For more than three months now, the online retailing giant Amazon has been locked in a feud with the publishing company Hachette, which is part of the French media group Lagardère. At first, the feud seemed to start as a pricing dispute over e-books distributed by Hachette. Soon, the disagreements began to multiply and cover even more issues, leading to drastic courses of action by both companies. Booksellers everywhere are nervously anticipating this battle, for whatever decision the two rivals come to will set an important precedent for the relationship between Amazon and publishers. However, it is unclear when this war will end.
The feud started over the already controversial issue of the pricing of e-books by retailers. Amazon is well known for its low prices and discounts, which is part of what makes it so popular. Usually, there is no problem with retailers putting discounts on hard copies of books, since these are ordered directly from the publishers and become personal property of the retailer. However, the radically different format and prices of e-books puts this general practice into question, and publishers want a stronger say in how their e-books are sold. This began the initial dispute between Amazon and Hachette. However, Amazon soon started messing with hard copy Hachette books by increasing the prices, lengthening the shipping time, removing the pre-order button for upcoming titles, and sometimes just refusing to sell certain books. Hachette, one of the largest publishing houses in America, sells works by authors from J.D. Salinger to J.K. Rowling, and its highly popular selection ensures that most of its books will still be purchased despite setbacks. However, if Amazon continues to tighten its grip on the company, it could lead to a major loss of revenue for Hachette and put it at an extreme disadvantage in the negotiations.
Amazon, after all, is currently the largest seller of books in the country, accounting for over half of total book sales. Its almost monopolistic control on the publishing industry ensures that publishers will continue to use its services for the selling of their books. There are, of course, e-books sold by other big companies including Barnes & Noble, Apple, and Google. However, Barnes & Noble has steadily been losing revenue in its e-book service, Nook, over these past few quarters, and Google's presence in the e-book market has been nothing particularly outstanding. Apple, while also not a big presence in the e-book market, is nonetheless a noteworthy player: a case popped up last year in which five of the world's biggest publishers, including Hachette, had conspired with Apple in fixing e-book prices so that prices would be the same all across their retailers. The publishers' cases were shut down, and they were forced to redo their contracts with their retailers, which ended up blurring the line of power over e-book prices. Despite the loss, Apple argued in favor of their their actions, mainly in the claim that this helped reduce the power of Amazon over publishers.
As a result of all this, the fight between Amazon and Hachette becomes important, for the precedent it sets will determine the future of the relationship between Amazon and the already-suffering publishing industry. There is much risk at both sides. If the much smaller Hachette wins and Amazon loses, it will be a huge boon to publishers, who will gain the upper hand in its dealings with retailers. Even more significantly, Amazon's reputation will have much to recover from; already, it has been blasted by authors, publishers, and the general press for its action. The company, known for its low prices and bargaining ability, may falter in its position as the web's best retailer. However, if Hachette loses, it will be hard for the publishing industry to even be able to bounce back to its meager position now. Publishing houses will most likely not take stands against Amazon as Hachette is doing now, and thus if Amazon continues its current practice of sharp discounts for books, the publishing industry's revenue will inevitably drop further.
The question now is when this long battle will finally end. Hachette has attempted to gain a firmer footing by acquiring the Perseus Books Group, one of the largest trade publishers in the U.S. Meanwhile, Amazon has recently made an offer to Hachette to have all of the publisher's books available on its website while the dispute continues, on the condition that authors will get all of the revenues from the sales of their books. Hachette is uneasy about accepting this proposal, and prefers resolving the dispute as quickly as possible.
Who do you think should win this battle? What do you think is the future of Amazon and the publishing industry?