Amazon share price up, reaches agreement with Hachette

Amazon.com Inc. struck a new multi-year publishing deal with Hachette Book Group over print and digital books, bringing to an end a dispute started in early May.

The main problem lied in the disagreement on how e-books should be priced and what part of their revenue should each party involved get.

In line with the agreement reached, to take effect in early 2015, Hachette will have the power to set the consumer prices on its titles. Both companies said that the French publisher will get better terms when it “delivers lower prices for readers.”

During the seven months that the dispute continued, Amazon took measures against the French publisher that faced severe criticism from some authors, including delayed shipments and disabled pre-order function on Hachette books.

Hachettes authors also took action during the dispute. The Authors Guild, a leading advocacy group, asked for a meeting with the Justice Department and demanded an investigation into Amazons business practices, saying their sales had been hurt by the retailers hostile measures.

Many self-published authors rushed to Amazons aid, including Tom Knighton, who said: “He’s defending a system that hurts a lot of authors,” referring to James Patterson, one of Hachettes top writers, who recently criticized Amazons practices in a video. “It’s the same system that offers predatory contracts for first time authors.”

With the holiday season coming soon, both companies were under pressure to strike a deal. Additionally Amazon was pushed in a corner by its investors, due to the quarterly loss that the company reported recently, its biggest in 14 years.

However, with the battle over, Amazon said it has resumed treating Hachette the same way as it did before the conflict.

“It’s a victory for Hachette in that they get to set the consumer prices of their e-books, while Amazon wins in that it has given Hachette an incentive to keep prices lower,” said James McQuivey, an analyst at Forrester Research. “This deal should have been done a lot earlier. Emotions took over, and they both began talking like they were protecting the free world.”

Recently Amazon limited pre-orders of physical copies of Walt Disneys and Warner Bros. Studios movies. Later it became known that the companies were having difficulties negotiating over product pricing.

Amazon.com Inc gained 3.58% on Friday on the NASDAQ and closed at $327.82, marking a one-year decrease of 10.77%. The company is valued at $151.78 billion. According to the Financial Times, the 36 analysts offering 12-month price targets 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 6.77% increase from the last price of $327.82.