Amazon pulled Macmillan titles due to price conflict -- confirmed (update: they're back!)
By Thomas Ricker 
posted January 31st 2010 4:06AM
posted January 31st 2010 4:06AM
Macmillan's US CEO, John Sargent just confirmed that Amazon pulled its inventory of Macmillan books in a powerful response to Macmillan's new pricing demands. Macmillan offered the new pricing on Thursday, just a day after Apple announced Macmillan as a major publishing partner in its new iBookstore -- a revelation that certainly factored into the discussions along with Skiff and other emerging e-book distribution and publishing models. During the meeting with Amazon in Seattle, Sargent outlined what he calls an "agency model" that will go into effect in early March. Under the terms offered, if Amazon chose to stay with its existing terms of sale then it would suffer "extensive and deep windowing of titles." Amazon's hardball response was to pull all of Macmillan's titles from its Kindle site and Amazon.com by the time Sargent arrived back in New York. Macmillan claims that its new model is meant to keep retailers, publishers, and authors profitable in the emerging electronic frontier while encouraging competition amongst new devices and new stores. It gives retailers a 30% commission and sets the price for each book individually: digital editions of most adult trade books will be priced from $5.99 to $14.99 while first releases will "almost always" hit the electronic shelves day on date with the physical hardcover release and be priced between $12.99 and $14.99 -- pricing that will be dynamic over time. So when Steve Jobs said that Apple's and Amazon's prices would be the same, he was almost certainly referring to the $12.99 to $14.99 e-book pricing originally rumored by the New York Times -- not the $9.99 price that Amazon customers have been enjoying so far. Funny how Jobs, the man who once refused to grant the music labels' request for variable pricing on digital music so that Apple could maintain a low fixed $0.99 price per track, is suddenly the best friend of a new breed of content owners. Guess the old dog just learned a new trick, eh?
Update: Amazon has conceded, but not willfully. It has decided to give the consumer the option of paying too much for a bestseller, and frankly, that's the right thing to do. Let 'em vote with their wallets, we say. The full response is after the break.
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.
@marialoving13
OMG take your spam and GTFO!!!
why this article have apple tag ?
@rhezaganteng because they think that happens because of them.
i will go and buy book instead of iboob, whatever they call.
@rhezaganteng it's a test to see if anyone complains after the apple hater article...
I'm other news Steve jobs is a hypocrite, rather than an old dog learning new tricks. Making enemies seems to be something he enjoys and someday it will come back to bite him
@rhezaganteng
Because McMillan have said "f**k you" to Amazon and jumped ship to Apple who presumably are giving them the rates they want.
It's pretty relevant to Apple, is news an in interesting - although I think the iPad is the inferior reading device that wont matter a shit if they get all the titles.
@rhezaganteng
they should just tag every article 'apple' now so those people who have this . . . weird hatred of apple . . . will just fume and have to imagine that steve has somehow managed to take over every single aspect of the gadget world as they read their newly filtered engadget.
this news about amazon and Macmillan. keep your apple rumors out.
@rhezaganteng
Engadget has to take every precaution to make sure the 'Apple Haters' don't go into rage, we must be careful or they might send another wave of negative energy through the Engadget discussion.
Please remember Apple Haters have very fragile egos and don't like to hear anything that might challenge their views, so it is best for all if they filter anything that could relate to Apple.
engadget.com/exclude/reality
@cswright
"Guess the old dog just learned a new trick, eh?"
The difference between Apple stand towards record companies and publishers is that Apple had the upper hand in audio players, but it´s a new player in reading devices. If the iPad sells well, they are probably gonna play hardball with the publishers too. I would take a kindle over an ipad any time (for reading books, at least), but I bet those things will sell very well.
@MarkAnderson Let the revolution begin! -- You put a product that both, competes not only on the ebook itself (physical features) but to its services as well. What would you expect?
Competition is good on the end of the users.. Hopefully, it'll still be the case for the ebook wars.. Details: http://bit.ly/the-apple-ipad-details
@cswright
Why is it that everytime a corporation executes a perfect business strategy they are demonized.
It seems brilliant to me for Apple/Jobs to encourage a fight between publishers and Amazon.
The spread the word that the kindle is a headache and you can't get the content you want.
Corporations are supposed to maximize profits. They are never supposed to give you the best deal unless it leads to maximizing profits
@cherryboom
You're comparring apples to oranges....
Watching video and playing games for hours on end is NOTHING compared to reading an entire book on an LCD screen. Have you tried it, kinda sucks...
@rhezaganteng
Good for Amazon. Macmillan thought they had a stronger position to muscle Amazon after the "revolutionary" iPad was announced. They may have bet on the wrong horse.
