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Amazon has given in to publisher Macmillan in a pricing dispute, agreeing to raise its e-book prices 30 to 50 percent on bestsellers. Price increases on standard titles and on works from other publishers are expected to follow in the near future.  (Source: Amazon)
Amazon isn't happy but it says it has to play ball with Macmillan Books, adopting up to 50 percent price increases

Amazon, originally an online bookstore, has thrived off of the ever-expanding retail offerings its core business unit provides.  However, the company has also enjoyed significant success as an electronics company, producing the best-selling Kindle series of e-Book readers (manufactured by Foxconn).  The Kindle series currently owns over 60 percent of this emerging market.

However, all is not well for Amazon's e-Books division.  Traditionally, bestsellers have retailed for about $10 in electronic form, with the early chapters being provided as free samples.  Recently, however, pulled Macmillan from its store over a pricing dispute.

Amazon wanted to stick with its lower prices.  However, Macmillan wanted up to a 50 percent increase on prices of its bestsellers.  Writes Macmillan CEO John Sargent, "Under the agency model, we will sell the digital editions of our books to consumers through our retailers. Our retailers will act as our agents and will take a 30% commission (the standard split today for many digital media businesses). The price will be set the price for each book individually. Our plan is to price the digital edition of most adult trade books in a price range from $14.99 to $5.99. At first release, concurrent with a hardcover, most titles will be priced between $14.99 and $12.99. E books will almost always appear day on date with the physical edition. Pricing will be dynamic over time."

He talked about the decision to pull the books late last month, writing, "I regret that we have reached this impasse. Amazon has been a valuable customer for a long time, and it is my great hope that they will continue to be in the very near future. They have been a great innovator in our industry, and I suspect they will continue to be for decades to come."

Now Amazon has given in to the publisher's demands, but not without doing a lot of complaining first.  Writes the Kindle team in their forums:

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!

Thank you for being a customer.

Now that Amazon has bowed to Macmillan's wishes, though, it will be hard pressed to block other publishers from demanding similar increases.  Ultimately, this will likely have a trickle-down effect, raising e-book prices as a whole around 30 to 50 percent.

That's bad news for this nascent market.  While e-books have significant appeal -- in terms of portability (you can bring thousands in your book bag) -- there's still many downsides as well.  With electronic books, you're at the mercy of your current formats and devices -- once they become obsolete, there's the chance you may lose your book forever.  And many people enjoy the look and feel of an old fashioned book.

Through competitive pricing, Amazon and other e-book vendors were able to help customers overlook the downsides and embrace e-books.  With that pricing advantage vanishing, it should be interesting to see if the industry's growth slows.  Amazon's CEO has boldly predicted (several times) that e-books will soon surpass sales of print books -- however that is under current pricing.  Will e-books that are 30 to 50 percent more expensive be able to take control of the market in the same way?

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RE: On the topic of suckers...
By Lonyo on 2/1/2010 11:18:40 AM , Rating: 5
And yet people love Steam, which is basically the same thing, but for PC games.

RE: On the topic of suckers...
By keegssj on 2/1/2010 11:27:15 AM , Rating: 1
That is precisely why I haven't opened a Steam account yet.

RE: On the topic of suckers...
By DM0407 on 2/1/2010 11:42:28 AM , Rating: 5
You can make local backups and play offline.

Everything eventually loses support and your forced to make due (still got that 386 humming away with Win 3.1? Pissed you can get DX11 on it?). Its more likely any DVD games you buy will become scratched or lost way before Steam dies.

Not to mention they have amazing deals that make it worth the lack of physical media.

RE: On the topic of suckers...
By Ryanman on 2/1/2010 4:17:27 PM , Rating: 4
And you know what? Steam still beats out physical disks in longevity.

When I first got a Steam account, I swore I would never buy anything but the Half life/Counter Strike series. Then the Orange box came along and I reluctantly bought that for the service.

I started gaming about 6 years ago and amassed quite a collection of disks. After building a new machine last month, i went back home from college to collect them and begin to install them.

