Hachette rejects Amazon proposal to give Hachette authors 100% of e-book revenue
July 8, 2014 | 6:09 pm
In the Amazon vs. Hachette feud, the PR moves and countermoves are coming out. Laura Hazard Owen has coverage at GigaOm and the Wall Street Journal also has a piece (paywalled; google the headline to view) on a proposal Amazon has floated to Hachette authors to pay them 100% of all revenue from sales of their e-books—cutting out both its own 30% and Hachette’s 70% share—if Hachette agrees. The revenue split on paper books would be unaffected.
The letter is particularly interesting in that, for the first time, Amazon is shedding some light on how the negotiations with Hachette have been going. Its letter, which GigaOm is carrying in full, states in part:
Our first choice would be to resolve a dispute like this through discussion only. We tried that already. We reached out to Hachette for the first time to discuss terms at the beginning of January for our contract which terminated in March. We heard nothing from them for three full months. We extended the contract into April under existing terms. Still nothing. In fact we got no conversation at all from Hachette until we started reducing our on-hand print inventory and reducing the discounts we offer customers off their list prices. Even since then, weeks have gone by while we waited for them to get back to us. After our last proposal to them on June 5th, they waited a week to respond at all, promising a counteroffer the following week. We are still waiting a month later.
So, the contract expired in March, and Amazon extended it to April, but Hachette still didn’t deign to respond to Amazon’s overtures until Amazon imposed its sanctions? Funny how Hachette never mentioned that little detail in any of its complaints about Amazon’s high-handedness. It puts me in mind of the old story about how you get a mule’s attention.
Paying the entirety of their e-book proceeds to the authors would, Amazon suggests, take the pressure off the authors, while putting it on both Amazon and Hachette to come to terms and start making money again. (Of course, granting that Hachette’s share is 70% to Amazon’s 30%, there would be rather more pressure on Hachette. But then, there already is anyway.) If Hachette were to agree to these terms, Amazon would also reinstate inventory stock levels that would permit rapid shipping, return to normal discount pricing, and reinstate pre-order buttons for titles that had them removed.
Hachette called the idea “suicidal” in a statement to the Wall Street Journal, and released a statement calling on Amazon to drop its sanctions and continue to negotiate. Amazon didn’t mince words in response:
We call baloney. Hachette is part of a $10 billion global conglomerate. It wouldn’t be “suicide.” They can afford it. What they’re really making clear is that they absolutely want their authors caught in the middle of this negotiation because they believe it increases their leverage. All the while, they are stalling and refusing to negotiate, despite the pain caused to their authors. Our offer is sincere. They should take us up on it.
The Wall Street Journal also talked to a Maxim Group analyst, publishing observer Mike Shatzkin, and Douglas Preston, author of the pro-Hachette open letter that’s been circulating.
In an interview on Tuesday, Mr. Preston said the Amazon proposal would be "devastating" to Hachette while "barely hurting Amazon at all." Mr. Preston also said he objected to the proposal because Hachette has supported him throughout his career. "There’s something wrong with this," he said. "My publisher gave me a very large advance for the book they are about to publish. Morally, I would have to turn over that (Amazon) money to them."
Of course, you could say it’s easy for Amazon to offer to give up its 30% revenue share when its adversary would be giving up over twice as much. (Or, well, almost twice as much if you discount the author’s share of the publisher’s revenue.) Nonetheless, it’s interesting to see Amazon finally taking its case to the public after allowing Hachette’s smear campaign to have the initiative.
If it’s true that Hachette isn’t even bothering to negotiate (and they apparently didn’t deny it in their statements), this disagreement might well go on for a while.