New Articles | Amazon v Hachette

Frozen conflict

The deal between the two firms is unlikely to end the dispute over e-books

|SAN FRANCISCO

By L.S.

AFTER months of acrimony, the statements on November 13th announcing the end of the standoff between Amazon, an online-shopping website, and Hachette, a book publisher, over e-book prices and profits sounded a bit too cheerful. The agreement was “a great win for readers and authors alike,” according to David Naggar of Amazon—which had tried to get Hachette to make concessions by, for instance, not letting customers make advance orders for its forthcoming books. “This is great news for writers,” continued Michael Pietsch, the boss of Hachette—which had been arguing that Amazon should not be allowed to dictate book prices.

Predictably, Hachette’s authors breathed a collective sigh of relief—in particular since the deal comes in time for the all-important Christmas season. “Books and publishing need to be preserved if not protected in this country. For the moment, this deal helps do that,” as the New York Times quoted James Patterson, who is one of Hachette's bestselling novelists and among the most outspoken critics of Amazon during the dispute.

But who has won the battle? It is hard to say, with so little to go on: neither side has said much about the multi-year agreement, which includes both print as well as digital books, and will take effect in early 2015. But Hachette seems to have achieved much of what it wanted: it will set the prices for its titles. The deal, however, also “includes specific financial incentives for Hachette to deliver lower prices,” according to Mr Naggar.

This sound less like a grand bargain than a frozen conflict that could easily heat up again. Several other big publishers are set to start negotiations with Amazon over similar issues in the next few months, which may result in renewed conflict. The digital world is particularly prone to fights over prices and profits: it costs almost nothing to sell an additional copy of an e-book. What makes clashes even more likely is that Amazon controls nearly half of the market in books and sees them as a loss-leader for other areas in retail it is trying to expand into. Publishers, on the other hand, want to protect the profit margins on their print books, and charge high rates for e-books to do this.

Another dispute is likely to continue as well. The stand-off between Amazon and Hachette has triggered a heated discussion about whether the online giant is a monopoly and hence should not be allowed to act the way it did. In fact, authors’ associations in America are planning to urge the Department of Justice to investigate the firm for abuse of market power. Perhaps that is why Amazon decided to give in—for now.