Dissecting Amazon and Hachette's new chapter

Amazon and Hachette are "burying the hatchet," said Shannon Bond at the Financial Times. The Internet retailer and the book publisher ended their "protracted, costly, and very public fight" last week, just in time for the holiday shopping season. Since May, the two have been locked in a war over e-book pricing and profit sharing. Hachette, the fourth-biggest U.S. publisher with authors including J.K. Rowling, Donna Tartt, and Malcolm Gladwell, wanted to retain the ability to set its own e-book prices; Amazon, which sells two-thirds of all digital books, wanted e-books priced at $9.99 or less. When Hachette wouldn’t agree to Amazon’s terms, the retailer responded with hardball tactics, removing the Pre-order button on Hachette titles and delaying deliveries of the publisher’s hardback books for weeks. The fight got so ugly that you could practically hear the "sigh of relief echoing through the corridors of Manhattan’s publishing houses" after last week’s deal was inked.

So who won? "It is hard to say," said The Economist, since neither side is disclosing details of the multiyear settlement. "Hachette seems to have achieved much of what it wanted:" It will still control most of its e-book pricing, which it says is a big win for authors. But it will also accept unspecified "incentives" from Amazon to sell books for less, which suggests that it could be vulnerable to strong-arm tactics by Amazon in the future. It’s no surprise that Hachette was eager to end this feud, said Andy Lewis at The Hollywood Reporter. Since being virtually locked out of the Amazon store, its overall book sales have suffered, declining 18 percent in the third quarter. But Amazon has arguably taken a bigger hit — if not financially, then in the court of public opinion. For months, the retailer’s opponents have "successfully cast it as a monopolistic bully, reinforcing the most negative images of the Internet giant." Hundreds of high-profile authors signed an open letter criticizing the company for its aggressive business practices and called on the Justice Department to open an antitrust investigation. CEO Jeff Bezos was the "subject of widespread personally negative press."

That public pressure is probably what led Amazon to accept "less in the deal than it originally wanted," said David Streitfeld at The New York Times. But the Internet giant has sent a message to the industry: It still controls nearly half of all book sales, and "it is not afraid to use its power" — a fact that other big publishers like Penguin Random House, set to start similar talks with Amazon in the coming months, will no doubt remember when they sit down at the negotiating table. "Meanwhile, Amazon is finding that there may be more than one route to victory," said Suzanne McGee at The Fiscal Times. Even as it battles traditional publishers, the retailer is steadily building its own in-house publishing arm, with thousands of popular titles priced at $4.99 or less. Amazon may have compromised this time, but stay tuned: The war over the future of the book market "is likely to be a long, complicated, and very messy one."

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