Deal Struck, Amazon Lets Hachette Set Its Own E-Book Prices

Resolves Ugly Dispute With Publisher

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Amazon and Hachette Book Group have resolved their dispute over e-book prices and physical book sales with a multiyear agreement in the U.S., ending a standoff that cut off availability of some of the publisher's books by the online retailer and stirred up ugly PR for Amazon.

The deal will take effect early next year. Hachette will have the ability to set consumer prices of its own e-books, but benefit from "better terms" when it delivers lower prices for readers, the companies said in a statement today. Seattle-based Amazon will also prominently feature Hachette books in promotions.

The world's largest online retailer blocked pre-orders for some of Hachette's books earlier this year, including "The Silkworm," a new novel by J.K. Rowling, writing under the pseudonym Robert Galbraith. Amazon has also appealed directly to authors, offering them all of the proceeds from the sale of any digital book in a letter in July.

Amazon dominates e-book sales with 60% of the market, according to Forrester Research. The company also helped pioneer the e-book market with the introduction of the Kindle device in 2007.

A large group of Hachette and non-Hachette authors, however, attached their names to a protest and asked the Justice Department to investigate Amazon's tactics.

"The new agreement will benefit Hachette authors for years to come," Michael Pietsch, Hachette Book Group's CEO, said in the statement.

The deal with Hachette includes "specific financial incentives for Hachette to deliver lower prices," David Naggar, Amazon's VP for Kindle said in the statement.

~ Bloomberg News ~

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