@scottkrk
"Please remember Apple Haters have very fragile egos and don't like to hear anything that might challenge their views, so it is best for all if they filter anything that could relate to Apple."
Uh, this seems to refer more to "Apple fanatics" that despise criticism, critique, analysis of some corporation that they have decided to back like a religion, and have taken it upon themselves to deem all who are "Apple haters", and expect them to all go away or sit in silence. They are truly the most thin-skinned children on the internet. this whole deal with the Pad, and the chorus of people, Apple users included, that were negative about it must have been a 9-11 sized disaster for them.
Of course there is nothing preventing those same Apple fanatics from going to ANY topic regarding non-Apple products to tell people how inferior they think they are or how people should stop using poor products and go buy Apple ones, which they do on countless forums.
@duruguay Actually, I think the difference is Apple was playing catch up with the music industry. Piracy was popular among music, and Apple had to ensure a price point that was cheap enough to discourage piracy.
The opposite is true with books. While some piracy exists, only your hardcore pirates are pirating books right now, so Apple is free to set the purchase price to whatever pleases them and the publishers.
@rhezaganteng Sure, it happens all the time when “competition” is overshadowed by high barriers to entry and near-monopolistic strangleholds on markets. Capitalism is a double-edged sword that doesn’t always swing the right direction when coupled with modern business practices.
The theory says that competition is good because companies compete to please consumers…but that model breaks down when only a few companies dominate the market, and they realize it’s much more profitable to simply collude — er, collusion is illegal, so clearly they’re just “adjusting to market forces”…riiight.
Competition is good on the end of the users.. Hopefully, it'll still be the case for the ebook wars.. Details: http://bit.ly/the-apple-ipad-details
@PBB Actually, I read all of the illiad and oddysey on my iPhone and it wasn't horrible. Reading in dim light puts far more strain on my eyes.
@Wildwood - Am I wrong, but isn't raising the prices of books against our best interests? Unless you are a book writer or publisher, you would have to be an idiot to applaud this right? Luckily, having owned both a iPod touch and a iPhone the iPad is useless to me. People should be going with the company trying to keep the prices LOWER not praising companies that want to raise prices on us.
@scots79 "Wasn't horrible" - yeah, that sounds great :P Personally, I prefer a great experience to one that "isn't horrible". I work with computers all day every day, go home and watch TV and play videogames and stuff, I've never felt eye strain. But it's just so much more relaxing to read books on my Kindle than on an LCD screen (I did read Stephen King's Dark Tower series on a handheld LCD device).
"Guess the old dog just learned a new trick, eh?"
Hypocrisy? No, he's been quite the expert for a long time.
@duruguay
Are you channeling Steve Ballmer?
@AllanMclovin Hell, I'm writing a novel myself and even I am against this.
If users have to pay hundreds of pounds for an E-reader, THEN pay JUST AS MUCH for the E-book as they would the hard-back... what's the point? Just get the physical book!
I know how I'd go about selling E-books, and these guys are waaaay off the mark.
I'm glad Amazon pulled out. The prices are way to steep, and it shows that Amazon actually cares about its customer base.
@whatchamacallit yeah I want to high five amazon for not putting up with it. Both sides know the paper side of the business is in decline and the publishers are struggling to keep their huge profits coming in
@whatchamacallit High five to Amazon and their brass balls. I'm definitely renewing my Prime Membership!
@whatchamacallit
Holy Shit did I just read a post on Engadget that actually sounded more like journalism and not "I am on Jobs cock 24 hours a day"? I mean it didn't put a line of defense for the beloved Engadget Apple CEO, this is a historic moment in engadget history.
@nickcraze Seriously dude, calm it, generally they've been anti-apple more then anything in their posts...
@whatchamacallit
Everyone wants to sing the praises of Amazon, the one that takes something like a 70% cut of all content, but slam on the people that want to actually make any moeny on their work.
I would expect every single publisher to drop follow McMillian on this in the future. Amazon is like the record distributers, take all the profits and leave the scraps for the publisher and even less for the author.
Yeah, Amazon is the good guy in white here.
@dennisheadley
Exactly. Amazon wants to take 70% of $9.99 and leave 30% for everyone else. Apple wants to take 30% of $14.99 and leave 70% for everyone else.
Do the math and figure out who you want to high five. If you say Amazon again, I'll weep for the poor suckers writing books for your entertainment.
@dennisheadley
As if the when the publishers get more they will pay the writers the same percentage more, I have my doubts about that.
And that's a cute method btw, raise prices and give the extra money made to the publishers but only if they agree to give you exclusives, yeah that's real caring and decent.
@GadgetGeezer
If you think the authors will see a penny more under the new system, I'll weep for you.
