Amazon & Hachette: Just a Guess That It Is the Brave New Old World

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Amazon & Hachette: Just a Guess That It Is the Brave New Old World

Intrinsic Books - Judge Denise CoteThe great sigh of relief at the news that Hachette and Amazon have reached an agreement for Amazon to list and sell Hachette books and ebooks is premature. Details of this new arrangement have yet to be made public. And unless someone leaks the terms they probably never will be. Pronouncements of satisfaction on both sides offer no hints at what wondrous new terms and conditions now govern the business. But one thing is for certain: neither Amazon nor Hachette will have bit the bullet here, so you can be sure the bullet is aimed squarely at authors (and perhaps self publishers.)

There is a great deal of speculation about the terms of the deal and many a blogger has posted copious words. But truth be told, nobody but a few Amazon and Hachette execs know who has been sold down the river. So let’s speculate here and leave it to the future to judge. My best guess is that the new deal offers Hachette a menu of choices to sell through Amazon and Amazon has a variety of conditions to those choices.

Suppose Choice One is that Hachette prices its ebooks where Amazon wants them to be priced, at $9.95 or less. Undoubtedly some new mid-list and many backlist titles will fit the bill. In this instance, Amazon lists and sells the titles and they pay the standard agency split on revenue, 70% to Hachette and 30% for Amazon. And the title is available for every Amazon promotional and marketing program and even automatically enrolled in some for free.

Choice two is that Hachette prices the ebook a little higher than Amazon wants – higher than $9.95 but less than $13.00. Amazon must exact a penalty if Hachette ignores their pricing dictum, and so the title might not be available for all Amazon promotions and the revenue split on a sale might be different, say 67% to Hachette and 33% to Amazon.

Choice three or four, etcetera, will continue in this vein, until the ebook over $25 is a God-awful deal for Hachette, perhaps with limited advance sale periods, and with splits in the 60%/40% or even 50%/50% range.

And so on. Now, to be clear, nobody has said such a scale exists and nobody has leaked any scale yet. But if there is a scale it is likely to be multi-tiered as Amazon is all based on numbers analysis.

Any deal will also allow Amazon to discount titles when they choose, especially bestsellers. Amazon will continue to make bestsellers break even or loss leader titles. No joy at indy booksellers over this.

So publishers (S&S and Hachette) and Amazon proclaim a brave new world. Authors get their prime ebook channel back on line and all is well. So how does the author lose? Hachette and S&S have said that the percentage the author gets from ebook sales revenue will not change! Hurrah! Except it is quite likely the amount Hachette receives from Amazon for the ebook sale could be less than it was before. So the 25% of net revenue Hachette gives authors for an ebook sale (a number that should rightly be 40% or 50%, even on a sliding scale) will be 25% of a smaller amount.

After all the crap, it sounds much like business as usual to me. Except the author could be a little worse off than before. Let’s see what happens if Amazon changes terms with self publishers. There’s money to be clawed back in that arena and my guess is Amazon has their eyes on it. Same Old Brave New World.

For further thought on the subject, there is always excellent analysis of publishing happenings at Mike Shatzkin’s blog, ideologue.com. His entry on the Hachette / Amazon deal is here:
http://www.idealog.com/blog/amazon-hachette-settled-will-big-bang-change-publishing-business-model/

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