How I Think Amazon / Hachette Will Play Out

To me, it’s this simple…

Back before Amazon, a publishing company like Hachette had a nice, comfortable business relationship with retailers like Barnes and Noble, Borders, etc…

Things hum along, and Hachette had a comfortable time “setting” prices through the retailer.

That should have been Barnes, Borders etc… actually setting the prices, and at times they DID “set” the price… on physical material (printed books).

Then Amazon came along, another retail store, but this time using the Internet to distribute books at first, then merchandise etc…

Amazon. Is. A. Retailer.

Hachette. Is. Not.

Amazon sets prices, Hachette does not set Amazon’s prices.

If Hachette doesn’t want to sell its books through Amazon (again, retailer), it doesn’t have to. And that includes ebooks.

Ebooks are products sold in Amazon’s store. Hachette can suggest price, but if they want to sell through Amazon, Hachette gets to sell at Amazon’s price.

To me, it’s that simple.

Hachette used to be comfortable because the retailers it used to (and still does) deal with were okay selling at prices it had a “say” in.

Now, Hachette is uncomfortable, because Amazon, a retailer who sells more than just books, wants to sell (distribute) Hachette’s merchandise at a price Hachette is not comfortable with.

But in the end, it’s too bad.

Amazon will sell at a price it feels will be best for its business and its profits (or business model, with little profit), period. 

If Hachette doesn’t want to use Amazon, it doesn’t have to. It can sell its finished product through other distribution channels (and retailers).

But Hachette wants it both ways, it wants to “be comfortable” and sell its product at a price that benefits its business, and its profits (or business model).

Amazon’s retail business model isn’t a good fit for Hachette as a manufacturer (and wholesaler?). That’s why I think this whole debate exists.

Amazon is having “patience” that I don’t think it will keep having for long … it hasn’t yet cut ties with Hachette.

(because Hachette does produce a good product, and Hachette does so BECAUSE of good authors and their reader following)

I’m guessing that if Hachette’s “leverage” in this negotiation slips at all (its authors and their reader following like Patterson, Preston etc…) then Amazon will correct.

I think Amazon is “algorithmic” in a way, in the way it conducts business. So if the “computer” says there are “plenty of books in the sea” (which are being created by self-published authors and other traditionally published authors not with Hachette) … I think a major shift will occur.

And the price will, in the end, be determined by market forces in this particular case.

Left as a comment on this post.

Advertisements