Book publishers, it seems, are starting to take lessons from the music industry when it comes to the digital landscape. Judging by how poorly the music labels have handled the situation and the fact that more than a decade after online music became a possibility, we still don't have a coherent and consumer-friendly solution. This while all major music labels are bleeding money. Macmillan, one of the biggest book publishers in the world, has decided that e-books are definitely worth more than the $9.99 Amazon is asking for them and took it upon itself to rectify the situation. Surprisingly and reluctantly, Amazon conceded but only after a weekend-long drama.
Apparently, Macmillan CEO dropped by Amazon headquarters to hand over an ultimatum of sorts. Amazon could continue to sell the books at the current pricing, but won't get any new titles and also have to pick the ones they really wanted. The publishing house also ran a full-page ad explaining why e-books had to be priced higher with the usual dooms-day scenario of how the poor writers had to be protected and how good writing would disappear altogether. If it sounds familiar, it's because it's the same speech the music industry has been promoting for years and, as we all know, music has been destroyed and no new artists have come along since they can't afford to pay rent on music alone.
What's interesting here is that the move is not aimed at making more money, at least not directly. Most publishers, including Macmillan, wholesale to Amazon for about $15. The online bookstore then sells the books at a loss in order to create a market and push its device, the Kindle, into as many hands as possible, meaning as many pockets as possible. The reasoning is that e-books need this to push them into the mainstream where the real money is.
Publishers are worried, though, that it creates a mindset for the readers which won't be willing to pay any more than what they see as the right price of $10. They also fear that the distribution market doesn't get controlled by just one player who can then make its own rules, like it happened with the music labels and Apple's iTunes. Publishers are so determined, in fact, that they've agreed to sell books, ironically, to Apple for its iPad bookstore at the wholesale price of about $10 just so that they get more flexibility on pricing. At first, it seemed like Amazon was ready to play ruff and pulled all Macmillan books from sale on the Kindle store. The attrition war wasn't going to last though, as Amazon relented and issued a, rather bitter, statement on Sunday. It admits defeat and says that it will allow Macmillan to set its own pricing even though it believes $15 is too much and that the users shouldn't and wouldn't pay that much for e-books.
"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," Amazon's
message to its customers reads. "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," it adds.
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