Amazon v. Publishers

Another skirmish in the e-book pricing war took place over the weekend. After Macmillan CEO Jon Sargent flew out to Amazon HQ to ask that Kindle pricing be restructured along the lines of the “agency model” offered by the new Apple iBooks store, Amazon not only rejected the suggestion, but retaliated by no longer selling Macmillan titles (which includes the imprints St. Martin’s, FSG, Holt and Tor/Forge); none were available for the Kindle and print editions could only be purchased through third-party retailers. This was covered in many news sources, including the L.A. Times.

On Sunday, it looked as if Amazon had conceded, posting this statement on the Kindle Community area (a somewhat hidden area of the site):

Dear Customers:

Macmillan, one of the “big six” publishers, has clearly communicated to us that, regardless of our viewpoint, they are committed to switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers and most hardcover releases.

We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles. 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. Amazon customers will at that point decide for themselves whether they believe it’s reasonable to pay $14.99 for a bestselling e-book. 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.

Kindle is a business for Amazon, and it is also a mission. We never expected it to be easy!

However, as of early Monday, Macmillan titles were still not for sale through Amazon.

What effect will this have on the public perception of e-books? It underscores that only certain titles are available for the Kindle and they can be removed from sale; issues librarians know only too well from dealing with database vendors (e.g., EBSCO & Gale). Corey Doctorow wrote on the tech site, Boing Boing, “this is a case of two corporate giants illustrating neatly exactly why market concentration is bad for the arts.” Futher, he objects to “Amazon draping itself in the consumer-rights flag,” when “Amazon’s ebooks are locked (by contract and by DRM) to the Kindle.” He also points to a post by John Scalzi, All the Many Ways Amazon So Very Failed This Weekend (even if you don’t care about this particular fight, read the post; it’s very funny).

Amazon has worked to give customers the perception that Kindle e-books cost $9.99, but if you are not buying bestsellers, Kindle prices can be quite a bit higher than that. Of the nine titles with full reviews in the current NYT BR, only one is available in a $9.99 Kindle edition; three are not available at all (these do not include any Macmillan titles; curiously, the one Macmillan title reviewed, from Palgrave Macmillan, is available for the Kindle. Guess Amazon doesn’t realize they’re part of Macmillan) and the rest were just $1.13 to $2.83 less than the hardcover price. In one case, the hardcover through a third-party retailer was cheaper than the Kindle version.

But consumers have proven they want the lower prices; none of the titles in the 100 top-selling Kindle titles was above $9.99 when we checked yesterday; the majority of the top “sellers,” 55 titles, were free; 25 titles range in price from $.01 to $9.60 and just 20 titles were at the magic $9.99 price. Clearly, people are still in the experimental phase and not willing to invest in buying content. Amazon sees e-book prices as a key to selling more Kindle readers. So, they’ve rejected the “agency model” (publisher sets the price; retailer gets 30%) even though it would earn them more money per title and get them out of the loss leader business.

2 Responses to “Amazon v. Publishers”

  1. Dave Says:

    This is really interesting. Thanks for the good coverage! I think the READERS should be cut severely in price. Then more people would have one, and then everyone could make more money off the content, with a greater number of people consuming it. Selling content at a low price to make money off the device seems backward.

  2. L’esprit d’escalier » Amazon, Still Failing Says:

    [...] Word points out that, despite their professed love for the $9.99 price point, there are plenty of Kindle books out there that are much more expensive: Amazon has worked to give customers the perception that Kindle e-books cost $9.99, but if you are [...]