Amazon and Hachette kissed, made up, and walked into the sunset hand-in-hand after their ten-month dispute over ebook pricing. That’s what the spin doctors want you to think when you read the statements issued by each company yesterday and the followup press reports, but it’s impossible to believe that the fires of resentment and future conflict aren’t seething in the c-suites of both companies. Hachette may have won the engagement, but the war is far from over.
Here’s the issue: Amazon wanted to set ebook prices on its website; Hachette wanted to set them itself. In a version of single combat worthy of Game of Thrones, Amazon landed the first blows when it pulled features such as overnight delivery of Hachette books. Not for the first time, Amazon used its market power to pressure a supplier to sell on best terms. Hachette took the rare step of publicly crying foul, and pursued a boxing-like jab-jab-jab strategy to wear down its opponent. Meanwhile, it egged on a loud chorus of ringside authors in an attempt to shame the champion into lowering its guard, leaving it open to a knock-him-on-his-arse blow.
Pundits have awarded the fight to Hachette, which won the right to set its own prices for ebooks, the so-called “agency” model. For its part, Amazon said the deal–terms of which were not disclosed–contains financial incentives for Hachette to keep its ebook prices low, fulfilling Amazon’s oft-stated mantra of low prices for consumers. By this logic, Hachette may be awarded the trophy, but it was Amazon that won on long-run strategy: It can continue to pressure Hachette to steadily lower its prices to Amazon’s preferred levels, its ultimate goal.
Both pugilists came away bloodied and bruised, though the true extent of the damage remains to be seen. Amazon’s public image as a champion of consumers is probably intact, but no major supplier of books or any other goods will look at the company again without trepidation; the 800-pound gorilla is also a bully. Hachette emerges as a whining legacy company unable to adapt to changing circumstances; if it thinks its problem with Amazon is fixed, wait a year or two when the agreement is up for renewal and renegotiation. $10 says Amazon will claim Hachette didn’t live up to the bargain, and it’ll be deja vu all over again.
The authors who supported Hachette, including Authors United, which came across as a shill for legacy publishers, may feel vindicated, but it’s a Pyrrhic victory. The war is Amazon’s to lose, and it’s showing no sign of re-evaluating its long-term strategy. A few have made dubious claims that the dispute cost Amazon revenue, conveniently forgetting that the company has invested heavily in new businesses and technologies, which are bound to cut into profits in the short term. Wall Street is restless, but Jeff Bezos is famous for not caring what the masters of the universe think. One thing is sure: Bezos has lost the cultivated image of author’s champion, but no one should believe that either company is a true friend to writers. Publishing is a commercial enterprise, and if you can’t add to the bottom line, you’re not worth consideration.