Amazon Offers to Give Hachette's E-Book Money Directly to Authors

Amazon has been in negotiations with book publisher Hachette for some time. Now, they are reaching out to Hachette authors directly to avoid having to settle on an undesirable price with the publisher. 

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Amazon has been locked in negotiations with book publisher Hachette for some time, and they have taken what some say are harsh negotiation tactics, including pulling pre-orders for Hachette books and removing some titles altogether. Because Amazon is the leading online book seller by a mile, they have a great deal of negotiation power, and this week attempted a new tactic: reaching out to Hachette authors directly to avoid having to settle on an undesirable price with the publisher.

Amazon offered to restore the book listings and pre-orders, as long as the writers get all of the revenue from digital sales. Here is the complete letter they sent authors, via Gigaom:

Dear XX,

I wanted to ask your opinion about an idea we’ve had that would take authors out of the middle of the Hachette-Amazon dispute (actually it would be a big windfall for authors) and would motivate both Hachette and Amazon to work faster to resolve the situation.

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.

We agree that authors are caught in the middle while these negotiations drag on, and we’re particularly sensitive to the effect on debut and midlist authors. But Hachette’s unresponsiveness and unwillingness to talk until we took action put us in this position, and unless Hachette dramatically changes their negotiating tempo, this is going to take a really long time.

Here’s what we’re thinking of proposing to them:

• If Hachette agrees, for as long as this dispute lasts, Hachette authors would get 100% of the sales price of every Hachette e-book we sell. Both Amazon and Hachette would forego all revenue and profit from the sale of every e-book until an agreement is reached.

• Amazon would also return to normal levels of on-hand print inventory, return to normal pricing in all formats, and for books that haven’t gone on sale yet, reinstate pre-orders.

Here’s an example: if we sell a book at $9.99, the author would get the full $9.99, many multiples of what they would normally get. We can begin implementing this arrangement in 72 hours if Hachette agrees.

We haven’t sent this offer to Hachette yet — we’re sending this to a few authors and agents to get feedback first.

What do you think?  Would this be helpful, especially for midlist and debut authors?

Can we talk on the phone later today or tomorrow once you’ve had a chance to digest?

Thanks and look forward to talking.”

Now surprisingly, Hachette was not amused by this letter and refused the offer. They offered this statement:

Amazon has just sent us a brief proposal.  We invite Amazon to withdraw the sanctions they have unilaterally imposed, and we will continue to negotiate in good faith and with the hope of a swift conclusion. We believe that the best outcome for the writers we publish is a contract with Amazon that brings genuine marketing benefits and whose terms allow Hachette to continue to invest in writers, marketing, and innovation.  We look forward to resolving this dispute soon and to the benefit of the writers who have trusted their books to us.”

But Amazon is clearly not interested in folding. Not only did they confirm the offer is completely serious, they made the point that Hachette is now hurting their own authors:

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.”

From there, it will be up to the authors to speak to their publisher, but we can expect this feud to continue for a long, long time. Clearly, neither side is willing to budge and while Amazon's offer may be genuine, essentially giving books away is also adding insult to injury when it comes to pricing negotiations with Hachette.

This article is from the archive of our partner The Wire.