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iPad & Kindle 2 spat continues, Amazon bans Macmillan books
by Kathryn Robbins on January 31, 2010
Publishers have been bickering with Amazon over their e-book price structure for a long time. The arrival of Apple’s iPad and iBookstore has forced Amazon to play hardball with publishers resulting in a total ban of MacMillan titles on their site.
Amazon’s price structure for e-books is great for Kindle owners but not to publishers. Kindle versions of the latest blockbuster cost just $9.99 while the same book in hardcover form is about $24.00. Macmillan was concerned that the cheap Kindle versions were discouraging readers from buying the more expensive and profitable hardcover version.
And then last Wednesday happened. Steve Jobs and his trademark black turtleneck announced to the world that Macmillan had signed an e-book partnership deal with Apple. Macmillan’s meeting with Amazon to discuss pricing was scheduled the very next day.
The publisher asked Amazon to raise their e-book price from $9.99 to around $15.00 for their titles. The structure is similar to Macmillan’s deal with Apple that lets publishers set their own e-book prices. Participating publishing houses stand to pocket 70% of the revenue of every book sold though Apple’s iBookstore. Alongside a hardcover edition, newer e-book titles are slated to be priced between $12.99 and $14.99. Like DVD’s, the prices would go down over time.
If Amazon didn’t want to adopt the model, Macmillan had an ultimatum prepared. If they continued to set e-book prices, they would delay e-book editions up to seven months after the hardcover was issued. Amazon wasn’t happy with this stance because cheap titles helped the Kindle dominate the e-reader market. Amazon took a bold step on Friday yanked all Macmillan titles off the site, including those for the Kindle.
According to the New York Times, Amazon caved this afternoon. They released the following statement:
“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.”
Apple’s iPad and iBookstore have ignited a war between Amazon and publishers. Who really has the power to set prices, the seller or the publisher? Macmillan’s win is sure to prompt other companies to make similar deals. While they battle it out, I’ll be down at my local library.