Amazon and Simon & Schuster reach a deal – what does this mean for Hachette?

Amazon and Simon & Schuster recently reached a deal on e-book and print book prices and it gives Simon & Schuster control over e-book prices 'with some limited exceptions.' E-book prices are reportedly part of the ongoing dispute between Amazon and publisher Hachette.

As a months-long standoff between Amazon and Hachette continues, Amazon and another Big Five book publisher, Simon & Schuster, have announced a multi-year deal on e-book and print book prices.

The agreement gives Simon & Schuster control over e-book pricing "with some limited exceptions," according to a letter to the publisher's writers, signed by Simon & Schuster CEO Carolyn Reidy. Amazon has also indicated it will promote Simon & Schuster titles on its website, according to news reports.

“We are very happy with this agreement as it is economically advantageous for both Simon & Schuster and its authors and maintains the author’s share of income generated from e-book sales," Reidy said in a statement.

News of the agreement comes as Hachette is locked in an enduring battle with Amazon over e-book pricing. What does this deal mean for the Amazon-Hachette dispute?

It may inspire both sides to strike a deal, according to some sources.

"Perhaps Hachette’s refusal to commit helped inspire Amazon to make an agreement with Simon & Schuster," reported the New York Times. "If so, a deal might inspire a settlement with Hachette."

Adds the Wall Street Journal, "[T]he fact that Amazon reached an amicable arrangement with the publisher could ratchet up pressure on Hachette."

“I think it will serve to make Hachette more frustrated with their inability to make a deal knowing that one of their competitors has reached a deal,” Richard Pine, a partner in the New York literary agency InkWell Management LLC, which represents authors published by Simon & Schuster and Hachette, told the WSJ.

As we reported in an earlier post on the issue, the Amazon-Hachette dispute, which began in early May, centers on e-book terms, including how e-books will be priced and how revenue will be split. Authors have complained of Amazon’s tactics in the dispute, including removing pre-order buttons, reducing discounts offered, and delaying shipment on Hachette titles. As a result, sales of Hachette titles have suffered, in some cases significantly.

As CNET reported, "Hachette accused the company of purposely delaying shipment and using authors as bargaining chips. In July, a group of nearly 900 authors, including heavyweights like Stephen King, Jennifer Egan and John Grisham, signed a letter opposing Amazon's negotiation tactics."

Notably, in her statement on the Amazon-Simon & Schuster agreement, S&S CEO Reidy said, “Our new deal assures that your books will be continuously available for sale at this major retailer through this year’s holiday book buying season and well beyond," a reference to Amazon's threat of hindering sales of certain publishers' books.

For its part, Amazon has argued that it is fighting to ensure it can offer consumers the best prices for e-books.

In addition to its ongoing negotiation with Hachette, Amazon is due to negotiate new contracts with Penguin Random House, Macmillan, and HarperCollins. Its deal with Simon & Schuster may inform its negotiations with these publishers.