Amazon Says Not Optimistic on Dispute With Hachette

Amazon.com Inc. (AMZN) said it is “not optimistic” that a dispute with publisher Hachette Book Group will be resolved soon and added that it is acting “on behalf of customers.”

The comments, which Amazon made yesterday in an online post, are the first extensive remarks by the world’s largest online retailer about its skirmish with Hachette over digital-book prices. The spat, which came to light in the past week, has resulted in Amazon blocking pre-orders for some of the publisher’s forthcoming releases. Among the books caught in the dispute is “The Silkworm,” the new novel by J.K. Rowling, writing under the pseudonym Robert Galbraith.

“Negotiating for acceptable terms is an essential business practice that is critical to keeping service and value high for customers in the medium and long term,” Amazon said in its post.

At the center of the conflict is the growth of the e-book market and how Amazon and Hachette both want their share of it. While physical book sales in the U.S. are projected to fall to $19.5 billion this year from $26 billion in 2010, e-book sales are anticipated to jump more than eightfold to $8.7 billion, according to Forrester Research. The growth is being spurred by the increasing consumer use of tablets and smartphones, through which people read e-books.

Photographer: Kevork Djansezian/Getty Images

Kindle electronic readers are stacked at Amazon's San Bernardino Fulfillment Center in San Bernardino, California. Close

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Photographer: Kevork Djansezian/Getty Images

Kindle electronic readers are stacked at Amazon's San Bernardino Fulfillment Center in San Bernardino, California.

60 Percent

Seattle-based Amazon dominates e-book sales with 60 percent of the market, according to Forrester. The company also helped pioneer the e-book market with the introduction of the Kindle e-reading device in 2007.

Arnaud Nourry, Hachette Livre chief executive, today said he’s still hoping for an agreement within “a few weeks.”

“We’re not in the business of fighting against retailers,” Nourry said during a presentation at an investor day hosted by France’s Lagardere SCA (MMB), owner of Hachette, in Paris. “All our energy is dedicated to finding a solution with Amazon as with any other retailer.”

In a statement today, Hachette said it would “spare no effort to resume normal business relations with Amazon” under terms that appropriately value the writer and publisher. The publisher would follow an agreement by then discussing how to compensate authors for the damage inflicted by the online retailer, said Sophie Cottrell, a spokeswoman for Hachette.

Sarah Gelman, a spokeswoman for Amazon, declined to comment yesterday.

In its post, Amazon said the dispute with Hachette affects only a “small percentage” of its merchandise and said it had offered to Hachette to fund 50 percent of an author pool to mitigate the impact on writer royalties.

Hachette, a New York-based arm of Lagardere’s publishing unit Hachette Livre, includes Grand Central Publishing, Hyperion Books and Little, Brown & Co.

To contact the reporters on this story: Pui-Wing Tam in San Francisco at ptam13@bloomberg.net; Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Ben Livesey, Mark Beech

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