The Amazon Hachette Dispute Comes to a Pyrrhic End

As the Epirot Illyrian general
Phyrrus demonstrated, winners
can be losers too. 
Image source: Wikipedia

Amazon and Hachette announced a settlement this week in their long festering contractual dispute.  I'm glad it's over.  As I discussed in a NINC interview last month, the dispute evoked a lot of unnecessary ugliness in certain quarters of the indie author community.

At the heart of the dispute was the Agency pricing model for ebooks, which meant it was a battle was over pricing and margin.  According to most press accounts, Hachette wanted the freedom to set consumer prices and earn 70% list for its ebooks, and Amazon wanted to pay Hachette lower margins so it could fund deeper discounting.  I covered the dispute back in May here at the Smashwords blog.

According to carefully worded statements this week by Amazon and Hachette - neither of which boasted of victory - Hachette will retain Agency pricing control yet conceded to certain unnamed Amazon demands that will incentivize lower pricing from Hachette.

It's not easy to pick winners and losers.  As with most wars, even winners can be losers.

Here's my attempt to examine the winners and losers of this episode, along with speculation on long term implications.

Hachette *mostly* won, but is now boxed into a position where faithful authors will expect higher net royalty rates for ebooks as well as other perceived reforms from publishers.  The Author's Guild has already hinted as much.  In a blog post this week commemorating the agreement, Authors Guild president Roxana Robinson took the opportunity to urge Hachette to raise ebook royalty rates for authors.

Amazon mostly lost, because it appears Agency wasn't dismantled or critically injured.  Amazon will likely seek revenge through other means (see below).

Agency mostly won. It dodged a bullet to the benefit of publishers and indie authors alike, and to the benefit of Amazon's retail competitors.

Amazon mostly lost on the PR front.  Amazon's heavy handed tactics confirmed the industry's worst fears about Amazon.  Word of Amazon's heavy-handedness leaked out into the mainstream media where it probably tarnished Amazon's otherwise pristine image in the minds of consumers who were paying attention.  Amazon dare not replay the same overt tactics again unless it wants to rip the scar off of the bloody putrid mess and invite people to connect dots back to the Amazon/Hachette dispute.

Amazon boxed in.  Just as Hachette is boxed in with expectations of payback from their defenders, so too is Amazon.  If Amazon puts the squeeze on indie authors and their 70% list, their supporters will cry foul ("Hey, I defended you like a loyal pit bull in your dispute with Hachette!")

Author affinity for publishers damaged.  Amazon partisans orchestrated a rage-fest against traditional publishers, further eroding the once divine reputation of traditional publishers. Amazon partisans used this dispute as an opportunity to paint all publishers with the broad brush that publishers don't care about authors, want to exploit authors, want to overcharge customers for ebooks to protect their print businesses, collude on pricing, and who knows what else, strangle puppy dogs?  All good conspiracies are grounded in a small amount of truth.  Yes, no doubt, publishers have much opportunity to bring reforms that benefit authors, though I thought the vitriol was excessive.  I also believe that indie authors are well-served by a thriving and profitable traditional publishing industry because it creates more publishing options for all authors.  When indies go too far to tear down publishing houses, they risk tearing down their own house as well.

Authors attacking authors.  Successful traditionally published authors who stood by publishers were attacked.  This, to me, was one of the most unfortunate outcomes.  When authors are attacking authors, you know the world has gone mad.  It was all the sadder that most of these attacks came from the indie author community.  Indies should be better than this.

Any perceived victory for publishers will likely prove Pyrrhic. The Hachette agreement, which was itself preceded by Simon & Schuster reaching new terms with Amazon, will likely be followed by other publishers striking similar deals now that the goal posts are planted in the ground.  To the extent Amazon feels it was forced to settle, this settlement will dredge up their bitter memories of the time publishers forced Amazon to move to Agency in 2010.  Amazon doesn't like it when others exert power over it.  Can you blame Amazon?  No one appreciates feeling powerless.  Amazon prefers its supplier frenemies divided, conquered and dependent. If it can't crush Agency, it will try to neuter the publishers who use it. It views publishers as fat middlemen to be disintermediated, their fat to be rendered away and conveyed to the bellies of customers. Although Amazon's ability to replay their heavy-handed Hachette playbook is limited, I expect they'll exact a different type of revenge in the form of discoverability and merchandising. Think of it as passive-aggressive. Amazon will redouble efforts to undermine the power of publishers by diverting more reader eyeballs to indie books in KDP Select and Kindle Unlimited, and to Amazon imprints that are exclusive to Amazon.  Amazon has every right to arrange their own shelves. Let's call it the cloak of invisibility that no author or publisher wants to wear.

Like with most battles, all combatants lost a little something in end.  Here's wishing the industry greater peace and prosperity in the future.