exactly contradictory. In the Agency Model, the publisher (not the retailer) sells the books (the former retailer just acts as an “agent”), and sets the customer prices. The publisher could set the price…and still, in some way, let Amazon discount under circumstances. For example, they might allow a three for the price of two deal to be offered. That doesn’t change the actual price of the book.

While we don’t actually know the terms of the deal, it is reassuring that a deal was reached at all. As a reader, I’d like Amazon to carry every book. However, the conditions under which they carry them do matter. I wouldn’t want Amazon to carry S&S books if the prices doubled…well, I guess I would, for folks who would pay that, but I wouldn’t like it for me. 😉

It’s possible that Amazon let the publisher set the customer price within certain constraints…that would be a form of compromise which could work for them both.

My intuition is that Amazon will make a deal with HarperCollins, and I would think they will with Penguin Random House. They’ve had trouble with Macmillan before…we could see a repeat there.

With publishers not standing united, though, I think everybody will deal before the end of the first quarter of next year.

This might also help Amazon’s stock a bit. Investors hate uncertainty.

Here are some of the articles:

Update: there has been a brief

Amazon announcement (at AmazonSmile: benefit a non-profit of your choice by shopping*)

in the official Kindle forum about the deal. They don’t say much about it, except that they are happy, it’s a multi-year deal, and it involves both e-books and p-books (paperbooks). Interestingly, they chose to make it a ” no reply thread”…they aren’t taking comments on it.

What do you think? Does Amazon need the Big Five? What should they be willing to give up to get their books? Where is the line in the sand? Will this mean Hachette settles quickly? Feel free to tell me and my readers what you think by commenting on this post.

Join hundreds of readers and try the free ILMK magazine at Flipboard!

* I am linking to the same thing at the regular Amazon site, and at AmazonSmile. When you shop at AmazonSmile, half a percent of your purchase price on eligible items goes to a non-profit you choose. It will feel just like shopping at Amazon: you’ll be using your same account. The one thing for you that is different is that you pick a non-profit the first time you go (which you can change whenever you want)…and the good feeling you’ll get. :) Shop ’til you help! :) 

This post by Bufo Calvin originally appeared in the I Love My Kindle blog. To support this or other blogs/organizations, buy  Amazon Gift Cards from a link on the site, then use those to buy your items. There will be no cost to you, and a benefit to them.


4 Responses to “Amazon and Simon & Schuster reach a deal”

  1. Edward Boyhan Says:

    I wonder if we’ll ever see the details to the S&S deal — it would not surprise me, if we don’t. Amazon is notoriously tight-lipped about the details of its businesses.

    That said, books are arguably now less than 20% of Amazon’s revenue, and I expect that the margins on them are among the thinnest of everything Amazon sells.

    So to answer your question: does Amazon need the big5? I would come back with the question: does it need books at all? To the extent that it does, are Indies enough? I think we are close to the tipping point where the big5 need Amazon more than Amazon needs them.

    In my view media (which includes music, movies, books) for Amazon will increasingly be the come-on to get you into their store. If the stats about the decline of reading have any validity, then the big5 long term may end up being completely irrelevant to everyone — not just Amazon.

    Amazon will be reporting their financial results on Thursday. To the extent that anyone at Amazon listens to Wall Street (I don’t think so), then they might report some profit. I actually expect them to follow their practice of the last few years, and report zero net income (or even a slight loss).

    The key harbinger will be whether they are able to continue reporting double digit increases in revenue. This is ever harder to do — as your revenue base gets large.

    • Bufo Calvin Says:

      Thanks for writing, Edward!

      I agree with you about media increasingly being a way to get people to become Prime members…which gets them to buy those higher margin “diapers and windshield wipers”. I have to say, it wouldn’t surprise me if twenty years from now, Amazon’s business had very little to do with selling things themselves. They might become “the great deliverer”, doing web and fulfillment for others, and being a platform for creators to sell to consumers.

      My sense is that reading is actually increasing, but I think the desire to be an owner of things is much more rapidly decreasing. Access is becoming far more important than ownership, which is one reason why selling things is not a great place to be. Amazon doesn’t sell things to customers with Kindle Unlimited…it sells access.

  2. Brian Hartman Says:

    Hi, sorry OT, but there’s a lightning deal for a Certified Refurbished Kindle Fire HD 8.9″ 4G LTE Wireless Tablet

    for 0nly 179.00 64 gig, 4g capable, 8.9″ HD screen, HDMI out. $179.

    Hope the link works, don’t have time, good luck!

    • Bufo Calvin Says:

      Thanks for writing, Brian!

      There have been some interesting sales lately…hadn’t had a chance to put that one in yet. Thanks for giving people the heads up!

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