Amazon Gives Insight into Hachette Feud

Jul 31, 2014

A blog post on Amazon's Kindle forum gave some insight into the ongoing feud between the internet retailer and Hachette, one of the Big 5 publishers. Negotiations broke down months ago, and Amazon stopped allowing pre-orders of Hachette books and users reported delayed shipping on the publisher's books. Many asked if Amazon had too much power including big name authors. Now, Amazon is making it clear what's at stake: lower ebook prices and 30% cut for Amazon.  

Interestingly, Amazon lays out its case for lower ebook prices and contends that everyone involved wins because people buy more ebooks (74% more to be exact) when prices are lower-leading to higher revenues  for the publisher and bigger royalty checks for the author. Amazon is advocating for most new ebooks to be priced at $9.99, instead of $14.99. However, Amazon's calculations only take into consideration ebooks prices, and the post doesn't mention how revenues are affected when buyers purchase print copies instead of ebooks (and surely Hachette is hoping that by keeping ebook prices high, readers will continue to buy print books).

Amazon also calls Hachette out for its part in the price-fixing scandal that encompassed the Big 5 publishers and Apple. Amazon wrote in the blog post, "Is 30% reasonable? Yes. In fact, the 30% share of total revenue is what Hachette forced us to take in 2010 when they illegally colluded with their competitors to raise e-book prices. We had no problem with the 30% -- we did have a big problem with the price increases."

While Amazon also advocates that authors get 35% and Hachette get 35%, it points out that most publishers don't actually give their authors a cut that big. Instead, authors get a fairly standard 25% royalty. In other words, publishers are the bad guys.