Hachette Joins Macmillan in Pricing Battle

Hachette Joins Macmillan in Pricing Battle

NEW YORK, NY/AUTHORLINK NEWS/February 5, 2010--In a letter to literary agents yesterday, David Young, CEO of Hachette Book Group, said the publisher, like Macmillan, will transition to a new "agency pricing model" for their e-books. The announcement added clout for publishers in pricing wars against Amazon.com.

In the letter Young said Hachette has been considering the model for some time and has now decided to implement the strategy, thus becoming the second major publisher to move to the new model. Macmillan's titles were removed from Amazon.com last week as a protest against that publisher's demand for better pricing.

The agency model lets publishers set their own pricing and provides a commission (reportedly about 30%)to the retailer rather than the old wholesale discount model that applies to print titles. Until now, retailers have given publishers little control over pricing, but publishers are now fighting back.

Young noted in his letter: "There are many advantages to the agency model, for our authors, retailers, consumers, and publishers. It allows Hachette to make pricing decisions that are rational and reflect the value of our authors’ works. In the long run this will enable Hachette to continue to invest in and nurture authors’ careers – from major blockbusters to new voices. Without this investment in our authors, the diversity of books available to consumers will contract, as will the diversity of retailers, and our literary culture will suffer."

He added that "the agency relationship will allow us to make more titles available to more consumers on more platforms. This expands the author’s reach and readership, which is at the heart of what we do as a publisher. Ultimately, these new terms open doors to all online e-book service providers and create more avenues for delivering e-books to readers."

Hachette intends to release HBG e-books simultaneously with the hardcover (or first format print edition).

"It’s important to note that we are not looking to the agency model as a way to make more money on e-books. In fact, we make less on each e-book sale under the new model; the author will continue to be fairly compensated and our e-book agents will make money on every digital sale. We’re willing to accept lower return for e-book sales as we control the value of our product – books, and content in general. We’re taking the long view on e-book pricing, and this new model helps protect the long term viability of the book marketplace."

He said this new model is preferable to withholding books, and is in authors’ and HBG’s best interest.