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.
@Synergi If you have a 'hard cover addiction' ebook prices will not matter one bit to you. Yeah, I know you meant 'edition'. :-)
@(Unverified)
Hey I blame Engadgets lack of a edit feature.
Good for Amazon.
For those with the patience, a couple links to authors whose works are published by Macmillan. Neither of them approve of Amazon's tactics:
1st (long): http://www.antipope.org/charlie/blog-static/2010/01/amazon-macmillan-an-outsiders.html
2nd (very long): http://www.tobiasbuckell.com/2010/01/31/why-my-books-are-no-longer-for-sale-via-amazon/
If you can get through Buckell's post, he goes into much finer detail, even comparing his printed books sales to those of his ebooks.
To sum them up, Amazon is not only trying to maintain their monopoly in on-line book-selling (a position they earned rightfully) but also leverage this power into becoming the only means for publishers who want to distribute books electronically. It's this latter ambition that could arguably be seen as anti-competitive and bad for a free market economy.
@Cromagazine
Charlie's an idiot. He's arguments have been thoroughly been debunked by the comments on his own blog.
Macmillan is actively performing the illegal act of price-fixing. You want to control the price, open your own store. That's all you can do.
@jgp
Look up what Price Fixing is, then add yourself to the idiot list. What Macmillan is doing is not price fixing.
@jgp No, they weren't, and to flat out discount the experiences of an author directly affected by Amazon's tactics with name-calling just shows that it is *you* that suffers from a case of idiocy.
Not a single participant in the thread could entirely refute Amazon's T&C with the new 70/30 plan:
"Amazon's T&Cs for letting authors publish via Kindle are onerous -- they agree to pay you 70% of net receipts (not SRP, as is usual in the business), but they decide how much to sell your book for and furthermore, the price is capped at $9.99. As ebook sales numbers are an order of magnitude lower than paper book sales -- at least, hitherto and for the next few years -- this would make it rather hard to make any money. Worse, the Amazon agreement bars you from selling ebooks for less elsewhere: it's effectively a no-compete clause, while ramming Amazon's DRM (or an EULA that amounts to the same) down the readers' throats. Worst case, you sign the agreement ... and Amazon can shovel out your book as a promotional freebie, paying you nothing, in order to make the platform attractive to their customers."
Sure, he apparently forgot the $2.95 minimum pricing, but that doesn't change the fact that it still grants Amazon a tremendous amount of power over an author's livelihood. Sure, publishers have a lot of control too, but they're only interested in selling books, whereas Amazon wants to push a lot more and would have no problem with using dirt-cheap ebooks to promote, say, their latest Kindle.
what is the big deal and why is Apple even part of the comments. Unless Macmillan is violating a contract that promised X terms for longer than this time, they have every right to renegotiate. They wanted to charge more as a condition of their deal with Amazon. Amazon said no and dropped the titles from their ebook collection. As would be their right. So what.
This was the worst thing Amazon could have done...to themselves. I've always championed the Kindle due to it having the best book selection of all other readers. Now all of a sudden the publisher of most of my favorite books, isn't available on Kindle. I might even return my Kindle (I only bought it a couple weeks ago) over this. And I have a friend who'se *REALLY* pissed off, he just finished reading the first book in a trilogy which really caught his attention, and he went to buy the next two...right after Amazon pulled them.
If I can't buy the books I want, or even trust that the books currently on the service *remain* on the service (what if I need to redownload one of these removed books??), then it's a bad service.
@Dreamwriter honest that's the dumbest thing I have ever heard. If you bought a 300 ebook reader to read one book you a have a larger problem. You know paper books still exist right? And you know they are cheaper right? So you are mad at Amazon for trying to keep prices low for you because Apple is colluding to increase the prices about 33%. Drink more Apple Kool aid
@Dreamwriter
"(what if I need to redownload one of these removed books??),"
You can still download them.
Oooohh... somebody (macmillan) bet on the wrong horse.
I really hope the FTC really slaps Apple hard with an unfair trade law suit
The Kindle is dead.
@kikoteixeira then the iPad is too. How can you make such a statement
Jobs is an idealist, but is also a smart guy when it comes to business. Not as smart (shrewd) as Gates was with MS, but smart nonetheless. He knows when it is time to switch hit and this is it for Apple. If they don't stay at the bleeding edge of tech-meets-music/literature then they will lose their advantage.
