To Agree or Not to Agree: Simon & Schuster Just Did

With so much attention recently given to the Amazon and Hachette dispute over their on going contract negotiations, Tuesday’s news that big five publisher Simon & Schuster had agreed a deal with the Amazon came as something of a surprise to many in the industry. If we were to listen to the anti-Amazon ramblings of New York Times journalist David Streitfeld, you’d swear no one could agree a deal with Amazon. According to Business Insider, negotiations between Simon & Schuster and Amazon were agreed two months ahead the date the current contract expires. The new deal officially kicks in from January 1st, 2015 and covers terms on both e-book and print books.

Simon & Schuster CEO Carolyn Reidy described the multi-year deal as giving the publisher a “version” of the agency model. The publisher will control the price of e-books with some exceptions, but quite what these exceptions are remains to be seen. Amazon, in its negotiations with other publishers, is believed to want the ‘hit’ it takes when discounting titles to its customers to be shared with publishers. In much of the Amazon and Hachette debate over recent months, two critical details are often passed over in an effort to paint the online retail goliath as the unreasonable aggressor. Regardless of how much Amazon discounts a title below the recommended selling price (set by the publisher), the publisher still gets the same agreed revenue, even if Amazon it making a loss. And for all the hoopla over Amazon’s strong-arm tactics (delays in delivery times and removing pre-ordering facilities), the retailer continues to stock and sell Hachette titles even though its existing contract with the publisher expired last April.

It’s hard to speculate on what this means for Hachette, and whether it places them in a stronger or weaker position. When I last discussed this I suggested that none of the big five wanted to be first in the door, or rather out the door with a deal in hand, because it would set a precedence and the framework for any other deal Amazon struck with a publisher. I doubt very much it’s solely down to this and the fact Simon & Schuster stuck a multi-year deal could suggest this is as much about the cost publishers pay Amazon for front-listed titles as it is about Amazon’s discounting.

Amazon may have won the short-term public relations battle with news of the deal with Simon & Schuster, but I still think there is a lot more to play out in the Hachette deal. It’s quite possible Hachette’s strategy is different to Simon & Schuster and it maybe willing to compromise on the cost of cooperative promotion, but less willing to commit to a multi-year deal.

Mick Rooney – Publishing Consultant

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