Amazon courts Hachette authors by proposing they keep e-book revenue

SAN FRANCISCO Tue Jul 8, 2014 6:37pm EDT

A zoomed illustration image of a man looking at a computer monitor showing the logo of Amazon is seen in Vienna November 26, 2012.  REUTERS/Leonhard Foeger

A zoomed illustration image of a man looking at a computer monitor showing the logo of Amazon is seen in Vienna November 26, 2012.

Credit: Reuters/Leonhard Foeger

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SAN FRANCISCO (Reuters) - Inc proposed that Hachette Book Group authors keep 100 percent of revenue from e-book sales while the two sides work through a thorny contract dispute that has kept some of the publisher's books off Amazon's website for months.

That offer was rebuffed by Hachette, the fourth largest U.S. book publisher owned by France's Lagardere, according to a statement shared with the Wall Street Journal. In its own statement, Amazon countered with "We call baloney."

At the center of the highly charged dispute is the price Amazon can charge for e-books. Earlier this year, Amazon delayed delivery of some Hachette titles, including sought-after print versions and, at one point, it removed a pre-order option for "The Silkworm," by Harry Potter author J.K. Rowling writing as Robert Galbraith.

Hachette did not respond to Reuters' request for comment.

Amazon, in a letter to authors and agents seen by Reuters on Tuesday, portrayed its proposal as a windfall for writers.

Amazon also said it tried to re-negotiate terms with Hachette in January, but heard nothing back until it began cutting back print inventory and reducing discounts on its websites.

"Unless Hachette dramatically changes their negotiating tempo, this is going to take a really long time," Amazon said in the letter. It reiterated key points in a separate statement later on Tuesday.

"Hachette is part of a $10 billion global conglomerate," it said. "It wouldn't be 'suicide.' They can afford it."

What's clear is "they absolutely want their authors caught in the middle of this negotiation because they believe it increases their leverage," Amazon said. "Our offer is sincere. They should take us up on it."

Amazon's actions have alienated authors including top-sellers James Patterson and Malcolm Gladwell, who mocked the situation in a spoof video posted on this week.

Both companies have remained quiet on details of the talks. During a July 1 panel discussion at the New York Public Library, one literary agent likened the situation to waiting for surgeons to finish operating on a loved one.

When the Amazon letter was written to authors, the e-commerce giant had not yet broached the revenue proposal with Hachette. Typically, Amazon, Hachette and authors would share digital book sales in agreed-upon proportions.

Lagardere has said accounts for some 60 percent of Hachette's digital sales.

"Hachette authors would get 100 percent of the sales price of every Hachette e-book we sell. Both Amazon and Hachette would forego all revenue and profit ... of every e-book until an agreement is reached," the letter said.

Amazon's proposal needs Hachette's consent. Should the publisher agree, Amazon said it would return to normal levels of on-hand print inventory, normal pricing in all formats, and pre-order options for books that have not yet gone on sale would be reinstated.

The Journal and the New York Times first reported on Amazon's proposal on Tuesday.

(Reporting by San Francisco newsroom; editing by Andrew Hay and Gunna Dickson)