It was a disaster. I had lost a key, or one of the five disks, or it had incredible DRM that I knew would slow down my entire machine.

While I struggled to organize my gaming history, Steam continued to download. And before I'd even found one complete set of disks and a key, I'd already downloaded TF2. By the end of the night the rest of my Steam games were on my hard drive, safe. I spent another week torrenting software I'd already bought and dealing with .iso mounters to use what I'd paid for years ago.

The end result: Steam being a necessary evil. I have faith that Valve will last longer than I can keep my disks in order. And that makes it the more attractive alternative.

RE: On the topic of suckers...
By Motoman on 2/1/2010 5:01:49 PM , Rating: 1
And you know what? Steam still beats out physical disks in longevity.

...except in the event that Steam ceases to be. Which we may all think is highly improbable...but it's not impossible. Especially given what our down economy has been doing to other high-profile companies as of late...

RE: On the topic of suckers...
By Ryanman on 2/1/2010 11:34:02 PM , Rating: 3
But here's the problem moto... in my practical experience, in a relatively short gaming career, Steam's already proven itself an order of magnitude greater than traditional distribution. It's not right, the alternatives should be there, but the FACT remains: That Steam is going to be a viable and enduring platform superior to physical media for a very long time.

RE: On the topic of suckers...
By Motoman on 2/2/2010 11:09:13 AM , Rating: 2
I am sure that Steam is pleased with your fealty. However, bigger operations than Steam have died in recent memory.

...and I still have CDs that are 15+ years old, some of them copied (it is legal to copy a CD/DVD for your own backup use), and I still play those games. And if I wanted to, I could sell them or give them away.

By Cypherdude1 on 2/2/2010 5:58:14 PM , Rating: 2
The problem with the Kindles is that they are just too small for many non-fiction books. Many of the non-fiction books I own are over 11" diagonally. Even the new $490 Kindle DX is still too small. How many people here actually own the newest $490 Kindle DX? I'd wager very few. It is way overpriced! It's not even in color! It doesn't even have an external SDHC storage option! It doesn't even have a user removable battery! For $490 you could buy a 15.5" color, fully featured laptop with DVD burner!

Kindle DX Wireless Reading Device (9.7" Display, Global Wireless, Latest Generation):

RE: On the topic of suckers...
By Ryanman on 2/3/2010 4:34:51 PM , Rating: 2
My feelings on it are very short of fealty. Valve has gone on record saying that if Steam collapses, they can de-activate the DRM required at will - leaving me with a hard drive full of unlocked games.
This faith I have in Valve is also shared in publishers. If Steam collapses, every byte of software sold is now available in a completely unlocked state. Publishers have been willing to gamble millions of dollars on Steam, which is a huge vote in their favor.

Disk-based games, even if you copy them, still have DRM that's an order of magnitude more invasive than Steam. On my blistering fast rig, it still takes 30 seconds for Crysis to double check that the disk I have inserted is legitimate. Meanwhile a double click launches Steam games from my SSD instantly.

The oldest CD I have is of Homeworld. That's 11 years and counting. But it's a disk that is copiable by any burning program, with only a key needed for the install. You can debate all day about the ethics of using Steam, and you might have some merit in your argument, but my software is too valuable to trust to my organizational skills.

RE: On the topic of suckers...
By jimhsu on 2/1/2010 6:46:53 PM , Rating: 2
You see, it's the perception of control, rather than actual control itself, that people value (same as in many other fields). Owning a CD equates to a sense of "control" over the relevant data, even though a) it typically doesn't last as long due to scratches, b) many games sold on CDs have online activation components anyways, and c) Steam stores the data locally anyways. Same as, for example, the outrage over the handful of handgun deaths by unsafe firearms in houses with children, compared to the tens of thousands of car accident fatalities every year (Freakonomics).

