Amazon, Hachette reach deal. So how big is the world of e-books?

Amazon and Hachette's dispute over e-book pricing reveals how important these digital sales are to the future of the publishing industry.

Amazon.com/AP/File
Amazon's Kindle e-reader next to a stack of books. Amazon has ended its longstanding feud with Hachette Books and reached a mutli-year deal, the companies announced Thursday, Nov. 13, 2014.

Amazon and Hachette Book Group resolved a months-long dispute last week involving e-book pricing. The agreement gives Hachette the ability to set prices for its e-books and addresses the sale of both physical and digital books through Amazon, according to Forbes. Hachette’s published works include popular authors such as James Patterson and Nicholas Sparks.

Both sides argued that they were fighting for the greater good. Last spring, in an official post by the Amazon Books Team, Amazon emphasized the importance of keeping “value high for customers in the medium and long term” when negotiating terms with a supplier. A statement from Hachette a few months later highlighted Hachette’s desire for an outcome that would best serve writers.

As negotiations broke down, Amazon removed the pre-order button on Hachette titles from its website and stocked fewer Hachette-published books, causing longer wait-times.

Retailers and suppliers negotiate contracts all the time – why did this dispute garner so much media attention? In the world of books, how big a deal is this agreement?

E-books arrived on the US book scene around 2007 and since then have grown to be about 30 percent of total book sales. More than a quarter of American adults read an e-book in the past year, whereas 69 percent read a print book, reports the Pew Research Center.

While the publishing industry has contracted over the past few years, books still represent the world's largest entertainment industry, according to consulting firm Rüdiger Wischenbart's Global eBook Report. At $151 billion, books and textbooks still rake in more money than movies ($131 million), magazines ($107 billion), video games ($63 million), and music ($50 billion).

Within the publishing industry, Hachette is one of the “Big 5” publishing houses. Its recent agreement is similar to the multi-year contract Amazon negotiated with Simon & Schuster, another of the “Big 5.” But since these negotiations are usually secret, there's no word on Amazon's contracts with the other three major publishing houses: HarperCollins, Macmillan, and Penguin Random House. 

How important are e-books to Hachette? Right now, e-books account for approximately 10 percent of Hachette’s total revenues, and Hachette expects that contribution to increase to 25-35 percent by 2017.

More than half of these digital sales come from a single source: Amazon. Hachette isn’t alone in depending on “the everything store” for distribution of e-books. A New Yorker article from earlier this year reported that Amazon makes up 65 percent of the e-book market in the US. 

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.