Hachette rejects Amazon proposal to give Hachette authors 100% of e-book revenue

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.

6 Comments on Hachette rejects Amazon proposal to give Hachette authors 100% of e-book revenue

  1. If what was printed in the letter is true (and Hachette has responded but doesn’t deny it), this whole thing sounds like a stall tactic. It does not sound like Hachette is demanding certain things and Amazon is demanding something else and negotiations have broken down. It sounds like Hachette is just ignoring the expiring contract and refusing to negotiate at all, getting Amazon to temporarily keep extending their existing contract on the short term.

    I know that the DOJ settlement requires the settling publishers to have staggered dates for renegotiating their contracts. Is this Hachette’s attempt at delaying the whole thing until the next publisher’s contract expires so that now there are multiple publishers negotiating terms at the same time with more leverage – the exact situation that the DOJ was trying to prevent?

  2. Paul Mackintosh // July 8, 2014 at 7:02 pm //

    This is getting more dramatic than the World Cup – and that’s saying something.

  3. Timothy Wilhoit // July 8, 2014 at 8:02 pm //

    “Is this Hachette’s attempt at delaying the whole thing until the next publisher’s contract expires so that now there are multiple publishers negotiating terms at the same time with more leverage – the exact situation that the DOJ was trying to prevent?”
    Sure sounds like it. I doubt doing an end-run around a federal judge’s order is a wise move on their part. The DoJ is already watching Hachette, Simon & Schuster and HarperCollins pretty closely, it will be interesting to see what happens.

  4. A very clever move by Amazon. The biggest mistake Hachette made last month was trying to play the PR – pity poor us – game with leaks to the NYT. Silly boys and girls at Hachette, trying to wear grown up pants in the real world. You’ve just walked into the lion’s den, and guess what? You’re this morning’s breakfast. Not only is Amazon unfairly tugging on the noose around your necks, now they are directly making a play for your authors. Guess what, Hachette? You’ve now made your authors fair game because you wanted to be the David that stood up to Goliath. Are you really too dumb to see you are being played like a fiddle? And yet every week you dance to the tune. Let’s be blunt Hachette, boys and girls… Amazon is telling you, loud and clear, if you f**k with us, we can take the compensation hit, we are prepared to share some of the financial loss, but maybe not today, but some day, your authors will become our customers. Deal with it, or take your books somewhere else. Amazon has all the time in the world and waiting until the other big 4 to turn up is not going to change that.

  5. Amazon has floated a proposal to Hachette authors to pay them 100% of all revenue from sales of their e-books.
    “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,” Douglas Preston said.
    Does anyone else spot the disconnect between the two statements above? Preston is either a disingenuous man or a very stupid one.

  6. I think we can safely describe Preston as a loyal servant of Hachette. A case of wanting to be portrayed as a crusader for all authors when in fact he represents the commercial interests of a select group of authors, or maybe he justs wants his toast buttered on both sides. If Preston is so aggrieved about the behaviour and power of Amazon in the bookselling universe, then maybe he should request Hachette, his publisher, to withdraw his books from sale there. The very same decision Hachette can also make on Douglas Preston’s behalf, and indeed all their authors.

    As you indicated, Sheogorath, there is a great deal of hyprocracy been spouted in all this, and not just from authors like Preston and Patterson, et all, but from the Howey/Konrath camp as well. It’s deliberately devisive, and not only sets out to polarise the different paths authors take, but to paint one large group of authors as *mugs* or *lambs to the slaughter* of the legacy publishing machine.

    All authors make choices, and those choices may or may not place you in a better or worse financial position when it comes to author earnings. There are too many players in this game of publishing thrones who want to raise a triumphant flag and play *follow the leader* as they march to the high moral ground.

    There are no angels and demons in this – Hachette or Amazon, just two very large corporate businesses arguing their case the same way it works in any other industry. If you attach yourself permanently to either coat tail, you pay the piper whether it’s when you walk in the gate or when you decide to leave.

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