Apple vs. Amazon vs. Macmillian -- Begun These e-Book Wars Have?


According to the NYT's Bits blog, Amazon has pulled Macmillan e-books due to a dispute over pricing, with Amazon wanting to hold the line at $9.99 and Macmillan wanting to raise it to an Apple iPad iBooks-like $14.99.

Eerily similar to Apple and iTunes Music, where Steve Jobs resisted the music industries desire to raise prices from $0.99 a song, and finally came to an agreement for flexible pricing up to $1.29 in exchange for DRM-free 3G downloads in January 2009. Previous to the change, Amazon was able to use music industry dissatisfaction to offer DRM-free Amazon MP3 music at $0.89. The industry was willing to take the loss in an attempt to break Apple's control, and now it looks like their hoping similar pressure and competition from Apple's iBooks will break down Amazon.

Ironic, poetic? Here's where it stands:

Macmillan offered Amazon the opportunity to buy Kindle editions on the same “agency” model as it will sell e-books to Apple for the iPad. Under this model, the publisher sets the consumer book price and takes 70 percent of each sale, leaving 30 percent to the retailer. Macmillan said Amazon could continue to buy e-books under its current wholesale model, paying the publisher 50 percent of the hardcover list price while pricing the e-book at any level Amazon chooses, but that Macmillan would delay those e-book editions by seven months after hardcover release. Amazon’s removal of Macmillan titles on Friday appears to be a direct reaction to that.

And here we thought when there was competition, prices were supposed to go down...

[Note: Amazon has merely stopped selling the e-books for now, they haven't remote-wiped any that were already purchased, the above graphic is entirely satirical!]

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Rene Ritchie

EiC of iMore, EP of Mobile Nations, Apple analyst, co-host of Debug, Iterate, Vector, Review, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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Reader comments

Apple vs. Amazon vs. Macmillian -- Begun These e-Book Wars Have?


Going up demand will of ebooks (the books themselves). The Kindle was doing ok, but the iPad (along with Nook, etc) will mainstream this market.

Under this model, the publisher sets the consumer book price and takes 70 percent of each sale, leaving 30 percent to the retailer.

This is a patent attempt to get around the First Sale Doctrine and I'm thinking it lands Apple in hot water.
Once again Apple is conspiring to use its dominant market position in digital music as leverage to assert dominance in another market. If Amazon files an FTC complaint of collusion on the part of Apple and a couple publishers this whole thing blows up in their face.
I do hope the retailers stand pat with Amazon and not let publishers use Apple as their wedge, because Ebooks are already too expensive. Ebooks can be produced for somewhere between 35 and 40% less than Paper books. The typical 9.99 price point is just about right. Nobody is losing money selling ebooks.

Not really satirical as much as an outright lie in this case, presumably to make an Apple competitor look bad...

@Dev - Updated with a fresh new graphic. We can even imagine the kid he's taking the Macmillian book from is Steve!
(Like I said in the post, it's nearly identical to what happened with iTunes and music -- and iTunes and NBC TV! so how that makes Amazon look any worse than Apple is beyond me...)

@Icebike -- isn't Amazon losing money on some of them by selling below the cost they're paying? ($4 and change per book).
When Amazon was doing MP3 at $0.89, was that the same "collusion" to undercut Apple?
I don't like any of these media games, but I don't think they're illegal in any way. Illegal would be Apple refusing to carry Warner music unless they got an exclusive deal on Warner books -- that would be abuse of monopoly (like Intel is accused of doing).
Some people weren't happy when Amazon signed exclusive e-book deals for the Kindle, but I don't think that was illegal either.
I'm curious if publishers get disintermediated and authors can sell directly via e-book, what pricing would then shake out to be. Typical print authors might get 10% of retail. An App Store like deal would net them 70%.
10% of $10 is $1. They could charge $2 for the e-book and still make more than they ever did for a $10 print book.
Sell it for $5 and they could hire the great copy editors and marketers few publishers provide anymore anyway.
There would need to be some third party aggregator to make negotiations and acquisition easier (like CD Baby for music), or it could just be App Store-like with authors becoming "developers" and submitting directly to Apple, Amazon, etc.

Its quite possible Amazon loses money on SOME small fraction of Ebooks, (loss leaders) but by and large, its profitable to be selling ebooks these days.
Undercutting someone else's price is fine, noble even.
But if Apple is conspiring with publishers to force a Price Increase on an entire market its called price fixing. Generally frowned upon. Illegal even.
Self publishing, with todays tools, could get dirt cheap.
Making an Ebook is pretty easy. (Google up a copy of Atlantis word processor and output directly to epub).
Problem is, virtually every author needs an editor,(I suppose those could work free lance as well), as well as a marketing arm, publicist, and someone to tell them to choose a new line of work.
I don't object to publishers in general. But this tactic of Raising the price and trying to end run copyright law by getting to set Retail Price pretty much stinks. And Apple helping them do it to make the iPod book sales profitable enough for Jobs stinks even more. To the extent they planned this, its collusion.
Will anything happen? Probably not with Teflon Steve still in charge and his buddies sitting in Washington.

I am outraged that Macmillan is using strong arm tactics to muscle Amazon (i.e. the consumer). What's wrong with cheaper prices for the consumer? Macmillan should kiss Amazon's toes for coming up with the Kindle!!!!!!! The book publishers see the writing on the wall just like the music industry did.
BTW, I had a chance to actually USE the is so awkward and the screen so will take a very long time to catch up to the Kindle.