In its second-largest acquisition, Amazon buys the company for $970 million.
The e-retailer and book publisher still don’t agree on terms for e-book sales.
Consumers hoping to preorder “The Silkworm” from author Robert Galbraith—a pen name of Harry Potter creator Joanne (J.K.) Rowling—will likely want to avoid placing their orders via Amazon.com Inc., which is embroiled in a pricing dispute with the book’s publisher, Hachette Book Group. But there are no signs that the contract fight will broadly impact consumers or Amazon suppliers, e-commerce experts say.
Amazon, No. 1 in the 2014 Internet Retailer Top 500 Guide, said this week it does not expect to quickly come to agreement with the publisher over terms for Hachette titles, reportedly including the prices of e-books for the retailer’s Kindle devices. Amazon has stopped pre-orders of some Hachette titles and delayed shipments of others. The dispute reportedly affects some 5,000 books. Neither Amazon nor Hachette, which is part of Lagardère Group, offered immediate comment today. “If you order 1,000 items from Amazon, 989 will be unaffected by this interruption,” the e-retailer says in a statement. “If you do need one of the affected titles quickly, we regret the inconvenience and encourage you to purchase a new or used version from one of our third-party sellers or from one of our competitors.”
“In addition to royalties, (authors) are concerned with audience, career, culture, education, art, entertainment, and connection," Hachette said in a statement. "By preventing its customers from connecting with these authors' books, Amazon indicates that it considers books to be like any other consumer good. They are not."
For Amazon’s part, its statement also reads: “We've offered to Hachette to fund 50% of an author pool—to be allocated by Hachette—to mitigate the impact of this dispute on author royalties, if Hachette funds the other 50%. We did this with the publisher Macmillan some years ago. We hope Hachette takes us up on it.” Amazon also credited Hachette with operating in “good faith.”
Do consumers care? Probably not, says Forrester Research Inc. analyst Sucharita Mulpuru. “I don't think most consumers have any idea what's going on so I don't think this will matter,” she says.
Indeed, consumers might applaud Amazon’s efforts to win lower prices for Hachette e-books, says Scot Wingo CEO of U.S.-based ChannelAdvisor Corp., which helps retailers sell through online marketplaces such as Amazon and eBay Inc. “I read Amazon's post and came away (as a consumer) liking the messaging that they are fighting for lower prices on Kindle books,” he says. “Sometimes I see these books that (cost) more on Kindle than print and that just makes no sense and you can tell that it must be the publisher doing that.”
Amazon, which is also No. 1 in Internet Retailer’s newly published 2014 Europe 500, appears unlikely to alienate any suppliers or marketplace sellers because of its dispute with Hachette, which became public earlier this month but whose roots stretch back at least four years. The agreement follows that Apple Inc. had made with major publishers, allowing the publisher to set the price of electronic books instead of Amazon, which had been pricing e-books low as a way to promote sales of its Kindle reader. “I think at this point no one gets into a relationship with Amazon naively thinking Amazon is there to help them,” says Mulpuru. “Amazon wants access to product and can drive volume for any company but it comes at a high price—everything from being disintermediated to underpriced to shut out. There is a risk to relying on Amazon, perhaps worse than on any other retailer. But didn't everyone know that even before the Hachette incident?”