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Amazon bows to Macmillan on eBook pricing

Pricing dispute

By Stuart Turton

Posted on 2 Feb 2010 at 09:17

Amazon has given into Macmillan on eBook pricing, only hours after the retail giant stripped all the publisher's books from its US website.

The two companies were locked in a bitter dispute over pricing. Amazon insists on charging $9.99 for new eBook releases, claiming that competitive pricing is crucial in order to grow the fledgling market.

Publishers, on the other hand, claim such pricing will harm the industry in the long term - making it impossible for them to take risks on new authors. They want to be able to set their own prices.

We want you to know that ultimately we will have to capitulate and accept Macmillan's terms because Macmillan has a monopoly over their own titles

Matters came to a head when discussions between Macmillan and Amazon fell down - with the latter refusing to sell even physical copies of the publisher's titles on its US store, including Hilary Mantel's Man Booker prizewinner, Wolf Hall.

"Amazon and Macmillan both want a healthy and vibrant future for books," wrote Macmillan chief executive John Sargent in an open letter.

"We clearly do not agree on how to get there. Meanwhile, the action they chose to take last night clearly defines the importance they attribute to their view. We hold our view equally strongly," he added.

International deal

It was widely feared the dispute would spread outside of the US, but it appears cooler heads have prevailed at the retail giant, which has reluctantly conceded defeat.

"We want you to know that ultimately 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 eBooks," says Amazon in a statement.

"Amazon customers will at that point decide for themselves whether they believe it's reasonable to pay $14.99 for a bestselling eBook."

The company also moved to quell fears that by capitulating to Macmillan it had opened the door to similar demands from other publishers. "We don't believe that all of the major publishers will take the same route as Macmillan," the company says.

"And we know for sure that many independent presses and self-published authors will see this as an opportunity to provide attractively priced eBooks as an alternative."

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User comments

I agree with Amazon, the fact that Macmillan do not have to invest in printing too many or to not enough copies vastly changes their prices. And of course, it saves the tree.

Greed is what it's all about. Well, I'll certainly not be buying any Macmillan publications.

By treadmill on 2 Feb 2010

£15 for a digital file? One copy locked? Why? You could buy the hardback for less than that.

It's so utterly absurd. If they said - buy the paperbook, get the ebook free that'd be worth having.

What frustrates is that publishers do make a lot of money from authors. There are advertising costs, yes, but a new author gets less than 50p from each book. Printers about the same (it costs about 50p to print a short run. A lot , lot less for the latest Harry Potter as the scale involved reduces costs). If only there was a site where authors could sell their work for say, £2.50. Cut out the middle man completely and his inflated costs.

By bubbles16 on 2 Feb 2010

Amazon should start adding disclaimer 'We would love to sell you this book for less but we've been bullied by Macmillan. So we recommend you get yourself a paperback for £6.99 or less.' :)

By Josefov on 2 Feb 2010

Let's all just stop buying Macmillan book for a month or two and see what happens that is books and e books!

By sandman652001 on 2 Feb 2010

It's called a "rip-off"

Maybe I'm comparing apples to oranges here, but as I read roughly the same number of books in English *and* Russian, it's funny to see a completely different approach to e-publishing in these two regions. While "West" charges more for an electronic version than the paper-back, in "Russian" market eBooks cost 3-4 times less than printed version. For instance, a cheap paperback will cost around £3.00 and the corresponding e-book £0.80 at most, some sought-after hardback - £9.50 and £3.00 respectively.
Considering that population of former USSR is over 300 millions, this market is quite large, and for some strange reason e-ink readers are very popular there :-)

By Lomskij on 2 Feb 2010

Surely Amazon should be able to sell books/e-books at whatever price it wants. Macmillan can charge Amazon whatever they like and Amazon can choose to pass on these costs if they want. If Macmillan wants to shoot itself in the foot with high prices then surely it's not Amazon's problem?

By Mullins2003 on 2 Feb 2010

Looks like Macmillan's executives came from the same business school as the record companies.

By chapelgarth on 2 Feb 2010

Uninformed Drivel!

The price for which a book sells is determined by the fees paid to the author, the cost of management and distribution and the volume sold. It's very unlikely that this equation would always result in the answer $9.99!
Some specialist technical, medical and similar works have very high production costs and low readership and this is reflected in the prices. Similarly often very high advances are paid to major authors or to Politicians or sportpeople and other public figures for memoirs.
The important point is that the cost of eBooks should reflect the lower production and distribution costs -which means they should typically be 20%-40% cheaper than hard copy.

By milliganp on 3 Feb 2010

Uninformed Drivel!

The price for which a book sells is determined by the fees paid to the author, the cost of management and distribution and the volume sold. It's very unlikely that this equation would always result in the answer $9.99!
Some specialist technical, medical and similar works have very high production costs and low readership and this is reflected in the prices. Similarly often very high advances are paid to major authors or to Politicians or sportpeople and other public figures for memoirs.
The important point is that the cost of eBooks should reflect the lower production and distribution costs -which means they should typically be 20%-40% cheaper than hard copy.

By milliganp on 3 Feb 2010

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