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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 Motoman on 2/1/2010 2:17:43 PM , Rating: 2
1. Is something most intelligent consumers are already aware of. And most intelligent consumers are also aware that the probability of a license being rescinded for any given book is extremely low, and if it does happen you'll probably get a refund.

Firstly, no I don't believe that the vast majority of potential e-book consumers are aware of/have thought that through. And while the likelihood of a license being revoked after the sale may be remote, it is a physical impossibility if you actually bought the book itself.

2. Is also something most intelligent consumers are already aware of. Except for Nook owners, because I believe it is not entirely true as applied to Nook owners because IIRC you can share Nook books with other Nook users.

Again, I seriously don't think most people have thought that through. I am not an expert on the Nook so I don't know if you can share those e-books or not...but it would seem to be counterproductive to their sales model to do so.

What happens if Blizzard stops supporting WoW?

Then you can't play WoW, since it has no non-MMORPG component. On the other hand, I occasionally play Heroes of Might & Magic III, which I originally bought on CD probably, what, at least 10 years ago. And it can never go away. You are correct to point out that this issue exists with WoW and other online games.

What happens if Sony stops supporting the PS3?

You keep playing your PS3 until it physically dies, and then you either sell your games and accessories or you get another PS3 used/refurbished, rinse and repeat.

What happens if the movie industry stops supporting DVD/Blu-ray?

Nothing. Eventually maybe people stop making new DVD/BD players, in which case you're into the aftermarket. Or, since you have the original movies etc. you can sell them, or maybe rip them to translate them to newer formats so that you always have access to them. You can still buy a cassette player I won't be worrying about DVD players going out of production for, oh, at least 20 years or so.

What happens when they stop making coffee filters for your coffee pot?

...if you bought a coffee maker that requires non-standard, proprietary filters, then you are a sucker, and you deserve what you get.

Ultimately, you are making the presumption that everyone in the world thinks through all such issues when they make a purchase decision. I firmly disagree - I am extremely confident that the vast majority of consumers do no such thinking through of their buying behavior. Perhaps you should stop acting like everyone in the world applies (apparently) the same due diligence that you do - because they don't.

RE: On the topic of suckers...
By namechamps on 2/1/2010 2:33:38 PM , Rating: 2
Seems like there is a lot you don't know.

You can share books via the nook just as you can a physical book. when you "lend it out" it becomes unavailable in your library. The nice thing is unlike a physical book you can set a max time (like 30 days) before it returns automatically to your library.

Any number of people can share a book they can just only read it one at a time (just like physical book).

Also amazon revoked exactly 2 titles out of hundreds of thousands and gave people a 100% full refund plus a credit on future book. It turned out due to a licensing mix up amazon never had the right to sell the book to begin with.

Regrettable yes but not the end of the world. No consumer "lost" anything. They received the exact amount of the book back plus a credit and could have used that money to buy a physical book if they wanted.

RE: On the topic of suckers...
By Motoman on 2/1/2010 2:46:39 PM , Rating: 3
You can share books via the nook just as you can a physical book. when you "lend it out" it becomes unavailable in your library. The nice thing is unlike a physical book you can set a max time (like 30 days) before it returns automatically to your library.

That's nice. Can't sell it though, or trade it permanently with some one else...or permanently gift it.

Also amazon revoked exactly 2 titles out of hundreds of thousands and gave people a 100% full refund plus a credit on future book. It turned out due to a licensing mix up amazon never had the right to sell the book to begin with.

...the point I was making was that it would be physically impossible for it to happen, ever, with an actual book - regardless of how rare it is with e-books.

RE: On the topic of suckers...
By fic2 on 2/1/2010 3:56:40 PM , Rating: 3
Actually Amazon has revoked 5 books that we know of.

There was a student that had made page annotations on his Kindle for 1984. He sued Amazon and they settled out of court for $150k. I am guessing Amazon's lawyers thought it could have been much more.

For an interesting look at electronic "rights" see:

RE: On the topic of suckers...
By artemicion on 2/1/2010 3:31:13 PM , Rating: 3
Um, do you not realize that your rebuttals for half of the examples I gave are the exact same thing that would happen in the event that Amazon stops support the Kindle?

Amazon stops supporting Kindle: No new titles come out, you can still read your old titles.
DVDs go obsolete: no new titles, you can still watch your old titles.
PS3 goes obsolete: no new games, you can still play your old games.

My point being that if that deters you from buying a Kindle why the hell wouldn't it deter you from buying anything that depends on future support. Or do you actually think that if Amazon abandons the Kindle, it's going to flip the license switch and revoke everybody's content licenses? Can you point to any language in the licensing agreement that suggests that that is the case?

RE: On the topic of suckers...
By Motoman on 2/1/2010 4:41:34 PM , Rating: 2
You missed some important points then, if that is the conclusion you came too... the ability to trade/sell/gift a real book, which cannot be done with a an e-book. Apparently you might be able to temporarily share it, but that's not the same. Same goes with DVDs, PS3 games, etc.

...also, if I buy a book, Amazon can't come to my house and take it back - regardless of whether or not they refund my purchase price.

...and if my Kindle breaks after Amazon stops supporting it...? Then what? Buy all the books I had bought as e-books again? With DVDs and games, I still have the original, no matter what happens.

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