Amazon-Hachette Dispute to End ‘Soon’?

Given the negotiating positions in their months-long business dispute over trading terms between retailer Amazon and publisher Hachette, as well as the latest offer from the publisher, “a deal soon would not be a surprise,” according to the New York Times.

In a long report on Amazon this weekend, New York Times reporter David Streitfeld interviewed both head of Kindle Russ Grandinetti and Hachette Book Group CEO Michael Pietsch.

Grandinetti’s position:

“If you charge high e-book prices, ultimately what you’re doing is making a slow, painful slide to irrelevancy,” said Russell Grandinetti, Amazon’s senior vice president for Kindle. “You have to draw the box big. Books don’t just compete against books. Books compete against Candy Crush, Twitter, Facebook, streaming movies, newspapers you can read for free. It’s a new world. It’s so important not to simply build a moat around the industry the way it is now.”

Amazon favors a price of $9.99 for many e-book titles, while Hachette and other publishers want to charge more. Sixty percent of Hachette’s e-book sales in the United States occur on Amazon.

“For most books, $9.99 creates more total revenue than $14.99,” Mr. Grandinetti said. “That means $9.99 creates more total dollars to share with authors.”

Pietsch’s position:

“This controversy shouldn’t be misinterpreted,” said Michael Pietsch, chief executive of the Hachette Book Group. “It’s all about Amazon trying to make more money.”

He noted that Amazon was also trying to squeeze a large publishing group in Germany, Bonnier, for better terms. And Germany has fixed-price laws for books. That, Mr. Pietsch said, “is evidence that Amazon’s margins, not lower prices for consumers, are the crux here.”

Mr. Pietsch implied that Amazon was becoming desperate.

“You can’t blame shareholders for demanding, at long last, a normal return on their investment,” he said. He added that even as Amazon was publicly accusing Hachette of refusing to negotiate last week, the publisher was putting its third proposal on the table, “by far the most generous to date.”

(Read the entire article here for a fuller understanding of the issues.)

On a webcast last week with Digital Book World, when asked when he thought the Amazon-Hachette dispute would end, Streitfeld said he couldn’t say.

Related: See senior vice president of Kindle Russ Grandinetti speak in an candid, on-stage interview at Digital Book World 2015. Register today!

 

2 thoughts on “Amazon-Hachette Dispute to End ‘Soon’?

  1. Len Edgerly

    I find it amusing that Mr. Pietsch emphasizes that Hachette’s latest offer is “by far the most generous to date.” Isn’t that the normal course of negotiations? Would anyone expect that a later offer would be LESS generous? I hope David Streitfeld is right, that this ordeal is coming to an end soon.

    Reply
  2. Theresa M. Moore

    At this point it is nothing more than a staring contest in which each party is expecting the other to blink. Amazon’s terms are not generous as they stand now, and Hachette’s is predicated on the contractual terms of the contracts with the authors. Amazon should not be dictating price. Period. It is a retail giant, and it should eat the losses it brought on itself by lowering the ebook prices below costs of sales, which includes the operational margin. The stockholders have the right and the expectation to profit from their investment, so it is up to Amazon to make good on that bargain, and without trying to make up the difference on the backs of its content suppliers. Amazon should recognize that it cannot achieve a greater market status by bullying publishers into giving it favor over the other retailers. It should compete fairly, and so far it has not.

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