@kobioshi
Your idea of Shrewd is hiding in a cabin for a week, reading 'essays' on Internet Security whilst slurping Orange Soda, or, the guy who outsmarted the entire music business and cellphone industry?
Pfft.
Macmillan has committed price-fixing, which is a crime in the US.
I hope Amazon files charges ASAP.
I think continuing sales and posting the type of open letter that Amazon has posted is the right thing to do. if they really wanted to, Amazon could certainly continue to block Macmillan, but I'm not sure that's what the bean counters really want to see happening.
At the end of the day consumers will indeed vote with their wallets. I, for one, won't be purchasing an e-books over $10.
iPad sucks as far as revolutionary expectations but will have a richer ebook feature set, thus a more fulfilling experience and higher price. Plus if authors get more money for good work, they deserve it.
@PattyXXX
Richer ebook experience? Have you used e-ink displays for reading? If you mean the ipad will be richer by gouging your eyes out on it's lofi display, then you're right.
Nothing out there today touches e-ink for reading on a portable device. NOTHING. You can read one for a week betwqeen charges, in direct sunlight (try that with the ipad) and with no more eyetrain than a regualr book.
@PattyXXX
Expectations? So you're gadget fantasy is exactly like the iPad, but with buggy flash and, what, a camera? Yawn.
They didn't do anything to you, they just leaked a few morsels to the WSJ.
I'm really digging this company.... I want a Kindle :(
"not the $9.99 price that Amazon customers have been enjoying so far"
I have a kindle. I have seen new release go for almost meatspace MSRP. $9.99 my ass.
I love that motto and Yes I will decide with my wallet
wait does that mean if I pay for a book on amazon for $9.99 and apple has the same book for $14.99 can I read my amazon purchased book on my apple purchased iPad
I know I won't BUY a regular book for more then $10. See I don't get these high ebook prices. Unlike a paper book, you can't SELL your copy when your done with it. Can't give it away to someone else. That means more Digital copy's get sold. There's no Printing costs, Distribution Costs, etc, etc, .etc. There's so many FREE books and low cost books to buy, that they can go ahead and try to sell them at $15, but I won't buy them at all. I can wait for however long it takes for the price to drop, or end up forgetting about it and now they just lost a sale as I've moved on to something else. I have so much to read on my Kindle as it is besides books, but Blogs and other stuff I get for FREE. I can browse the Internet using 3G at any time for FREE on my Kindle, no monthly FEE at all. It's not great, or fast, but for FREE when I'm out and need to look something up, it can't be beat.
IPAD seems pointless. Something like the HP Slate seems far better anyway. No matter how much they think they can sell their over priced books for, I won't pay it!!!
Amazon offer a sweet deal to consumers but give the publishers a horrible deal. Amazon got too greedy without a competitive ebook retailer to challenge them.
http://www.antipope.org/charlie/blog-static/2010/01/amazon-macmillan-an-outsiders.html
write them an email.
customerservice@mpsvirginia.com
Macmillan wants the higher price for e-books in order to drive people away from e-books towards hardcovers. Hardcovers are MUCH more profitable for publishers, but because e-books are released concurrently with hardcovers yet are 1/3 the price, they are consequently more attractive to those with the ability to purchase them.
So really, the best way to force Macmillan's hand and lower e-book prices is to boycott their hardcover sales, so that they see that the gain that they expected from hardcovers will not make up for their loss in e-book sales.
This is bullcrap! Amazon pays the publishers the same rate as the physical books for every digital copy sold. The only reason why Macmillian is doing this is to price fix the e-book market and raise the standard price to $14.99. Good on Amazon to do what Apple didn't have the balls to do and try to fight for the cost to the consumer.
Here's my bottom line. A product is only worth what people will pay for it. I will not pay $14.99 for an e-book. Period. I also do not think I should have to wait for an e-book to be released well after the hard copy. I don't think I'm alone in this. You know what I CAN do? I can go online and download that book for free (often times before it is even released in stores). Yes, yes I know it is illegal and morally wrong and if I had the authors address I would gladly send him/her a cheque, but I won't pay $14.99 for a digital file. The end.
I will NEVER pay the same price for an eBook as a physical book. $9.99 seems about right for a new release. At $14.99, I'll just read something else until the price becomes reasonable or I'll simply download it elsewhere if the opportunity arises (or if the book in question isn't available in a digital format).
Let publishers get greedy. Let's see where it leads them.