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The battle between Amazon and the French publisher Hachette is not just a spat about the price of books. Their row over ebook prices, which led to the online retailer freezing out pre-orders of Hachette books and has provoked angry words from authors such as Donna Tartt and Phillip Pullman, could determine the next chapter of the publishing industry.
On one side is "the everything store" that sold $75bn (£45bn) of goods online last year, from toothbrushes to tents – and is estimated to sell 90% of ebooks in Britain. On the other is one of the world's biggest publishers, whose parent company, French conglomerate Lagardère, earned €7.2bn (£5.8bn) last year from its print and broadcasting empire.
But Hachette's starring role is more than anything a quirk of timing, as all the major publishers face fresh negotiations with Amazon over the coming months. And this latest dispute, which strikes at the heart of their business model, comes as the traditional publishers face changes sweeping through the industry. Independent bookshops continue to close, while mobile games and on-screen entertainment are competing for readers' scarce attention like never before.
Even before the latest dispute, publishers were thinking about how to reinvent themselves, from developing their own digital content to trying to build a direct relationship with readers by hosting author events and using social media. The world's biggest publisher, Penguin Random House, recently launched a social network site for readers, allowing people to showcase their favourite books and buy them from independent stores.
In another closely-watched development, HarperCollins has unveiled a revamped version of its US website, making it easier for fans of Agatha Christie, Chimamanda Ngozi Adichie and David Walliams to buy their titles direct from the publisher.
A new version of the UK website is to be unveiled in the autumn, as the redesign is rolled out across all HarperCollins's English-language sites. The timing of the launch prompted headlines that the initiative was a device to bypass Amazon, but Chantal Restivo-Alessi, chief digital officer at HarperCollins, says she never had any intention of competing with the internet company.
"Do you think I am mad?" she says. "I don't think that's realistic and why would we want to. They are one of our biggest retail partners. We want to create different channels and opportunities for our authors to sell our products."
The HarperCollins site encourages consumers to shop around, providing links to almost two dozen other retailers including Amazon and Apple, often selling the book cheaper. For example, the official autobiography of One Direction was available to pre-order on HarperCollins website for $21.99 in hardback, but a $14.84 version was only a click away on Amazon. While HarperCollins is only selling the book, Amazon is also chivvying browsers to buy the group's albums, wall calendars and posters, post their own reviews and create wishlists.
HarperCollins is not revealing the percentage of sales it is seeking to generate, but Restivo-Alessi says that is not the whole point. "Even if we get a small percentage of sales, that small percentage will give us a better insight into the author's consumer, which will make us a better publisher and provide a better service to our authors."
A secondhand section in a bookshop. 'Books are cultural artifacts', says Tim Godfray, head of the Booksellers’ Association. Photograph: Rob Whitworth/Alamy
Some smaller publishers have already moved into direct sales. When Colin Robinson co-founded OR Books in 2009, he decided to bypass Amazon and sell directly to readers, printing books on demand. He says Amazon would have taken a 60% cut on the list price, money that can instead be spent on advertising and promotion.
OR Books is "handselling" its books, he says, "like the person who works in the bookstore [and] knows you". It is a model that suits the New-York based publisher, which Robinson says publishes books that are "written, edited, reviewed, bought and read by people with sympathy for ideas that are politically and culturally off-piste".
Recent publications include an account of the rise of Isis (Islamic State) in Iraq, by a veteran Middle East reporter and a collection of short stories by Cuban authors. "The future of the business, especially for small to medium-sized publishers, who have got quite targeted audiences for their books, the future is is to sell direct."
But industry watchers doubt that this model would be easy to replicate for a big conglomerate, such as HarperCollins, which sells 40,000 books online, from "hot and steamy" $1.99 novels through to self improvement and cookery.
Douglas McCabe at Enders Analysis thinks large publishers will continue to need the middleman, pointing out that readers don't set out to buy HarperCollins or Penguin books, just as they don't watch a film because it is made by Pinewood Studios.
For now publishers have no choice but to deal with Amazon - the publisher's "frenemy" in the words of Restivo-Alessi. "When it comes to negotiation you are enemies because obviously you are both trying to maximise returns for your business, and in our case our authors … and at other times you are friends because you are both trying to increase the amount of the product."
Road to petition: how the narrative unfolded
The dispute over the price of ebooks flared up in May, when Amazon removed the pre-order button for some Hachette titles, including JK Rowling's latest detective novel.
Some of the book world's biggest names have weighed in against Amazon. Stephen King, Philip Pullman, John Grisham, Donna Tartt and Antony Beevor are among 900 writers who signed an open letter against Amazon.
Last week, almost 1,200 German-language authors, including the Nobel prize winner Elfriede Jelinek, added their names to a similar missive criticising Amazon's tactics against the Stockholm-based publisher Bonnier.
But Amazon has its champions. Almost 8,500 writers, including some of the most popular self published authors, such as Joe Konrath and Hugh Howey, have signed a counter-letter in praise of Amazon for allowing them freedom of expression versus the "self-serving" traditional publishing industry.
Nobel laureate Elfriede Jelinek was one of 1,200 German-language authors to criticise Amazon. Photograph: Rudi Blaha/AP
In a nutshell, Amazon proposes to cap the price of most ebooks at $9.99. It would keep 30% of the proceeds, while authors and publishers will split the remaining 70%. Amazon contends that ebooks are "unjustifiably" expensive, because they do away with the cost of printing, warehousing and transport.
But Hachette's chief executive, Michael Pietsch, accused Amazon of seeking more profit and market share "at the expense of authors, bricks and mortar bookstores, and ourselves".
Douglas McCabe at Enders Analysis questions Amazon's assumption that paper, print and ink is the costliest part of a book. "It is not the most expensive part of the publishing process by any means."
Industry sources support this analysis citing the cost of paying advances, editing, proof-reading, promotion, distribution, legal approval, pictures and design. In the UK a hardback book with no pictures can cost around £1.60 to print; a text-only paperback just 70p.
Champions of Amazon argue that savvy authors will be able to buy editing and marketing services using their receipts from a larger share of the proceeds. But McCabe is not so sure. "Not all of that work is profitable, it is only profitable because it is part of a much larger publishing cycle."
The traditional publishing model means the proceeds from JK Rowling and Stephen King allow a publisher to put out the fourth volume of a little-known poet, he adds.
Booksellers, which have been hard hit by Amazon's steep discounting, are watching anxiously. "Books are more than just consumer products; they are cultural artifacts," says Tim Godfray, chief executive of the Booksellers' Association. "What bookshops don't want is for Amazon's growing competitive advantage to lead to a monopoly which stifles a diverse marketplace for publishing, authors and, ultimately, the consumer."
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