From the NY TIMES: Amazon and Hachette Resolve Dispute

 Amazon and Hachette Resolve Dispute

By DAVID STREITFELD. Alexandra Alter contributed reporting.

Hachette won an important victory on Thursday in its battle with Amazon: the ability to set its own prices for e-books, which it sees as critical to its survival. But even as the publisher and retailer announced a negotiated peace after sparring since January, hardly anyone seemed in the mood for celebratory fireworks.

The conflict, which played out in increasingly contentious forums as the year progressed, left wounds too deep for that. Amazon has been cast as a bully in publications across the ideological spectrum, and a large group of authors is calling for it to be investigated on antitrust grounds. Its sales were hit by the dispute, analysts said. Hachette, too, revealed its vulnerability.

Amazon’s supporters publicly questioned the need for Hachette, the fourth largest publisher, to exist in an era when authors can publish themselves digitally, an accusation Hachette was reluctant to respond to.

And even if Amazon got less in the deal than it originally wanted, it still controls nearly half the book trade, an unprecedented level for one retailer. And the dispute showed it is not afraid to use its power to discourage sales.

One common feeling among those who produce, sell, market and publicize books: relief. “The fact that these two companies are no longer shooting at each other is a really good thing for all of us,” said Jane Dystel, president of Dystel & Goderich Literary Management.

Len Edgerly, who is host of an independent podcast, the Kindle Chronicles, called the brawl “a painful ordeal.”

“As a longtime Kindle enthusiast, I have been in Amazon’s corner throughout the struggle, but I never doubted the other side’s sincerity in wanting what’s best for authors and readers,” Mr. Edgerly said.

What began as a spat between supplier and retailer — completely routine, Amazon said — soon became a public standoff. Depending on where you stood, it was a struggle between the future and the past, the East Coast and the West Coast, culture and commerce, the masses and the elite, technologists and traditionalists, predator and prey.

James Patterson was a forceful voice against Amazon during the dispute. “Books and publishing need to be preserved if not protected in this country,” said Mr. Patterson, a best-selling Hachette novelist. “For the moment, this deal helps do that.”

The multiyear agreement, which includes both e-books and print books, broadly follows a deal Amazon recently worked out with Simon & Schuster. A source with knowledge of that deal said it was negotiated relatively quickly and gave the publisher control over most of its pricing but offered incentives to sell at lower prices. Amazon got increased co-op funds, the payments for placement on the retailer’s website. Simon & Schuster declined to confirm the terms.

James L. McQuivey, a Forrester analyst, said that if Hachette won in the short term, it would be a different story in the long run.

“Hachette got Amazon to allow them to control pricing while also cutting the amount of money Amazon takes if the publisher does engage in discounts, which appears like a victory,” the analyst said. “But in the end this all cements Amazon’s ultimate long-term role in this business, which will only put Hachette right back in this situation every time they are up for renegotiation.” 

Neither side gave many details of the deal, but both pronounced themselves satisfied. An Amazon executive, David Naggar, said Amazon was “pleased with this new agreement as it includes specific financial incentives for Hachette to deliver lower prices.”

Amazon feels publishers get too much of the revenue from e-books, so that was another major area of contention. In a letter Thursday to authors and agents, Michael Pietsch, Hachette’s chief executive, said the percentage of revenue on which Hachette authors’ e-book royalties are based “will not decrease under this agreement.”   The change for consumers might be slight.

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