Last year the news of a feud blew up presses everywhere. It was a seeming story of the little guy versus the giant, and it involved one of the biggest names in e-books: Amazon. It drew global attention, causing sides to be taken and bringing e-book sales tactics into question.
According to Vanity Fair, Amazon began punishing the small book publisher known as Hachette Book Group in what some labeled as cruel and unusual ways. The war of the words started in April 2014, and it only recently came to a truce in November of 2014.
A contract between the two major businesses officially ended back in March 2014. Amazon extended the contract under new, less than ideal, stipulations:
- Hachette would have to sell most of their books through the online retailer for $9.99.
- Consumers would have to wait weeks for actual delivery, which went against the ever so popular two-day shipping Amazon offers prime members.
- The updated contract removed the pre-order function that so many e-book consumers have grown to love.
As you can imagine, the new terms left Hachette feeling like a battle cry had been issued. Over a six-month period, the disagreement between the publisher and Amazon grew into a major feud; a feud that affected writers and consumers alike.
Taking Sides: Hachette vs. Amazon
Some authors sided with Amazon, holding to the idea that cheaper prices attract more buyers, paving the way to more readers and sales. Strong supporters of Kindle Unlimited and the Kindle Owners’ Lending Library say the giant’s tactics work. But when playing by Amazon’s rules, Hachette experienced a major decline in their sales.
Hachette wanted Amazon to allow independent e-book pricing so their bottom line could increase. The publisher is worth about $10 billion versus Amazon’s $122 billion value, making them the little guy, or the underdog, of the fight.
Despite being the so-called little guy, the publisher was not void of support. According to Business Insider, a coalition calling itself Authors United began. Started by Douglas Preston, an author of techno-thrillers and horror novels published by Hachette, over 900 authors joined in support of the underdog.
The Plot Thickens: A Scheme to Increase eBook Prices
Authors United began by Preston’s circulation of a letter condemning Amazon’s behavior in the hopes it would convince Jeff Bezos—Amazon’s founder and CEO—to find a new, better way to negotiate with Hachette—a way void of harmful sales slashing tactics and bullying.
Amazon, one of the most influential and monopoly-holding online book retailers, has never been afraid to throw its weight around, sometimes acting as the Godfather of e-commerce. The coalition managed to involve the Department of Justice (DOJ) in the feud. An investigation was due to be launched into the tactics wielded by Amazon.
It’s not the first time the DOJ has gotten involved in this particular type of dispute. In 2012, an anti-trust lawsuit was filed against major book publishers, including Apple, Hachette, and several others accused of coming together to raise the prices of all e-books sold online.
The DOJ is said to have proof of chief executive officers at numerous publishing groups meeting for lunch over several months to discuss a plan of forcing a dramatic e-book price change. Referred to as the “$9.99 problem,” the accused were reportedly working with Apple to raise the prices of e-books before a new iPad launch. The goal was to force Amazon into a price increase right before readers would begin purchasing e-books to fill up their new tablets.
The endgame goal was to increase profits. Apple fought the allegations and lost, whereas the others involved settled.
Amazon’s Profits and Reasoning for Cheaper E-Books
While Amazon’s pricing may cause brick and mortar publishing houses a headache, it has resulted in increasing profits for the online retailer and smart indie authors who learn the market. By keeping e-book prices at $9.99, more customers can purchase more e-books.
Amazon is one of the most accessed sites on a daily basis. Consumers can buy just about anything at a reasonable price. The e-commerce conglomerate feels that by pricing most of their books at $9.99 they will level the market, granting e-books the ability to compete with other media outlets like television and film and freely accessible blogs brimming with valuable content. Kindle Unlimited and the Kindle Owners’ Lending Library are likewise becoming the Netflix or Hulu of e-books.
The pricing structure enforced by Amazon appeals to most readers. It strongly entices them to return, and it attracts a fresh generation of readers on an almost daily basis. Unlike publishers, Amazon need not worry about printing and distributing hardcover and paperback versions of a book. Their overhead is dramatically smaller.
Amazon and Hachette End Publishing Dispute
The headline broke early in November. Says The Wall Street Journal, “[The] e-retailer [and] book publisher [reached a] multiyear pact for print [and] digital books.”
In a surprising turn of event for those who thought Amazon would bully to a win, neither side came out victorious. Both made concessions in the fight over e-book pricing and revenue.
In their updated agreement, which took effect on January 1, 2015, Hachette will be setting the prices of its consumer titles. According to Amazon, “it has resumed treating Hachette titles as it did before the dispute.” But Hachette will receive better terms when it “delivers lower prices for readers.”
The agreement between the feuding companies came weeks before the holiday season kick-off. It was welcome news to writers, including Hachette’s high-profile authors like J.K. Rowling, James Patterson, and Michael Connelly.
Perhaps the best summary of the feud came from James McQuivey, an analyst at Forrester Research, who said, “[The] deal should have [come] a lot earlier. Emotions took over, and [Hachette and Amazon] began talking like they were protecting the free world.”
The Changing Face of Publishing
The truth of the matter is publishing is changing. It’s rapidly evolving. It’s drawing in audiences who love both bound books and digital copies. The sales and marketing tactics for each are dramatically different. As publishing continues to evolve, we are sure to see more developments affecting both traditional and indie authors and publishers.
Additional Contributor: Brittany Cotton
Feature Image Credit: Dana Stabenow