Amazon and Macmillan’s ongoing disagreement about pricing models for e-books boiled over this weekend in a very public way.
Late Friday, Amazon pulled all titles by Macmillan and its imprints – including Tor, Forge, St. Martin’s, and Farrar, Straus & Giroux – from its online store, even removing titles from customer wishlists and remotely removing promotional sample chapters from the Kindle e-reader. Macmillan books could only be purchased via third-party sellers hosted by Amazon.
Speculation ran rampant on twitter and in the blogs, but confirmation for the cause came only when Macmillan CEO John Sargent released an open letter on Saturday the 30th, reading in part, “This past Thursday I met with Amazon in Seattle. I gave them our proposal for new terms of sale for e-books under the agency model which will become effective in early March. In addition, I told them they could stay with their old terms of sale, but that this would involve extensive and deep windowing of titles. By the time I arrived back in New York late yesterday afternoon they informed me that they were taking all our books off the Kindle site, and off Amazon… I regret that we have reached this impasse.”
Amazon wants to set its own prices for e-books – at $9.99 for most titles, though they often take a loss at that price, using the sales as a loss-leader and to spur sales of their Kindle e-reader. Publishers fear this aggressive pricing gives customers the impression that e-books should always be so cheap – and that eventually Amazon will demand higher discounts from publishers to keep those prices low.
Macmillan is pushing a progressive pricing model, where books will be initially offered a higher price, becoming cheaper over time, in a range from $5.99 to $14.99. The “agency model” – with publishers setting e-book prices, rather than allowing retailers to set their own prices – is expected to be used by Apple with their upcoming iBooks store, which has announced deals with five of the six major publishers, including Macmillan.
On Sunday Amazon – or at least the Kindle team – posted a response, noting Macmillan’s push toward an agency model and saying: “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.”
As of this writing, Macmillan books have still not been restored for sale on Amazon.
Among the many discussions online: writer Scott Westerfeld offers his take on the situation, and Tor author Tobias Buckell weighs in as well.
For more details and analysis, see the March issue of Locus.