@jon
If that's the case, then it's on the publisher and writer's contract negotiations, not Apple or Amazon. Writers will simply need to adjust their contracts with publishers going forward. At least Apple is allowing more revenue to flow back towards the writer so they have the ability to negotiate for more money. With Apple both the publisher and writer can make more money.
@GadgetGeezer
Sort of like how raising the price of MP3s to $1.29 resulted in more money for the musicians. Oh, wait.
@jon
Again, that's up to the musicians and record labels. If the musicians want more money, they need to make a move to demand it. That can't be put on Apple's head.
All I'm saying is that if Apple keeps their revenue model from the app store, they will make less money overall than Amazon per sale, leaving more money in the pipeline for the rest of supply chain. If the writers can't stand up for themselves to get what they deserve, then they deserve whatever scraps publishers give them.
@cswright
Yeah, their huuuge profits.
Obviously anyone who makes a profit is evil, right?
....
@jon
Oh by the way, in regard to your previous comment about authors not getting more money if the price goes up or if money revenue flows back to authors and publishers:
“Today, authors often receive royalties in the range of 7 to 15 percent of the list price that publishers set for their physical books, or 25 percent of the net that publishers receive from retailers for their digital books,” said Russ Grandinetti, Vice President of Kindle Content.
http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20100120005644&newsLang=en
@dennisheadley, What are you talking about? You must get your news exclusively from Apple propaganda sites. Try more reliable sources, like the NY Times. Amazon doesn't get a 70% cut of the e-book sales, or even a 30% cut. They typical pay 50% of the retail price of the physical book for the e-reader version. That means in most cases they are taking a LOSS on the $9.99 prices for new hardcovers right now. As the Times reported, publishers will make less profit with the Apple model than they do with Amazon. The publishers are just scared that e-books will destroy their print market though so they want to make them more expensive and are willing to make less sales on them and less profit to protect their 15th century business model.
So, yeah, Amazon is the white horse here from a customer POV.
@GadgetGeezer Yeah, except everything you wrote is pure fiction. Amazon isn't taking a 70% cut of $9.99. Not even close. Apple's 30% is a bigger profit that Amazon is taking. Amazon is willing to take a loss to protect the $9.99 price for customers.
@citivas
Actually we're both wrong. Starting in June Amazon is adopting Apple's pricing strategy. So Amazon won't lose a dime on any books with an auto 30% built-in revenue on every sale.
http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20100120005644&newsLang=en
@whatchamacallit
Go Amazon!
@GadgetGeezer, as the article says, that's a second option they are giving publishers. They still will have their default pricing per what I described. And, BTW, they announced this option before Apple officially announced its plan, though they were no doubt responding to what they knew Apple was floating privately.
@GadgetGeezer exactly, they get paid on the list price of the PAPER books, not how much the electronic books are selling for. Whether Amazon charges $9 or $15, the author makes the same amount of money. It's amazon and to a lesser extent the publisher that are taking the loss.
@citivas amazon regularly takes losses to stay competitive, particularly on CDs and other objects that Walmart drops to rockbottom prices, Amazon stays right there with them. It's happened a bunch of times in the last couple of months
@PerryAJ
The publisher is taking a loss on e-books? WTF? There is _zero_ manufacturing cost per e-book title. The publisher does nothing at all. No printing, no paper, no shipping, no risk of overprinting. All the things that a publisher did with physical books are gone.
There is no effing way that an e-book should be more that $9. It is all profit. It is Amazon, Apple and eReader.com that bear the distribution costs (server et al).
I've been buying and reading e-books for many years - reading from eReader on a Palm PDA. My main gripe has always been that the price should be cheaper. $15 for an e-book is obscene.
@cswright Huge profits? There have been no huge profits in publising in decades. LOL.
But $14.99 for a zero cost ebook is insane. Knowing publishing (and I do) the costs of meatspace hardcopies are very high for the publisher. With an ebook the distribution cost is eaten by the retailer and perhaps the user (amazon whispernet, apple store,AT&T 3G, whatever). So the cash from an ebook sale is pure gravy for the publisher.
To those calling this price fixing: it is not. The sole publisher is setting their prices. That is their right. If more than one publisher gets on board and they all collude to jack up prices, then maybe something might be done, but probably not. It's not like there can be competition between publishers for the same title.
I'm just buying more hard copies now. My kindle collects dust just becuse the value of the experience is not there at the current price points for new releases.
Well now... What to say about this? Not much obviously...
@MrPacMan36: Nothing, except that I will NEVER pay $14.99 for an e-book.
@aubreyq Especially an E-Book that can be deleted from my device at the distributor's (or publisher's) whim. No thanks, I'll stick to a paperback.
Amazon = The fairy godmother
Apple = The Wicked Witch of the West
This is how fanboys will spin it.
@XciteMe
Well, what do you expect when Apple is fighting for higher prices and Amazon for lower?