Hachette cuts jobs in U.S. amid e-book dispute with Amazon

Hachette Book Group is laying off three per cent of its staff in the U.S., about 28 workers, amid a dispute with Amazon that has seen the online retailer limit access to its books.

Hachette, whose authors include J.K. Rowling, Stephen Colbert, Malcolm Gladwell and Emma Donoghue, said the layoffs were a result of a "changing marketplace" for books.

Its parent company, French conglomerate Lagardère, reported a 6.2 per cent drop in worldwide sales for the first quarter of this year.

• E-book prices could drop under Competition Bureau pact
• E-book prices spark battle between publishers, retailers

Hachette’s dispute with Amazon is over e-book pricing, with the online retailer demanding publishers charge a lower price for digital books, which comprise a 30 per cent share of the publishing marketplace.

Amazon ...wants to control bookselling, the book business and book publishing- Author James Patterson

Amazon has blocked advance orders of Hachette books such as Rowling's The Silkworm and delayed shipments for publications such as for Colbert's America Again in an effort to get Hachette to come to terms. Hachette has said about 5,000 titles are affected.

The dispute over e-book pricing comes after a 2012 government lawsuit against Hachette and four other publishers, alleging that they conspired with Apple to fix e-book prices. Hachette settled out of court in the case and a federal judge ruled against Apple last year.

Before the lawsuit, the publishers set e-book prices on Amazon.  

James McQuivey, principal analyst at Forrester Research, said Hachette is fighting a battle on behalf of the small group of big publishers who dominate the book business worldwide.

“Amazon is one of the largest booksellers in the world, both e-books and physical and they are a target for publishers like Hachette who want to make sure they don’t get too powerful,” he said in an interview with CBC’s The Lang & O’Leary Exchange.

Publishers are having a hard time making enough money from the reduced royalties they receive from e-books, while Amazon has effectively grabbed a huge share of the publishing market with discounted prices.

"Amazon is both friend and foe to publishers because they control so much of the sales of these books and they do it on their own terms," McQuivey said.

"They actually look at a book that you buy as an opportunity to deepen a relationship with you as a customer. If they lose money on that book, they’ve run the numbers and they know that they’re going to make money on the 42 other things you buy this month," he added.

That could be ruinous for publishing.

"As a publisher you don’t want that. You don’t want consumers thinking that a nice, first edition, bestselling hardback book which is supposed to go for $24 is really only worth $9.99," he said.

However, Hachette said its layoffs were planned before the Amazon dispute and were needed to maintain the company’s "resilience."

Hachette authors react

Meanwhile, Hachette's biggest authors are tearing a strip off Amazon for its tactics.

Harry Potter author Rowling, whose The Silkworm is published under the pen name Robert Galbraith, tweeted to followers that there are "lots of ways to order" her novel in the U.S.

Colbert also made a concerted effort during The Colbert Report earlier this week to direct consumers to retail outlets other than Amazon.

Saying that he's not just mad at Amazon, but "mad prime," Colbert flipped his middle finger at Amazon during the show and interviewed another Hachette author, Sherman Alexie.

Alexie, recommended debut novel Edan Lepucki's California and urged viewers to buy it from independent bookseller Powell's Books in Portland, Oregon.

Colbert also unveiled a sticker, "I didn't buy it from Amazon," that could be downloaded from his website thecolbertreport.cc.com and placed on America Again.

James Patterson, one of the world’s best-selling authors, called Amazon’s business practices “a national tragedy,” saying it was “out to control shopping” in the U.S.

“Amazon ...wants to control bookselling, the book business and book publishing,” he said.

McQuivey called the many author statements part of a "PR war" that Hachette seems to be waging against Amazon.