Amazon 'Not Optimistic' It Will Resume Selling Hachette Books Normally Soon

Authors Guild Says Amazon is Abusing Market Power

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Where Amazon would ordinarily take a pre-order on J.K. Rowling's new book (written under a pseudonym), it now says the book is unavailable.
Where Amazon would ordinarily take a pre-order on J.K. Rowling's new book (written under a pseudonym), it now says the book is unavailable. 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 ordering fewer print copies of existing Hachette books blocking pre-orders entirely 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, which Amazon says is "currently unavailable."

"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.

The Authors Guild told The New York Times last week that it believed Amazon was acting illegally. "Amazon clearly has substantial market power and is abusing that market power to maintain and increase its dominance, which likely violates Section 2 of the Sherman Antitrust Act," Jan Constantine, general counsel at the Guild, told the Times.

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.

Seattle-based Amazon dominates e-book sales with 60% 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," Mr. Nourry said during a presentation at an investor day hosted by France's Lagardere, owner of Hachette, in Paris. "All our energy is dedicated to finding a solution with Amazon as with any other retailer."

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% 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.

In a statement on May 23, Hachette said it was doing everything in its power "to find a solution to this difficult situation, one that best serves our authors and their work, and that preserves our ability to survive and thrive as a strong and author-centric publishing company." Mr. Nourry said today he saw no impact on Hachette's sales and profit from the dispute.

~ Bloomberg News with Ad Age staff ~

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