Hachazon War: peace declared
I was on my phone and additionally limited when I sent the first very short version of this post, but this obviously deserves a major update.
It’s being widely reported (I’ll include links later on) that Amazon and Hachette have reached an agreement after months of a messy contract negotiation that saw Amazon discouraging customers from buying Hachette books (by delaying them, putting ads on the books’ pages for other books, removing the ability to pre-order them, not discounting as deeply, and, I think perhaps by not listing them on their books of the year, except for one…these are all allegations that have been made. It would be hard to prove the exact motivations).
It also got authors involved on both sides…pro Amazon and anti-Amazon (not so much pro or anti Hachette, I’d say). For more on my coverage of what I’ve been calling the “Hachazon War”, see
I’m not seeing an announcement in the Amazon Kindle forum, yet, so I’ll be going by what is in the news as I look at the ramifications.
Interestingly for readers, this appears to be a return to the “Agency Model”, meaning that Hachette will set the prices that consumers pay for e-books.
There has been confusion about that. The U.S. Department of Justice went after the publishers that had used the Agency Model and forbade them from using it…for a while.
That wasn’t because the Agency Model was in itself illegal. It was because they had, according to the DoJ, used it to do illegal things.
I said before that it was sort of like a baseball bat. You can own a baseball bat, and you can carry it around. However, if ten of you got together and used baseball bats to inflict damage on somebody, a judge might say that you ten can’t have them.
I’ll admit: this makes me uneasy.
The Agency Model, by its nature, reduces price competition. If the publisher sets the consumer price at multiple sales channels, it’s unlikely that it will be lower at one than at another. Amazon has always used the power of discounting, and this pretty much takes that out of the picture for the e-tailer.
Here’s a phrase which has been in several stories:
“…pleased with this new agreement as it includes specific financial incentives for Hachette to deliver lower prices.”
That’s attributed to an Amazon executive, David Naggar.
It says clearly to me that Hachette gets to set the prices.
I’m guessing the incentives would be Amazon agreeing to take a lower cut at different price points. Hypothetically: “Price the books under $10, and we’ll take a 30% cut. Price them at higher than $14.99, and we’ll take a 50% cut.”
The logic behind that, which Amazon has explained, is that many more of the books will sell at $9.99 than $15, so they make up the difference on volume.
I’m happy to see it settled, but I still don’t like it. As a former brick and mortar bookstore manager, I don’t like the idea of the publishers setting the prices. The store owner/manager should do that, it seems to me.
Publishers don’t have the experience at doing it, and I see that as a problem.
Another big issue for me is how nimble they will be. When something big happens in the news, a store can slash the prices on all related books…let’s say a celebrity announces an engagement. A store might give 10% off on all of the books about that celebrity…to get people into the store, where they will hopefully also buy other things.
A publisher doesn’t have the same motivation to make someone a customer of a specific store. They’d probably have to run the idea through a pricing committee, which looks at all the stores, runs projections…and by then, the logical discounting window may have closed.
I’m not saying it will happen that way, just that I’m concerned. I suppose all of the big publishers could hire retail pricing managers…and give them considerable autonomy to make the decisions.
One question is whether Hachette will strike this same deal with other big e-book retailers…hmmm, just who would that be again? 😉
Amazon has now reached agreements with Simon & Schuster and Hachette, leaving three of the Big Five to go: HarperCollins; Penguin Random House; and Macmillan.
Another interesting thing for me: how does this impact the subsers (subscription services), like Oyster, Scribd, and Amazon’s own
It helps them.
I think the prices may rise under these agreements, at least somewhat on some titles (I’ll keep track of prices, as I always do).
That will, in turn, make the subsers more attractive.
We’ll have to see, though.
I took a look at
That’s sort of their “blockbuster” imprint. I didn’t see any delays listed on any of the ones I checked, including
by J.K. Rowling writing as Robert Galbraith…that had been one of the most high profile books in this dispute.
I also didn’t notice any Stephen Colbert books being delayed.
Good will all around from here on forward?
That would be my preference…but I wouldn’t bet the bullfrog.
Here are some of the articles:
- The Daily Mail: The battle of the book is over: Amazon and Hachette end months long dispute over e-book revenue
David Streitfeld at the New York Times: Amazon and Hachette Resolve Dispute
Nick Statt and Donna Tam at c|net: “Amazon and Hachette settle bitter e-book dispute”
and a search at Google:
Update: more links now that there has been a bit of time since the announcemnt:
- Jim Milliot at Publishers Weekly: Amazon-HBG Deal: The Reaction
- Publishers Weekly: “Amazon Versus Hachette: The Whole Story”
What do you think? Feel free to tell me and my readers by commenting on this post.
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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.