The interesting times we live in might just have gotten a little more interesting. Right as Hachette is in the middle of a protracted contact negotiation dispute with Hachette comes a rumor, via Publishers Weekly, that its fellow Big Five publisher Simon & Schuster has just finalized a contract deal with Amazon. The deal would supposedly move the pricing model “back toward the original agency plan,” with S&S able to set prices on its e-books, but Amazon retaining some ability to discount.

Of course, this is just a rumor based on an anonymous leak. PW pointed out that neither Amazon nor S&S would comment on the matter. But if it is true, it’s not exactly a surprise. Remember that in one of its statements about the Hachette matter, Amazon said it didn’t have any problem with the 70-30 revenue split, provided that prices on most titles could be kept at or below $9.99. So perhaps Amazon negotiated the right to give up some or all of its 30% margin on select agency books? Or perhaps Amazon gains the ability to discount a certain number of titles to $9.99 per year?

Pundits have theorized that Hachette has been so determined not to give in lest that be seen as the first step onto that slippery slope of giving Amazon additional power over the other publishers when their turns came up to negotiate. But on the other hand, Simon & Schuster might have looked at the havoc wrought on Hachette’s sales when it held firm and decided Amazon’s terms didn’t seem that objectionable after all.

So if the rumor is true, S&S might just have stepped up to that slippery slope, plopped a sled down, and gone for a ride. Which, in turn, might put additional pressure on Hachette to accept those terms.

Of course, this assumes that the rumor is true, something which I have no way of confirming. It could be a complete fabrication. But oh, what if it’s not?

2 COMMENTS

  1. Some industry insiders have predicted that, as the largest, S&S might be able to swing a good deal. But having settled with S&S, Amazon may find itself having to make similar arrangements with others. This may end quickly and end these bad times for Amazon.

    What’s this about agency pricing though, with a 70/30 spilt even? Don’t we know that the very picture of virtue, the Obama administration’s DOJ and an infallible second circuit have ruled that such things are evil. If if agency pricing is evil price-fixing for Apple with perhaps 20% of the market, they they’re certainly evil for an Amazon with perhaps 70% of the market. Just don’t expect anything that logical to happen where Amazon is concerned.

    Much of this fuss has been crazy. Agency pricing makes quite a bit of sense for digital sales, certainly more that having a court attempting to rule a price too high or too low. Agency pricing already dominates the sales of music, videos and apps. Trying to make a distinction for ebooks has never made sense.

    • Michael Perry writes:

      What’s this about agency pricing though, with a 70/30 spilt even? Don’t we know that the very picture of virtue, the Obama administration’s DOJ and an infallible second circuit have ruled that such things are evil. If if agency pricing is evil price-fixing for Apple with perhaps 20% of the market, they they’re certainly evil for an Amazon with perhaps 70% of the market. Just don’t expect anything that logical to happen where Amazon is concerned.

      Oh, come on, Michael. If you’re going to trot out straw men, don’t use ones that are so easily debunked.

      Judge Cote wrote on page 132 of the decision finding Apple guilty (emphases mine):

      The Plaintiffs do not argue, and this Court has not found, that the agency model for distribution of content, or any one of the clauses included in the Agreements, or any of the identified negotiation tactics is inherently illegal. […] That does not, however, make it lawful for a company to use those business practices to effect an unreasonable restraint of trade.”

      It makes it look like you don’t have any clue what you’re talking about. Your arguments, for all that I tend to disagree with them, are usually better than that.

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