Amazon Blinks in Stare Down With Macmillan

Discussion
Feb 02, 2010
George Anderson

By George Anderson

At least at this point in time, book content
belongs to publishers and when faced with the option of agreeing to higher
retails or not having anything to sell, Amazon.com chose the former.

The online
merchant found itself in a dispute with Macmillan over e-book prices the publisher
felt were too low. Instead of selling best-sellers for $9.99 when they come
on the market, Macmillan was looking for titles to start higher when offered
on Amazon’s Kindle device.

In the end, the parties agreed to a $12.99 to $14.99
range with prices to change after titles have been on the market for an unspecified
period. At first, however, Amazon had tried to muscle Macmillan by pulling
all of the publisher’s titles over the weekend. The dispute did not last long
with the e-tailer working it out with Macmillan before the work week began.

In
a posting on its Kindle Forum, Amazon said it had “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. Amazon customers will at that point decide for themselves
whether they believe it’s reasonable to pay $14.99 for a bestselling e-book.”

Amazon
is looking to establish a low-price position in the market as it faces challenges
from developers of other devices that read e-books such as Apple and Sony as
well as strong competitors on the retail front including Barnes & Noble,
Target and Wal-Mart Stores.

For its part, at least publicly, Amazon does not
expect to replay its confrontation with Macmillan with other publishers. “We
don’t believe that all of the major publishers will take the same route as
Macmillan. And we know for sure that many independent presses and self-published
authors will see this as an opportunity to provide attractively priced e-books
as an alternative.”

Discussion Questions: What is your reading of the Amazon
and Macmillan dispute? How do you expect other publishers – large and small –
to react?

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9 Comments on "Amazon Blinks in Stare Down With Macmillan"


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Max Goldberg
Guest
11 years 3 months ago

The publishing business is ripe for a major shake up. The business model has not changed for a century. Why should e-books cost $14.99 when no physical product is being delivered to a retailer and subsequently to a consumer? Expect to see further disputes between publishers and e-book sellers as e-book readers proliferate (pay particular attention to textbooks).

Doron Levy
Guest
Doron Levy
11 years 3 months ago

Macmillan has probably given up so much to Amazon on the print side that when they saw an opportunity to make some more money through Kindle, they had no choice but to jump all over it. I just wonder what the ‘unspecified time’ is and I would be curious to see if this episode affects Macmillan’s title buys on Kindle.

Dick Seesel
Guest
11 years 3 months ago

If it’s correct (as reported) that Amazon and other book resellers are paying 50% of the cover price to publishers, it shouldn’t matter to those publishers whether Amazon loses money at $9.99. If anything, the price point is driving much greater unit volume than if the same best-sellers were priced at $14.99.

It’s hard to determine whether the publishing industry as a whole is ready to take on the 800-pound gorilla of the book retailing business (whether online or e-books) as well as other fast-growing resellers of books like Walmart, who are engaged in a price war with Amazon anyway. Bottom line: price maintenance hurts the consumer, curtails demand and is a hard business model to maintain over the long run.

Gregory Belkin
Guest
Gregory Belkin
11 years 3 months ago

Amazon is doing everything it can to remain competitive in a space that everybody knows Apple is about to become a force to be reckoned with. And, agreed with the comments above that 12 bucks plus seems a bit high for a non-physical product. In the end, Amazon had to back off but the skirmish alone is good for them–cements them into a position of trying to fight for low prices. Could help their image going into a tough battle.

John Rand
Guest
John Rand
11 years 3 months ago

As a regular Kindle user, this is not making me love the publisher much. I have zero intention of paying this much for a book with no physical presence. I simply won’t pay for it while it is a current best seller and will wait for the price to come down. If it doesn’t, I will read something else.

The sudden influx of additional e-readers from booksellers, computer makers, etc, has so far not given me a reason to move away from Amazon’s Kindle, which has literally hundreds of thousands of titles easily available and instantly downloadable. Macmillan will hold its price and at least for me, will lose my business entirely. There are other books.

Gene Hoffman
Guest
Gene Hoffman
11 years 3 months ago

Reading is to the mind what exercise is to the body. And today there is a high activity in both processes. Thus, reading between the lines on this power-play matter, one can envision that Amazon might someday move into publishing too…perhaps by buying Macmillan.

Doug Stephens
Guest
Doug Stephens
11 years 3 months ago

Macmillan won this battle but not the war. The truth is that information and media wants to be free. And all businesses (music, film, publishing, television, radio) that relied on intermediation between the creator and the audience, will need to find new business models.

Rick Moss
Guest
11 years 3 months ago

This battle is all about muscle-power, but Amazon and Apple should keep in mind that unnaturally low prices will cheapen the quality of the product. Authors are being advised by their agents to keep books under 300 pages because publishers can’t afford to print larger volumes. And it’s becoming dauntingly difficult for talented young writers to get a start. Even established writers are having trouble getting published.

And here we are, saying we can’t see paying another couple of bucks for an e-book…? Yes, e-books are cheap to produce, but these profits will be needed to supplement losses on real book printing–and I, for one, would like to see that tradition continue.

Bill Emerson
Guest
Bill Emerson
11 years 3 months ago

I have a hard time believing this is about margins for the publisher. E-books have to be a major margin boost for the publishers–no paper, no ink, no printing, no distribution costs, etc. My sense of this is that the meteoric growth of e-books are taking a big bite out of Barnes & Noble and the other 4-wall booksellers. Since the 4-wall business is still larger than e-books (for now at least), they are squeezing the publishers. This should go on until e-books surpass the print media.

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