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Amazon Accepts Macmillan’s Demand for Higher E-Book Prices mapthis Send a noteboard - 01/02/2010 04:21:35 PM
    At Amazon, Giving In to Demands

    By MOTOKO RICH and BRAD STONE
    Published: January 31, 2010

    After a weekend of brinksmanship, Amazon.com on Sunday surrendered to a publisher and agreed to raise prices on some electronic books.

    Amazon shocked the publishing world late last week by removing direct access to the Kindle editions as well as printed books from Macmillan, one of the country’s six largest publishers, which had said it planned to begin setting higher consumer prices for e-books. Until now, Amazon has set e-book prices itself, with $9.99 as the default for new releases and best sellers.

    But in a statement Sunday afternoon, Amazon said it would accept Macmillan’s decision.

    On Friday, Amazon removed “buy” buttons from thousands of titles published by Macmillan, including recent best sellers like “Wolf Hall” by Hilary Mantel and “The Gathering Storm,” by Robert Jordan and Brandon Sanderson. Customers who wanted to buy print editions could do so only from third-party sellers. Digital editions made for Amazon’s Kindle device disappeared.

    In a strongly worded message on its Web site on Sunday, Amazon said that while it disagreed with Macmillan’s stance, it would bow to the publisher’s plan.

    “We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles,” Amazon said. “We want you to know that ultimately, however, we will have to capitulate and accept Macmillan’s terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books.”

    The face-off had set the already anxious publishing industry on edge. “I think everyone thought they were witnessing a knife fight,” said Sloan Harris, co-director of the literary department at International Creative Management. “And it looks like we’ve gone to the nukes.”

    As of Sunday evening, the “buy” buttons had not yet been restored to Macmillan titles on Amazon. In a statement to Publishers Marketplace, an online industry newsletter, John Sargent, chief executive of Macmillan, said: “We are in discussions with Amazon on how best to resolve our differences. They are now, have been, and I suspect always will be one of our most valued customers.”

    Under Macmillan’s new terms, which take effect at the beginning of March, the publisher will set the consumer price of each book and the online retailer will serve as an agent and take a 30 percent commission. E-book editions of most newly released adult general fiction and nonfiction will cost $12.99 to $14.99.

    Those terms mirror conditions that five of the six largest publishers — Hachette Book Group, HarperCollins Publishers, Macmillan, Penguin Group and Simon & Schuster — agreed to with Apple last week for e-books sold via the iBookstore for the iPad.

    For more than a year, publishers have been fretting about the price of digital books, which Amazon, as the dominant player in the fast-growing market, had effectively been able to set.

    Last Thursday, Mr. Sargent flew to Seattle to explain the pricing and new sales model to Amazon. He said Amazon could continue to buy e-books on the same terms it does now — allowing the retailer to set consumer prices — but that the publisher would delay the release of all digital editions by several months after the hardcover publication.

    Amazon buys and resells e-books in the same way it handles printed books, by paying publishers a wholesale price that is generally equivalent to half the list price of a print edition. Because Amazon has discounted the price of most new and popular e-books on its Kindle e-reader to $9.99, it loses money on most of those sales.

    Amazon’s goal has been strategic: it aims to establish a low price for e-books that will have the ancillary benefit of helping it sell more Kindle devices.

    Amazon’s decision is also a victory for Apple’s chief executive, Steven P. Jobs, who first pitched the idea of selling e-books under the agency model to book publishers earlier this year. Now Apple, whose iPad tablet is due in March, can compete on fairly equal footing with Amazon.

    Book publishers, meanwhile, are volunteering to limit their digital profits. In the model that Amazon prefers, publishers typically collect $12.50 to $17.50 for new e-books. Under the new agency model, publishers will typically make $9 to $10.50 on new digital editions.

    Apple’s stance in allowing publishers to set their own e-book prices (albeit within a limited range) is also a bit of a reversal. That is precisely the kind of arrangement it declined to offer TV networks and music labels, which have long railed against the 99-cent price of songs in iTunes.

