Amazon offers 100 percent of e-book profits to Hachette authors as dispute rages on

As if the Amazon-Hachette clash over e-book pricing wasn’t already ugly, things just got uglier.

In what some are calling a move to turn public opinion against Hachette, Amazon offered the publisher’s writers 100 percent of e-book profits until the publishing house and online retailer resolve their months-long conflict.

In a letter sent to select Hachette authors, Amazon proposed that both it and Hachette forgo all revenues until a resolution is reached.

Hachette rebuffed the offer, initially calling it “suicide,” and later issued a statement.

“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," the publisher said. 

In a statement, Amazon fired back.

"We call baloney," the statement said. "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." 

At issue in the high-stakes fight is e-book pricing. Amazon is attempting to negotiate its contract with Hachette to achieve a greater share of e-book revenue and lower e-book prices, according to reports. In order to pressure Hachette to the negotiating table, it has previously removed pre-order buttons on forthcoming Hachette titles as well as delayed shipment and reduced discounts on some Hachette books.

Of course, there’s more at stake here. Both sides are grappling to favorably set precedent for the future of the e-book business, which, with much-reduced overhead, has significantly higher profits than print books. As such, publishers, retailers, and, to a lesser extent, writers, have been fighting for leverage.

Amazon’s latest move to give 100 percent of e-book profits to Hachette authors is designed to woo Hachette writers who have been unfairly hurt – in lost book sales and lagging bestseller status – by the thorny dispute.

Amazon said it is trying to “take authors out of the middle” of the dispute. It added that if Hachette agrees to the terms of the proposal, it would 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 preorders.”

The proposal would also “motivate both Hachette and Amazon to work faster to resolve the situation,” said Amazon’s vice-president of Kindle content David Naggar in a letter.

As reported, Hachette swiftly rejected the offer, saying, “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.”

That’s not surprising. As The Wall Street Journal pointed out, the proposal would hurt Hachette far more than Amazon.

“Losing revenue from Amazon's digital book sales would be a big blow to Hachette. Amazon accounted for 60% of the publisher's e-book sales in the U.S. last year....” it reported. "For Amazon, which sells everything from diapers to DVDs, the hit would be marginal, analysts said. ‘Hachette constitutes a very small part of Amazon's business,’ said John Tinker, an analyst at Maxim Group. ‘It's a smart PR move by Amazon.’” 

As such, authors and industry watchers have largely dismissed the proposal.

Bestselling Hachette author and former Authors’ Guild president Scott Turow called Amazon's offer "little more than a publicity stunt,” according to The Washington Post.

"They're asking us authors to load Amazon's guns for them," said Doug Preston, another bestselling author who had penned a letter signed by more than 400 signatories, including bestselling authors like Stephen King, James Patterson, and Robert Caro, asking Amazon to resolve its dispute with Hachette.

(There has also been a rival letter circulating, signed by Amazon self-published authors, criticizing Hachette.)

Another Hachette author Sherman Alexie dismissed the proposal as “a negotiating tactic,” adding, "It's not real. It's just to get people talking."

And it certainly has.

Even in the increasingly tumultuous publishing business, the fiery exchange has surprised onlookers.

“It is rare to see billion-dollar conglomerates engage in this sort of invective,” writes The New York Times. 

“Amazon … has made clear that it’s ready to play hardball,” writes The Washington Post. 

“It seems a bit like a mugger wanting praise for donating stolen goods to a charity,” quips bookstore industry newsletter Shelf Awareness.

The latest salvo also shed some light on the attempted negotiations, with each side claiming that generous offers were ignored or refused.

“On the evidence of their statements, the parties appear light-years apart,” The New York Times observes.

In other words, we don’t expect a happy ending – or any ending at all – for a while.  

Husna Haq is a Monitor correspondent.