Amazon Vs Macmillan

Amazon and Macmillan have reached an agreement over ebook pricing. The buy buttons which Amazon had removed as part of a dispute concerning new pricing arrangements have been re-instituted for all Macmillan titles.

The dispute arose when Macmillan CEO John Sargeant informed Amazon late January that he was proposing a new model for selling ebooks through Amazon. This new model would change the way that books were priced as well as shifting to an “agency” basis whereby Amazon instead of receiving a discount and selling the book at a price of their choosing, would sell books at a price set by the Publisher and receive a commission of 30% on that price.

The “Agency Model” emerged as a point of discussion during discussions between industry players and Apple in the run up to the lauch of Apple’s iPad on 26 January 2010.

~ The Financial Times carries a piececovering the issues in the dispute today that is worth reading.

~ Macmillan placed a statement on US industry website Publishers Marketplace explaining their actions:

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.

~ Amazon’s response is freely available too:

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.