Tuesday, February 02, 2010

'The Future. . . Being Forged Right Before Our Eyes'
Shelf Awareness

"The future of e-books, the future of publishers' control over their own destiny, and the future of retail pricing, is being forged right before our eyes."--Richard Curtis, literary agent and e-book publisher, in a Wall Street Journal article about the Amazon-Macmillan dispute and broader e-book pricing issues.

And from Philip Jones in The Bookseller, 1 Feb:
Amazon 'temporarily' pulls titles from Macmillan US after e-book row

Macmillan has set out new terms for the sale of e-books in the US, which has resulted in Amazon.com removing from direct sale all physical books and Kindle editons published by Macmillan. In a posting on its Kindle forum Amazon said it had only "temporarily" ceased the sale of all Macmillan titles in order to express its "strong disagreement" with publisher, which wants to raise the price of e-books. The dispute means that titles such as Booker winner Wolf Hall (published by Henry Holt in the US) are currently only available via third party sellers.

The move came in the week that Apple announced its iBook Store, with the backing of five US publishers including Macmillan, widely perceived as a threat to Amazon.com's hold over the e-books market in the US and its pricing of e-books.

In a statement issued by Macmillan over the weekend, chief executive John Sargent said he had flown to Seattle to present Amazon with its new terms for the sale of e-books which would now be based on an "agency model", whereby Macmillan would set the e-book price and Amazon would receive a cut of 30% "the standard split today for many digital media businesses". Macmillan wants to sell e-books of new titles at $14.99 and $12.99, above Amazon.com's $9.99. The new terms would commence from March, and Sargent said that if Amazon did not accept the new deal, Macmillan would delay the release of Kindle books, as a number of US publishers have already done. Sargent threatened that Amazon would face "extensive and deep windowing of titles".

Amazon corporate has not commented publicly on the discussions, or its decision to pull Macmillan US' titles from sale, but it is likely to be infuriated. Its first reaction was to remove from sale all of Macmillan US' books (though some from subsidiary divisions such as Palgrave remained available). Sargent said: "By the time I arrived back in New York late yesterday afternoon they informed me that they were taking all our books off the Kindle site, and off Amazon. The books will continue to be available on Amazon.com through third parties."

But by the end of the weekend its position had shifted. On Sunday afternoon, its Kindle team blogged: "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." However, the titles have not yet been reinstated.

The development has echoes of the 2008 dispute between Hachette UK and Amazon.co.uk over terms, though in that case some books, namely frontlist titles, did remain on sale. There is no such sugar-coating this time around. But this dispute has been brewing for sometime because of a disagreement about the price Amazon.com puts on ebooks, which many US publishers consider to be too low and a threat to their established businesses. A number of big US publishers have delayed the release of Kindle editons in order to protect hardback sales.

Sargent said the dispute was not about "short-term profitability but rather about the long-term viability and stability of the digital book market". He stated: "The agency model would allow Amazon to make more money selling our books, not less. We would make less money in our dealings with Amazon under the new model." Amazon sells Kindle bestsellers at $9.99, a price at which it is understood to make a loss.

Despite its initial equivocation, Amazon is likely to place itself as the consumer champion in its argument for cheaper e-books. Its Kindle team wrote: "Amazon customers will . . . 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."

In conclusion, Sargent noted: "Amazon and Macmillan both want a healthy and vibrant future for books. We clearly do not agree on how to get there." Sargent added that Amazon.com's reaction to the discussion "clearly defines the importance they attribute to their view". He said: "We hold our view equally strongly. I hope you agree with us."
Macmillan's UK titles sold through Amazon.co.uk are unaffected.

Washington Post

New York Times

amazon forum


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