Amazon, Hachette Reach Agreement Over E-Book Prices

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Amazon and the Hachette Book Group have finally reached an agreement on the sale of e-books and print books. A dispute over a new contract played out very publicly for months. In the end, Hachette retains the right to set the price of e-books, but Amazon says the agreement includes incentives to keep prices low for consumers. NPR's Lynn Neary has more.

LYNN NEARY, BYLINE: The news came in a joint announcement from both the online retailer and the publishing house. Amazon and Hachette provided scant details of the multi-year agreement. But Hachette CEO Michael Pietsch said, quote, "it would benefit Hachette authors for years to come." Kindle Vice President David Naggar called it, quote, "a great win for readers and authors alike."

JAMES MCQUIVEY: It's about time for Amazon and Hachette to realize that neither of them was really going to win.

NEARY: James McQuivey is an analyst with Forrester Research.

MCQUIVEY: There was no real victory to be had here - not even a moral one - because both of these companies damaged themselves in the meantime while they were holding out against some principle which they have now just conveniently decided to overlook.

NEARY: Amazon said it was fighting for lower prices on behalf of the consumer. For Hachette, it was about both the price and the size of revenue share from e-books.

MCQUIVEY: They feel like Amazon undervalues books. And they made this a cultural issue. How could Amazon want to sell books below prices and then take a large share of that - of that value? And they really objected to that and were going to stand on that issue.

NEARY: McQuivey thinks a couple of things ultimately led to the agreement. Most importantly, just a few weeks ago, Amazon reached a deal with another major publisher, Simon & Schuster. McQuivey says that gave both sides the incentive to become more flexible in the negotiations. Beyond that, he says, both no doubt wanted to resolve the dispute before the all-important holiday season began.

DOUGLAS PRESTON: I'm very relieved. And I'm very relieved on behalf of myself and all my fellow Hachette authors.

NEARY: Writer Douglas Preston. During the protracted negotiations between Amazon and Hachette, he organized a group called Authors United to protest Amazon's tactics, which made it difficult for consumers to buy Hachette books. Hundreds of authors, both unknown and bestsellers like James Patterson, joined his campaign. Preston says the group helped focus attention on the dispute.

PRESTON: I think it also showed Amazon that it couldn't get away with these types of scorched earth tactics anymore - and especially harming authors. I mean, you know, Amazon is welcome to negotiate as hard as it wants. But when it holds authors hostages and sanctions books, that's where I - we feel that they crossed the line.

NEARY: Preston's hopeful that Amazon will not use similar tactics in future contract talks. Amazon still has to negotiate with three major publishing companies, Penguin Random House, HarperCollins and Mcmillan. James McQuivey says it should be much easier to reach an agreement in those cases, assuming Amazon has learned something from its very public battle with Hachette.

MCQUIVEY: It turns out, though, in the long run, this is a small issue for Amazon. Amazon has so many - I'm not going to say better - but bigger things to worry about on its Amazon Web Services front. It's trying to figure out whether it can sell new devices into people's homes. It's really best for Amazon to just deal with all those publishers, give them the same deal Hachette got and move on.

NEARY: In their announcement today, Amazon and Hachette said they will immediately resume normal trading, and Hachette books will be prominently featured in Amazon promotions. Lynn Neary, NPR News, Washington. Transcript provided by NPR, Copyright NPR.