Photo by Rick Wilking/Reuters

Amazon signs five-year pricing deal with Simon & Schuster

After months of dialogue, Amazon and Simon & Schuster signed a five-year deal for book pricing.

The contract, which both sides have labelled a success, allows the book publisher to set the price of electronic and print books sold on Amazon “with some limited exceptions,” the New York Times reported.

Simon & Schuster’s chief executive, Carolyn Reidy, wrote that the the recently-signed agreement is “economically advantageous for both Simon & Schuster and its authors.”

Now an online behemoth, Amazon had humble beginnings as an online bookstore. In 1994, physical, paper books were its sole offering. From the beginning, the strategy was to price books close to cost to increase sales.

Amazon recognized the power of data and harnessed it to customize purchases. Yet despite collecting the purchasing preferences of all its users, it is secretive about its own figures. It is difficult to ascertain what percentage of its profits still come from book sales, but one publisher estimates it is only seven percent. On the other hand, Amazon sales account for a third of one book publisher’s sales in a given week.

Amazon has recently been navigating negotiations with a handful of other publishers including Hachette, whose contract expired in March.