Amazon
Amazon.com temporarily stopped selling all Macmillan books to show the “seriousness of our disagreement,” Amazon.com said in a notice on its Web site yesterday. Macmillan, publisher of Elie Wiesels “Night” and Michael Cunninghams “The Hours,” proposed new prices for electronic books last week, Macmillan Chief Executive Officer John Sargent said in an e-mail to authors and agents.
“Amazon and Macmillan both want a healthy and vibrant future for books,” Sargent said. “We clearly do not agree on how to get there.”
Under the new terms, Macmillan wants to be able to set the prices of electronic books individually, with most new titles costing $12.99 to $14.99. Amazon.com charges $9.99 for most best-sellers and new releases. Retailers would get a 30 percent commission under the proposal, Macmillan said.
Titles such as “Sarahs Key” by Tatiana de Rosnay and “Wolf Hall” by Hilary Mantel, listed as best sellers on Macmillans Web site, werent available for purchase directly from Amazon.com yesterday. A 2006 edition of “Night” and “The Hours” were also not available. Macmillan books are still available on Amazon.com from third-party sellers, Sargent said.
Digital Future
The clash highlights the struggle between Amazon.com and the publishing industry over the economics of electronic books. Some publishers are unhappy with pricing models on the Kindle and want more control over how much they charge, said Carl Howe, an analyst with Boston-based Yankee Group.
“This is really a war for who wins control of the digital book publishing industry,” Howe said in an interview.
Drew Herdener, a spokesman for Seattle-based Amazon.com, declined to comment beyond the notice on its Web site.
Amazon lost 62 cents to $125.41 on Jan. 29 in Nasdaq Stock Market trading. The shares have lost 6.8 percent this year. Macmillan, which has offices in New York and London, is a unit of Verlagsgruppe Georg von Holtzbrinck GmbH.
Eventually customers will have to decide whether its reasonable to pay $14.99 for a bestselling electronic book, Amazon.com said.
Strong Disagreement
Amazon.com sells digital books that can be viewed on a range of devices, including the best-selling Kindle e-reader. The Kindle has about 60 percent of the U.S. market, with Sony Corp. ranking second, according to Cambridge, Massachusetts- based Forrester Research Inc. Apple Inc.s new iPad, debuted last week, will also display electronic books.
Macmillans Sargent said in his e-mail that he met with Amazon.com in Seattle on Jan. 28 to propose the new pricing model. By the time he arrived back in New York, Amazon.com had told him that it planned to remove the publishers books.
Amazon.com said Jan. 20 that it plans to offer a 70 percent commission to authors and publishers that put their titles on the Kindle. The e-books must sell for no more than $9.99 and the price must be at least 20 percent cheaper than the lowest available price for the physical version of the book, the company said.
Revenue Split
The 70-30 revenue split mirrors the arrangement Apple has with programmers who make applications for its iPhone and iPod Touch devices.
In announcing the iPad, Apple appeared to be giving publishers more control over the price of their books for the device, Yankee Groups Howe said. Macmillan is among five publishing houses, including News Corp.s HarperCollins and Pearson Plcs Penguin, that signed agreements with Cupertino, California-based Apple to distribute books on its tablet computer.
“Publishers werent happy with the Kindle pricing before, and the release of the iPad has accelerated their displeasure,” Howe said.