Monday, February 1, 2010
Wave bye-bye to $9.99 bestsellers.
Amazon caves in to publishers' pressure to raise eBook prices
The $9.99 bestseller that helped Amazon.com dominate the booming eBook business may disappear. Amazon surrendered in a fight triggered by the launch of Apple's new iPad that allows publishers to make more money.
Amazon cryed "uncle" Sunday evening after it had stopped selling all books published by Macmillan in an eBook pricing dispute. Having made the $9.99 price standard for eBooks, Amazon now may have to boost its prices to match better deals that Apple is offering to book publishers.
"Ultimately we will have to capitulate and accept Macmillan's terms because Macmillan has a monopoly over their own books," Amazon said.
Amazon's move shows how seriously Amazon is taking Apple's challenge to its position as the market leader in eBbook sales. This is the first of what is expected to be a series of upheavals as Amazon and Apple square off over the digital future of book publishing and retailing.
The picture is likely to get more complicated when Google launches its own eBookstore later this year. Google said it will allow publishers to set their own prices, but Google may discount prices even if it loses money.
When Apple unveiled the iPad last Wednesday and disclosed that five major publishers, including Macmillan, will begin selling their own eBooks for the device. Publishers will set prices themselves on Apple's iBooks store and many of the new eBook bestsellers are expected to be priced at $12.99 or $14.99 -- terms that the publishers are expected to ask Amazon to match.
Under the Apple model, publishers will receive 70% of each sale, or $10.49 on a $14.99 eBook. This compares unfavorably with what they were receiving from Amazon per title. However, publishers believe that Apple's customers represent a vast new market and that they will make up the difference on volume. They also believe Amazon's $9.99 price tag doesn't reflect the true value of their books.
Whether consumers will be willing to pay more for their eBooks remains to be seen. After a news conference announcing the iPad, Apple CEO Steve Jobs said that "the prices will be the same" for books on the iPad as on the Kindle.
The Macmillan fracas came to light after Macmillan boss John Sargent flew to Seattle to discuss "new terms of sales for eBooks" with Amazon last Thursday, the day after the Apple announcement. By the time he returned to New York on Friday, he had been informed that Macmillan's books would not be for sale on Amazon.com directly. By late Friday evening, many of Macmillan's titles had already been removed.
Sargent said late Sunday that Macmillan is now "in discussions with Amazon on how best to resolve our differences. They are now, have been, and I suspect always will be one of our most valued customers"
Macmillan boasts such top sellers as Wolf Hall by Hilary Mantel. On Saturday it published The Politician, an account of the John Edwards scandal that on Sunday afternoon ranked No. 1 on the bestseller list at Barnes & Noble.com.
The Wall Street Journal reported that neither of those titles was available from Amazon, in eBook or hardcover versions, over the weekend.
Amazon said it doesn't believe that "all of the major publishers" will follow Macmillan's position. Amazon didn't rule out others offering cut-rate prices: "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."
The new pricing demands could have benefits for Amazon. Instead of losing several dollars on new eBook best sellers -- which Amazon was willing to do to push sales -- it stands to make a profit on each title. And publishers are expected now to make their new eBooks available on the same day as their hardcovers, a position Amazon has long advocated. (info from The Wall Street Journal)