Amazon, Macmillan Fight Over Ebook Prices; After Amazon Removes Macmillan Titles, It Caves To Higher Prices

from the too-bad dept

On Friday, there was a sudden realization that Amazon had removed books published by publishing giant Macmillan, apparently over a dispute concerning ebook pricing. Of course, Amazon wasn't just removing Macmillan ebooks, but the physical books as well. After a bit of back and forth over the weekend, Amazon caved in and accepted the way Macmillan wants to price books, which means that Macmillan sets the retail price, and Amazon gets a cut. Previously, Amazon had paid a wholesale price and then got to set the retail prices itself.

I had been under the impression that when manufacturers tell retailers what the end user price is, it's a form of price fixing, but apparently not...

Of course, what may seem odd about this is that it appears Macmillan will make less per ebook under this model. That's because with its old wholesale pricing, Amazon was actually losing money on every ebook sold. As the NY Times notes:
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.
So why are publishers specifically trying to limit their own profits from ebooks? Because they're afraid of ebooks cannibalizing hardcover book sales, which is why they're also looking to delay ebook releases. In fact, in this case, Amazon was given the choice of either increasing the retail price for consumers on Macmillan ebooks, or getting them many months later. All in all, this looks like publishers hurting themselves, yet again, by going against what consumers want in a misguided effort to preserve the way things used to be. Yet, in an age when users are punishing authors and publishers who don't treat them right, this could backfire in a big way.

Filed Under: ebooks, pricing
Companies: amazon, macmillan

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  1. icon
    Griff (profile), 1 Feb 2010 @ 4:13am

    Just like hardbacks / Paperbacks ?

    It is pretty standard for hardback edition to come out first.
    This forces people to choose between a price (maybe even a format) to suit them, and the desire to have it now.

    Though it can be pretty annoying to be forced to buy an overpriced, oversized hardback just to get it when you want it, it's how the industry has worked for a long time and anyone is free to choose not to buy it.
    About the only time when this would be seriously worrying is if the book was named on the national school curriculum and the publisher delayed the paperback until after term start.

    If eBooks are cheaper than paper then I'd expect publishers to do exactly the same (ie launch them later). And it's a business decision. They may actually be wrong (overall sales may suffer) but they're free to do it.
    If eBooks cost the same, then I'd be more surprised.

    There's no difference between believing paperbacks will cannibalise hardbacks, and believing eBooks will cannibalise paper (and DVD's will cannibalise theatres, DVD rentals will cannibalise DVD sales etc).

    The one small flaw in it all is that you are deliberately and explicitly choosing not to give customers what they want in an attempt to extract more money. In any other industry, someone might break ranks and just serve the customer. But if I am publishing a new book by author xx, there is noone else competing with me to publish that actual book.

    You could argue that if book xxx is only in hardback then I'll buy book yyy to read on the plane instead because that IS in paperback form.

    But if their business model is stupid, that's their funeral. It's the author I feel sorry for.
    But they (publishers) should be competing against each other to win the author, surely.

    What would bother me is if the publisher told one outlet (Amazon) what to charge and not every other outlet.

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