The long-running battle between Amazon and publisher Hachette has come to a close, after the companies reached agreement over online and ebook sales after months of acrimony that pitted the world’s largest online retailer against authors, agents and publishers.

Since early May Amazon has been locked in a standoff with the French publishing house after Hachette refused to give Amazon pricing control over its ebooks, which would have seen most of their digital titles discounted to less than $10 a book.

Amazon came under criticism for its “aggressive” negotiating tactics, which included preventing customers from being able to pre-order Hachette titles, reducing the discounts it offered on Hachette books and even delaying shipment of some of the publisher’s titles for up to a month, all which had a huge impact on sales.

Under the multi-year deal announced on Thursday, Amazon confirmed that from early 2015, Hachette will have responsibility for setting consumer prices of its ebooks and will benefit from better terms when it delivers lower prices for readers. Amazon and Hachette will resume normal trading, and Hachette books will be prominently featured in promotions.

Amazon said the deal included “specific financial incentives for Hachette to deliver lower prices, which we believe will be a great win for readers and authors alike”.

Michael Pietsch, Hachette Book Group CEO, said: “This is great news for writers. The new agreement will benefit Hachette authors for years to come. It gives Hachette enormous marketing capability with one of our most important bookselling partners.”

Amazon’s attempt to stop customers buying Hachette books as a way of putting pressure on the publisher also prompted outrage from almost 1,000 authors, including Donna Tartt, Salman Rushdie, John Grisham and Stephen King, who signed a petition demanding Amazon stop using writers as hostages in its negotiations. The group, Authors United, also took out a full page advert in the New York Times attacking Amazon’s actions.

Douglas Preston, a bestselling author whose books are published by Hachette and who spearheaded the Authors United petition, said: “I’m very relieved both for myself and for my fellow Hachette authors. I don’t know the full details but I’m sure Michael Pietsch would not have accepted anything that was not beneficial for his authors, so I’m quite satisfied and happy about it.

“It doesn’t change the fundamental problem that Amazon controls 50% of the book market in the US and was willing to throw its weight around and take books hostage and hurt authors whenever they run into a negotiating problem. I just hope that they will see that that was a damaging negotiating tool and that if they have future problems with publishers they will find some other way to come to a solution.”

Preston added: “Amazon started off asking for just outrageous and untenable terms and I do think our Authors United campaign did put a lot of pressure on them to solve this thing quickly as they were obviously doing damage to their brand. I’m just hoping that we were able to contribute in some way to a win-win settlement.”

Philip Jones, editor of the Bookseller, was also optimistic about the deal, and said the whole book industry had suffered both in terms of profit and reputation as a result of the Hachette-Amazon conflict.

Jones said: “It looks to me like a draw but if you want to follow that analogy forward and imagine it’s gone to penalties, then I think Hachette has won the shoot out.

“The key aspect was a return to agency whereby Hachette, and all publishers in general, have control over the consumer price for ebooks. I think that was the line in the sand for Hachette and other publishers.

“I think this is good news for publishers in the short term in that it enables them to seize or take back control over the price of ebooks, which was a much larger play for them. It was also about the wider market and the price of print books compared to ebooks and I think they want control over the transition to digital. But Amazon has also gained a bit of ground here as it’s got a deal that clearly incentivises publishers to price ebooks lower and gain an online advantage.”

He added: “This a multi-year deal so it gives all parties breathing space to watch this market develop and figure out their slices of the pie. There was a sense that Amazon was trying to railroad publishers in a certain direction and in a certain fashion, which would not have played out too well for authors or readers, and this gives a period of grace to work out how to tackle some of the big questions about publishing’s transition to digital.”

The deal is similar to one struck between Amazon and Simon & Schuster two weeks ago, which gave the publisher significant control over ebook pricing when it comes into effect in January 2015.