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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 atlmann10 on 2/2/2010 1:04:15 AM , Rating: 2
Ok this discussion has gone to crap discussion. This is not a game it is whats called a book. The issues surrounding this being Kindle is as cool as steam is no issue. A book is something you keep and may read again, or give to someone else to read if you so choose, unless of course it's an E-book. In my house last week I read 2 books, and did 2 finals for the quarter for school. My wife read 3 books cover to cover. Now if I buy an e-book and I do see the point. They would be much easier to carry store and have access to. However if I were to buy e-books they would be ones I did not insist on keeping. As many as we have and buy around here that would be fine. The issue here though is Mcmillan, and no one is even talking about this. To make there money they are wanting to market a book at higher than retail price for a paperback book. They are also doing this with no cost at all to them. There are no materials in an e-book none at all for them to pay for to put it on a shelf, nor is there shipping and, really no advertising cost either past what they would already do. SO McMillan is making the largest e-book retailer in the world raise there book prices by almost double. When it is stated at 50% in the wording it means to raise the book + half it's normal price from 10 which would be Amazons normal price to 15 for a book which they pay nothing for. This is the hugest price hike in the world. The deliver nothing physically, and then decide to make the retailer charge 50% higher. People should be raising utter he11 this is ridiculous. If I were you I would not buy anything from this publisher at all. I would in fact protest them completely. As all they are doing is practicing total greed. They see that this format will largely take over books, they are hurting financially because readers in general have declined severely. So they are propping up there print operations by making retailers charge more than there print books for e-books. I personally keep all kinds of stuff backed up on my computers anyway, these are small enough I could keep the library of congress at home indefinitely. Come on a 2TB drive is 125 buxk a 1Tb drive is less than a 100. In my house I have 4Tb of storage space 1 on the laptop 2 on my desktop 1 on her desktop. I also use acronis disk director sweet and true image. Which mean I can burn naked drive images to DVD. So I could make a library for songs strip that BS protection crap from it and copy it for a hard copy. Then if I loose a drive or buy a new one I copy it back on, no loss ever. The only way I don't have access is if the powers out. Of course if I have an e-reader or digital music player I have access then to don't I. This is McMillan trying to stab everyone in the back and over support themselves by still charging you the price of a regular book, and then charging an e-reader price plus 50% to make there pockets fatter. It is called Greed, they locked there self into it by becoming an initial supporter for the iPad. Which is a stunted runt of a device Apple is hoping to float on iPhone glory. Then to save there selves from that because now that its out and very widely criticized there afraid there going to go bankrupt.

RE: On the topic of suckers...
By jojo29 on 2/2/2010 9:40:49 AM , Rating: 2
I totally agree here atlmann10.

I will not get into my opinion on the whole DD vs PM debate, because, lets face it, thats NOT the issue at hand. The issue at hand is that a company, Macmillian, is forcibly trying to increase their prices, yes, they are trying to make money,m but they were because DD cost Macmillian nothing, and now they are trying, no, they ARE raising the prices on their books, for no reason other than greed, at NO COST TO THEM, AT COST TO THEIR CUSTOMERS, for no reason at all!!

If anything, People who KEEP BUYING MACMILLIAN books should STOP buying them, else all companies will follow...

I am more against corporate greed than any DD/PM debate...people FOCUS on the issue at hand, i have not seen a more blatant example of a company raising prices, and sticking it to their customers ass, with NO lube, for no apparent reason...

"I'd be pissed too, but you didn't have to go all Minority Report on his ass!" -- Jon Stewart on police raiding Gizmodo editor Jason Chen's home

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