    Analysts say Amazon, which accounts for 15 to 20 percent of domestic book sales, probably realized it could not compete with Apple if it wasn’t offering the same range of content. “Amazon figured out pretty quickly that this was a battle they could not win,” said Mike Shatzkin, the chief of the Idea Logical Company, a consultant to publishers.

    Amazon may still hope to play one asset to its advantage. Loyal Kindle users routinely give low ratings to books they perceive as too costly, or whose digital editions are delayed past the publication of the hardcover edition. These consumers could ostensibly reject costlier e-books.

Interesting how Apple changed the game so quick and their device isn't even on the market yet. I've always assumed that ebook prices would eventually go up as publishers and sellers realized they could make significant money on it, I just didn't expect it to happen so soon.

I've had a Kindle for a week now and I love it, but I'll still be buying actual books for certain series and/or authors.
Palabra a tu madre.
NYTimes
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Amazon Accepts Macmillan’s Demand for Higher E-Book Prices mapthis - 01/02/2010 04:21:35 PM 1273 Views
Amazon lost me as a customer over all this *NM* kcf - 01/02/2010 05:52:53 PM 357 Views
Why's that? Aemon - 01/02/2010 06:55:35 PM 894 Views
I sum it up here kcf - 01/02/2010 08:42:02 PM 1155 Views
That's an interesting point. And I have an opposite reaction. The Shrike - 01/02/2010 08:56:16 PM 742 Views
I like that they are public - I dislike that they affect the public so directly kcf - 01/02/2010 08:59:41 PM 902 Views
To each his own. I come away with the opposite reaction and like Amazon even more. The Shrike - 01/02/2010 09:35:10 PM 656 Views
I agree with you. I like what Amazon did. everynametaken - 02/02/2010 12:45:10 AM 796 Views
I think his complaint is that he feels Amazon is using public opinion to pressure suppliers. Aemon - 01/02/2010 09:04:16 PM 643 Views
thats a big part of it kcf - 01/02/2010 09:09:15 PM 1000 Views
It's a good tactic. I would have done the same thing. *NM* The Shrike - 01/02/2010 09:36:31 PM 355 Views
Is it though - Amazon's stock is way down today. Seems the tactic failed *NM* kcf - 01/02/2010 09:53:06 PM 331 Views
Apple stocks have gone down on days after major announcements too. The Shrike - 01/02/2010 10:04:04 PM 611 Views
agreed - short term doesn't mean much *NM* kcf - 01/02/2010 10:08:01 PM 331 Views
Still, your overall point stands. The Shrike - 01/02/2010 11:10:25 PM 630 Views
yep - apparently they read the move as a sign of weakness *NM* kcf - 01/02/2010 11:20:04 PM 370 Views
Macmillan will lose out when people like myself choose to find the book elsewhere. The Shrike - 01/02/2010 06:46:10 PM 631 Views
How easy is it to find books now? Rebekah - 01/02/2010 06:53:43 PM 579 Views
Pretty easily, actually. The Shrike - 01/02/2010 07:07:11 PM 997 Views
That's excellent. Rebekah - 01/02/2010 08:19:55 PM 798 Views
Screens are good. Aemon - 01/02/2010 08:50:08 PM 839 Views
Two words: Leather cover. The Shrike - 01/02/2010 08:54:37 PM 673 Views
True, I do remember liking the cover. It's much nicer than what comes with the Sony. Aemon - 01/02/2010 09:02:56 PM 867 Views
This is what I have. It sounds like what you have for your Sony. The Shrike - 01/02/2010 09:39:02 PM 875 Views
Unless you like a lot of old books, or have fairly eclectic tastes, you should be all set. Aemon - 01/02/2010 07:11:30 PM 1037 Views
If you do like a lot of old books ranagrande - 01/02/2010 07:16:20 PM 653 Views
Yep, definitely true. I wasn't thinking quite that old, though. Aemon - 01/02/2010 07:24:49 PM 775 Views
