Macmillan Books to Return to Amazon, Prices to Rise to iPad iBooks Level, Consumers to Vote with their Wallets

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Both Mcmillan and Amazon have issued statements about the story linked to previously, wherein they stopped selling Macmillan e-books after the publisher wanted to raise the price for best-sellers to an agency model $12.99 to $14.99 -- which Apple had already agreed to for iBooks on the iPad.

Mcmillan's CEO, John Sargent's comments ran as a paid advertisement in the Sunday edition of PublishersLunch and read in part:

Under the agency model, we will sell the digital editions of our books to consumers through our retailers. Our retailers will act as our agents and will take a 30% commission (the standard split today for many digital media businesses). The price will be set the price for each book individually. Our plan is to price the digital edition of most adult trade books in a price range from $14.99 to $5.99. At first release, concurrent with a hardcover, most titles will be priced between $14.99 and $12.99. E books will almost always appear day on date with the physical edition. Pricing will be dynamic over time.

The agency model would allow Amazon to make more money selling our books, not less. We would make less money in our dealings with Amazon under the new model. Our disagreement is not about short-term profitability but rather about the long-term viability and stability of the digital book market.

Amazon's response can be found in full on Engadget, but contains:

Dear Customers:

Macmillan, one of the "big six" publishers, has clearly communicated to us that, regardless of our viewpoint, they are committed to switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers and most hardcover releases.

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. We don't believe that all of the major publishers will take the same route as Macmillan. And we know for sure that many independent presses and self-published authors will see this as an opportunity to provide attractively priced e-books as an alternative.

Kindle is a business for Amazon, and it is also a mission. We never expected it to be easy!

Thank you for being a customer.

So what do you think? Will the publishers be able to raise prices or will the market -- or lack thereof for higher priced e-books -- force them back down again?

[PublishersLunch via BoingBoing via Engadget]

Rene Ritchie

Editor-in-Chief of iMore, co-host of Iterate, Debug, Review, The TV Show, Vector, ZEN & TECH, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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There are 16 comments. Add yours.

Rene Ritchie says:

Updated to include Mcmillan's comments...

taroliw says:

Honestly, I think that as long as people feel they're getting a deal over the cost of the printed editions of these books -- considering the substantial savings in printing, distributing, retailers, etc -- then I doubt anyone will raise an eyebrow over this change. I don't think that people have enjoyed free/almost free prices for eBooks in the same way that they were used to "free" music before the RIAA finally decided to get a clue over online music sales. And if you look at online rates for /albums/ you'll find they aren't that much cheaper than many CD's used to be. (Not that I bother buying whole albums in most cases... but you'll see the parallel.)
Amazon is correct though. If buyers don't see the value (savings) in buying books online then they won't. Simple as that. I guess we'll all get to see what happens.
My bigger issue with this is whether Apple will bother to support owners of it's other iPhone OS enabled devices with iBooks in the same way that iPad owners are. I guess we won't know until version 4.0 of the OS, since 3.2 that comes with iPad doesn't even support iPhone or iPod Touch. Hmm...

Andrea.Richardson says:

There's no way I would pay that much for an ebook. Part of the reason I have an Amazon Kindle account (I get my books on my iPhone) is that the cost is generally cheaper than hard copies. Also, I figure that the overhead costs for producing ebooks has to be far cheaper than making hard copies (no shipping, printing, supplies, etc). If I really want to read a best seller that bad, I will get it from my local library or buy it used online for a fraction of the price. Worst case I will get a hard copy at the store. However, I would NEVER pay that price for an ebook.

KiltBear says:

I'll be supporting and using my local library more than ever.

Victimsofgravity says:

Whoever pays $15 for am ebook is a bloody fool. Most times u can get the real book at walmart for $17 and then sell it when your done or give it to a friend...

ParishYoung says:

Pricing is the least of my concerns right now!!
Need to get agreements to have the iBookstore open outside of the US first!!
That said as Andrea said above I currently use the Amazon Kindle App on my iPhone, and I have the luxury of discounted books through the conversion rate from USD back to GBP. won't get that in iBooks.

Googlr says:

This should be deemed as price fixing by major corporates. This is illegal. Full stop.

Benoit Cerrina says:

As long as the prices for the ebook is cheaper than the cheapest hardcopy format (basically as long as they don't keep using the hardcover price as a reference once the paperback is out), I'll be happy. I've been shocked recently when finding that the kindle books I was interested in were several dollars more expensive than the paperback in the same online store.

dloveprod says:

Everyone loves money, more more more.

fz553 says:

So now just like all apple products...iBooks will offer the same thing just for more money.

LarryC says:

it's a shame that corporate interests have to get in the way. I enjoy my Kindle because of the convenience and some of the ability to work digitally with notes and highlights (I'm an addicted noter) and my decision to purchase an e-book is only partially determined by the price. That said, market pricing is misleading since the "market" cannot respond to competition selling any specific book.

Mike Roberts says:

The price increase will cause more piracy, fewer eBook sales, and more print book sales where the margins for the publisher are less than eBook margins.
Now they are selling eBook best sellers for more than the hard copy book costs at Costco. When you're done with the hard copy you can sell it, trade it, or donate it to the library.
Actually the library is looking really attractive now. You can check out audio books and transfer them to an MP3 player to listen to them, or borrow the hard copy.
What's ironic is that for hard copies, the least expensive books are the best sellers which are sold not only at bookstores, but warehouse clubs and Wal-Mart, while for eBooks the best sellers are the most expensive books.
Essentially, Apple made a bad deal with McMillan, and this hurt Amazon as well.

Djay says:

Despite being a long time fanboy of Apple, the apparent iPad / iBook impact upon e-book pricing has left a bad taste in my mouth for Apples!

Scott G. Lewis says:

I've thought long and hard about the matter, and support Macmillan. To the commenter that proclaims price fixing - quite the opposite. If anything, Amazon selling books at a loss to promote Kindle sales is far more egregious an offense. Basing eBook pricing off the standard discount rate for hardcovers was silly - it doesn't make sense. Macmillan's new pricing strategy actually causes them to EARN LESS per sale and enabled Amazon to PROFIT on all new and bestselling titles.
I've written a lot about it, but summed up my thoughts here:
http://www.thelewisfour.com/2010/02/amazon-macmillan-and-agency-based.html
Also interesting are John Scalzi's comments (he is a Macmillan published author):
http://www.thelewisfour.com/2010/02/john-scalzi-macmillan-author-on-amaz...
And lastly, Kobo, who sells ePub books compatible with most major eReaders (except Kindle) weighed in today with a great piece.
http://www.thelewisfour.com/2010/02/kobo-weighs-in-on-shift-towards-agen...