By Cypherdude1 on 2/2/2010 5:38:57 PM , Rating: 2
Everything eventually loses support and your forced to make due (still got that 386 humming away with Win 3.1? Pissed you can get DX11 on it?). Its more likely any DVD games you buy will become scratched
Well, yes, I still have an AMD K6-2 350 stored away with 2 - 30 GB HDD's, 384 MB's RAM, etc... I also still have Win3.1 on floppies stored away. When your DVD gets scratched, you can use a machine to repair it and remove the scratches:

RE: On the topic of suckers...
By tviceman on 2/1/2010 3:16:38 PM , Rating: 2
The ship has set sail and you decided to stay on the island all by yourself.

By KoolAidMan1 on 2/1/2010 8:59:34 PM , Rating: 2
Your loss. Steam and the Kindle service are superb.

RE: On the topic of suckers...
By bug77 on 2/1/2010 11:33:50 AM , Rating: 3
How many games are you planning to pass along to your kid?

RE: On the topic of suckers...
By Motoman on 2/1/2010 1:32:01 PM , Rating: 1
Apparently none.

RE: On the topic of suckers...
By nafhan on 2/1/2010 11:43:12 AM , Rating: 5
Steam is great, however I've never bought anything for full price - I only buy the weekend specials. If I get a game for $2-$10 and then play it for more than 5 hours, I'm getting what I consider to be my money's worth out of that purchase. Likewise, publishers need to realize that an e-book is less valuable to most people than a physical copy and price it with that in mind.
Also, as Valve has shown, price and number of sales are related not linearly but exponentially, and when you have no distribution costs that's a good thing. In all likelihood, McMillan is trying to keep the print side of things going as long as possible for whatever reason.

RE: On the topic of suckers...
By Suntan on 2/1/2010 12:25:02 PM , Rating: 5
McMillan is trying to keep the print side of things going as long as possible for whatever reason.

That should be pretty obvious. Why even work with a publisher if you don’t need a middle man to bankroll the costs necessary to print a large inventory of paper books?

The only compelling reason to do it would be the leverage of getting your work advertised (an individual writer isn’t going to be putting down money to advertise their books) but even that is a task that can be accomplished without the need of a “publisher” in the digital domain. As Apple has shown with their app store, independent programmers can find a place to sell their apps where a large customer base is already present and the need to spend money to advertise your wares goes down to almost zero. For e-books, Amazon can take on that roll, to the point of even signing contracts directly with individual writers/editors for their work. Publishers basically get cut out of the equation in short order.


By dark matter on 2/1/2010 12:09:38 PM , Rating: 2
A game is hardly comparable to a book.

RE: On the topic of suckers...
By Motoman on 2/1/10, Rating: 0
RE: On the topic of suckers...
By bodar on 2/1/2010 2:19:41 PM , Rating: 4
Fine by me, since I don't really resell games and I usually only pay $5-$20 for them anyway. I think the most I've ever paid for a Steam game is $35 for L4D2 a couple weeks after release.

Not to mention, aren't a lot of multiplayer games unable to be resold once the key is used online or is that no longer the case?

For me, the benefits far outweigh the shortcomings. Some games will actually store your game saves in the cloud, so you won't lose them if your hard drive goes.

RE: On the topic of suckers...
By jimhsu on 2/1/2010 6:49:12 PM , Rating: 3
Exactly. Steam goes away (possible, but not very probable) - outrage. You get a virus, CD get scratches, hard drive suffers a head crash w/ no backup (far more probable situations that online distribution helps prevent) - people hardly care by comparison.

By ArcliteHawaii on 2/1/2010 2:35:51 PM , Rating: 3
Yup, and one of the big draws of Steam is lower prices on games a year or more old. I have picked up most of my games in the $5-10 dollar range, which is 80-90% off retail: Unreal Tournament 3, Bioshock, Battlefield 2, Crysis, Far Cry 2, Left 4 Dead, Street Fighter 4, and many others. These were best selling, AAA titles when they came out. If Steam goes away after I play these, then no great loss, since I got them at such a bargain. I won't get into ebooks until the same thing happens for this very reason. Of course, I can't borrow games from the library, but all the books I'm interested in end up there eventually.

"I want people to see my movies in the best formats possible. For [Paramount] to deny people who have Blu-ray sucks!" -- Movie Director Michael Bay

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