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 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 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 &

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)



  1. Macmillan is just being dumb. They are inviting more ebook piracy and that's really ALL they're doing.

    ebooks won't sell for 15 bucks, sorry. I won't buy an ebook for 15 bucks, period. I'm even thinking that my own book, at $3.99 is overpriced.

  2. To Christy:

    Since the cost of manufacturing is zero, the cost of shipping is zero, the cost of warehousing is zero, the cost of in-store handling is zero, and there are no returns of unsold books, I think the $9.99 price makes good sense for eBooks from traditional publishers.

    Amazon, B&N, Target, etc. are already willing to keep 20% (or even less) on a pBook sale, so giving 20% to the bookseller, 40% to the publisher, and 40% to the writer could make a lot of sense for eBooks.

    Or maybe 60% should go to the publisher and 20% to the writer to provide more money for production and promotion.

    For the writer, 20% of $9.99 is as good as 8% of $24.95 -- and the lower price should result in MANY more books being sold (unless the book is crap).

    If a publisher knows there won't be any returns, there will be no justification for a publisher making writers wait six months for royalty payments. If royalty money could start flowing to the author in 30 to 60 days after an eBook is sold, there would be less need for big advances, and that could help reduce the price of books.

    The iPad could be a genuine world-changer. It's a computer for people who need but don't like computers (like my wife), a great toy for people who want a big-screen iPod (like me), and a back-seat movie/music/game device for kids, that also just happens to be a superb eBook reader.

    Amazon, Sony and B&N have not been able to motivate me to get their e-readers, but I'm ready to place an order for an iPad today.