Jeremy Steinberg
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Jeremy Steinberg in Deals, M&A and more!,

Amazon and Simon & Schuster reach compromise deal

The tug of war between Amazon and one major book publisher just ended -- and both sides are declaring victory.

The publisher is Simon & Schuster, a unit of CBS Corporation, which had been locked in negotiations with Amazon for upwards of three months.

In signing the deal, Amazon has rid itself of one thorny negotiation. But its too early to say whether the company will enjoy improved relations across the publishing industry -- or soon find a way to resolve its six-month dispute with another big publisher, Hachette.

CBS Corporation (CBS) CEO Les Moonves revealed that Simon & Schuster was negotiating with Amazon back in July.

"Obviously Amazon has a very definitive point of view on what should be done in the publishing business," Moonves said at the time. "Those in the publishing world are not totally copacetic with it."

Amazon (AMZN, Tech30) wants lower prices for books, particularly e-books, because it believes that will stimulate more sales, to the benefit of both its bottom line and the publishers' bottom lines.

In a statement on Monday, after Business Insider reported that a deal had been struck, Amazon indicated that it made progress on the price front, saying that "the agreement specifically creates a financial incentive for Simon & Schuster to deliver lower prices for readers."

Both Amazon and the publisher said they were "very happy" with the deal.

Carolyn Reidy, Simon & Schuster's CEO, said the agreement is "economically advantageous for both Simon & Schuster and its authors and maintains the author's share of income generated from e-book sales."

Reidy sent a letter to the publisher's authors and the agents that represent them, stressing that the deal will ensure their books will be "continuously available" through the holiday season and beyond.

She needed to say that because in its feud with Hachette, Amazon has disadvantaged certain titles by delaying shipping and disallowing pre-ordering. (Full disclosure here: Hachette published my book "Top of the Morning" in 2013. In an illustration of the dispute, the hardcover edition is delayed "1 to 3 weeks" on Amazon but available immediately through other websites.)

Reidy also said that with some exceptions, Simon & Schuster will have control over the pricing of its e-books -- a major point of contention in the industry -- "while providing us the flexibility to deliver great prices for readers."

Could both sides have really come away feeling good about the result? Maybe so -- it could be a compromise in the best sense of the word. But it won't quiet the complaints about Amazon's behavior, most recently from The New York Times columnist Paul Krugman in a Monday op-ed.

"By putting the squeeze on publishers, Amazon is ultimately hurting authors and readers," Krugman wrote. He concluded that "what matters is whether it has too much power, and is abusing that power. Well, it does, and it is." 

http://money.cnn.com/