The biggest online retailer in the world, Amazon.com Inc., managed to resolve its misunderstandings with Hachette Book Group over the traditional and digital books sale through a multiyear agreement at the home market of the e-commerce company. The deal is to take effect in early 2015.
Sarah Kahn, an analyst at IBISWorld, commented on the deal for Bloomberg: “It definitely shows the large publishers that they can have some impact, even if the smaller ones can’t publicly battle Amazon. It showed a little bit of Amazon’s weakness.”
The two companies announced that they have agreed Hachette to set consumer prices of its e-books. Hachette will be also provided with the opportunity to benefit from “better terms” in the cases when it offers lower prices to customers.
The deal puts an end to the dispute, which was brought about after Amazon blocked pre-orders for some of Hachettes books earlier in 2014, because of misunderstandings over the books prices, right before the holiday shopping season. Currently Amazon dominates the e-book sales by holding almost 60% of the market.
Both Amazon and Hachette made compromises in order to set the differences and put an end to the dispute. Under the terms of the deal, normal trading will be resumed immediately, and titles provided by Hachette would be “prominently featured in promotions”.
As reported by the Financial Times, the Chief Executive Officer of Hachette, Michael Pietsch, sent a letter to authors, saying that the agreement with Amazon was “a very positive development as we head into the holiday shopping season”.
However, the companies refused to make their executives available for further comment on the agreement reached.
Amazon.com Inc. was up 1.60% to close at $316.48 per share yesterday, marking a one-year decrease of 11.16%. The company is valued at $144.23 billion. Amazons shares traded at €255.00 in Frankfurt as of 8:21 GMT. According to CNN Money, the 37 analysts offering 12-month price forecasts for Amazon.com Inc. have a median target of $350.00, with a high estimate of $450.00 and a low estimate of $296.00. The median estimate represents a +10.59% increase from the last price of $316.48.
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