$12.99 to $14.99 for a fiction ebook is ridiculous. *NM* everynametaken - 01/02/2010 07:44:20 PM 400 Views
Agreed. *NM* Legolas - 01/02/2010 07:46:33 PM 304 Views
Then again, it's half the price of a print version, for essentially the same product / experience. Aemon - 01/02/2010 07:50:29 PM 613 Views
That's the thing, it's not. Legolas - 01/02/2010 08:24:08 PM 640 Views
Re: That's the thing, it's not. Aemon - 01/02/2010 08:55:35 PM 858 Views
Because, as Aemon says, that's how price discrimination works. Ghavrel - 01/02/2010 11:31:14 PM 601 Views
Not really. I buy new hardcover releases at Borders for around 18 to 20. everynametaken - 02/02/2010 12:34:08 AM 778 Views
I don't know about that. Rebekah - 01/02/2010 08:21:05 PM 672 Views
not really, i buy brand new paperbacks for 6.99 *NM* Apsalar Shadowdancer - 02/02/2010 12:21:16 AM 299 Views
Mass markets, yeah. nossy - 02/02/2010 12:19:25 PM 640 Views
That is bananas. Elaine - 01/02/2010 07:46:28 PM 632 Views
"Most newly released..." Aemon - 01/02/2010 07:55:19 PM 860 Views
People pay that sort of money for DVd and more for Blue Ray random thoughts - 01/02/2010 08:00:47 PM 650 Views
Physical copy is rather important in that case, you know... at least to me. jh - 01/02/2010 08:54:05 PM 806 Views
I was with you till that last sentence. Aemon - 01/02/2010 08:58:58 PM 885 Views
I really don't think it is that different random thoughts - 01/02/2010 10:01:20 PM 649 Views
If you have issues with eBook pricing, read this link kcf - 01/02/2010 08:46:47 PM 987 Views
He makes good points... Ghavrel - 01/02/2010 11:37:22 PM 641 Views
I am unimpressed by his arguments. everynametaken - 02/02/2010 01:06:03 AM 648 Views
Good for MacMillan. I'll cheer on anyone who takes a stab against e-books. lord-of-shadow - 02/02/2010 04:00:05 AM 726 Views
Whaaa? Ghavrel - 02/02/2010 04:08:50 AM 677 Views
Yes, of course. lord-of-shadow - 02/02/2010 04:33:13 AM 775 Views
In ten years you'll have an ebook reader. Ghavrel - 02/02/2010 05:34:57 AM 800 Views
I know. That's the problem. *NM* lord-of-shadow - 02/02/2010 12:56:32 PM 336 Views
Oh, hush. Go sit in the corner and listen to your 8-track while the rest of us enjoy The Future. *NM* Aemon - 02/02/2010 02:37:33 PM 307 Views
The lower prices, the increased profit, or the ecological benefit? *NM* Ghavrel - 02/02/2010 05:17:13 PM 280 Views
The gradual loss of physical books. *NM* lord-of-shadow - 02/02/2010 05:32:39 PM 286 Views
Mmm. I detect an illogical argument. Ghavrel - 02/02/2010 05:35:14 PM 581 Views
Obviously they won't disappear completely, or even that fast. lord-of-shadow - 02/02/2010 11:04:47 PM 629 Views
Why not? It'll spur the growth of used book stores. *NM* Ghavrel - 03/02/2010 01:29:56 AM 276 Views
It will increase the number of books available random thoughts - 02/02/2010 01:55:05 PM 789 Views
One apt analogy is the widespread use of recording tools like Pro Tools. everynametaken - 02/02/2010 08:07:22 PM 767 Views
There are already comapnies offering editng services random thoughts - 02/02/2010 10:30:28 PM 599 Views
Uh, so what you want to dictate is the medium by which people read? You have no right. everynametaken - 02/02/2010 08:01:09 PM 736 Views
And again let me add that it's not necessarily one or the other. Ghavrel - 02/02/2010 10:09:20 PM 571 Views
That would be awesome. lord-of-shadow - 02/02/2010 11:02:42 PM 567 Views
Obviously I'm not dictating anything. I'm stating my view. lord-of-shadow - 02/02/2010 11:01:41 PM 861 Views
Good Lord! *NM* everynametaken - 02/02/2010 07:58:03 PM 285 Views
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