iPad debut ignites price war between Amazon and publisher Macmillan

Posted:
in Current Mac Hardware edited January 2014
Amazon stopped selling print and e-books from publisher Macmillan this weekend over a price dispute, just days after Apple introduced the iPad and its own iBookstore for e-books.



According to The Wall Street Journal, Macmillan CEO John Sargent visited Amazon Thursday to negotiate a new deal for e-book sales. Talks apparently did not go well, as he was later informed that his company's books would only be available for sale through third parties on Amazon.com.



"Amazon, the leading e-book seller in the world, now faces the prospect of publishers demanding the same terms they receive from Apple," the Journal wrote. "People familiar with Amazon's action said the move by the online retailer, which targets not only e-books but hardcover and paperback titles, signals its unhappiness with the prospect that e-book prices may rise in coming months as a result of Apple's e-book debut."



Just days earlier, Apple co-founder Steve Jobs had a conversation with Journal tech reporter Walt Mossberg in which he said that iPad book prices would be "the same" as the cost of e-book content for Amazon's Kindle. Currently, Kindle bestsellers go for $9.99, but a previous report said Apple wanted to offer bestsellers for between $12.99 and $14.99.



The apparent troubles between Macmillan and Amazon suggests that Jobs' comments to Mossberg were meant to imply that Amazon book prices would eventually increase to match higher costs on the iPad. Jobs also noted taht book publishers were "withholding their books from Amazon, because they're not happy with it."



On Wednesday, Macmillan was highlighted as one of five high-profile book publishers that would be a part of the iBookstore, a marketplace within the new iPad iBooks application. Apple's iBookstore business strategy allegedly employs the same 70-30 split in favor of content providers as the existing iPhone App Store.



"It is expected that publishers will now seek to do business with Amazon and other e-book retailers on the same terms as with Apple," the Journal wrote. "By setting their own prices, publishers would be able to eliminate discounting on Amazon and elsewhere that they believe threatens the long-term business model of publishing."
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Comments

  • Reply 1 of 102
    Wow. Looks like Jobs pulled Bezos' chain in a major (but sneaky) way.



    And, this from him on Google and Adobe: http://news.cnet.com/8301-17852_3-10444817-71.html



    Gotta love it!
  • Reply 2 of 102
    I wonder if previously purchased books by Macmillan will be "disappeared" on my Kindle.
  • Reply 3 of 102
    That's very interesting that it was Amazon that booted MacMillan rather than MacMillan pulling out. All speculation has been Macmillan pulled out. I guess with 3 million-ish in Kindle sales Amazon feels their strongest position is now before the iPad hits the market. Who will blink first?
  • Reply 4 of 102
    They should just let the publishers decide what they want to charge, let the free market decide what e books should go for, enough with the price fixing already!
  • Reply 5 of 102
    dave k.dave k. Posts: 1,306member
    Quote:
    Originally Posted by anantksundaram View Post


    Wow. Looks like Jobs pulled Bezos' chain in a major (but sneaky) way.



    And, this from him on Google and Adobe: http://news.cnet.com/8301-17852_3-10444817-71.html



    Gotta love it!



    Interesting read...



    Google entered the phone business (and really the OS business) because they want to keep their search business dominance.



    Its been said many times before, that one has to wonder how smart it was for Apple to keep Google's CEO on its board for as long as he was... Even if he didn't visit Apple's R&D labs on a daily basis, I can't imagine that he didn't know Apple's long-term business plans.
  • Reply 6 of 102
    boredumbboredumb Posts: 1,405member
    Considering the far lower expense of creating, handling, and distributing them compared to paper books, eBook prices are too high already, so I can't really thank Apple much if the result of the iPad is to raise rather than lower them.
  • Reply 7 of 102
    woodewoode Posts: 67member
    Quote:
    Originally Posted by boredumb View Post


    Considering the far lower expense of creating, handling, and distributing them compared to paper books, eBook prices are too high already, so I can't really thank Apple much if the result of the iPad is to raise rather than lower them.



    That would be an interesting point, if the value of the book was just the paper and ink -- yeah, electrons are cheaper. However, the value of the book is the content, the ideas inside. So, maybe that's not a good argument after all.
  • Reply 8 of 102
    Quote:
    Originally Posted by Elian Gonzalez View Post


    I wonder if previously purchased books by Macmillan will be "disappeared" on my Kindle.



    No. Only Macmillan books for sale have been removed.
  • Reply 9 of 102
    boredumbboredumb Posts: 1,405member
    Quote:
    Originally Posted by Woode View Post


    That would be an interesting point, if the value of the book was just the paper and ink -- yeah, electrons are cheaper. However, the value of the book is the content, the ideas inside. So, maybe that's not a good argument after all.



    Well, lets pretend for a moment that the selling price is tied more closely to the cost of producing, storing, crating, distributing, shipping, uncrating, retailing, recrating, reshipping, and re-storing a book, rather than, or perhaps in addition to, any calculation of how much people like, enjoy, or agree with what is in it. The point is that without all those costs associated with non-virtual content, profits on ebooks figure to be far higher at the same price-point. Assuming that all the people in either pipeline are more interested in those profits than in the warm fuzzy glow of everyone's appreciation (shocking), eBooks _should_ sell for less than paper books.
  • Reply 10 of 102
    areseearesee Posts: 776member
    Quote:
    Originally Posted by boredumb View Post


    Well, lets pretend for a moment that the selling price is tied more closely to the cost of producing, storing, crating, distributing, shipping, uncrating, retailing, recrating, reshipping, and re-storing a book, rather than, or perhaps in addition to, any calculation of how much people like, enjoy, or agree with what is in it. The point is that without all those costs associated with non-virtual content, profits on ebooks figure to be far higher at the same price-point. Assuming that all the people in either pipeline are more interested in those profits than in the warm fuzzy glow of everyone's appreciation (shocking), eBooks _should_ sell for less than paper books.



    And the 10 to 15 dollar eBook price is less than the 25 to 30 dollar price for hardbacks.



    And don't forget that cost of producing eBooks (writing, editing and page layouts) is the same.
  • Reply 11 of 102
    Quote:
    Originally Posted by boredumb View Post


    Well, lets pretend for a moment that the selling price is tied more closely to the cost of producing, storing, crating, distributing, shipping, uncrating, retailing, recrating, reshipping, and re-storing a book, rather than, or perhaps in addition to, any calculation of how much people like, enjoy, or agree with what is in it. The point is that without all those costs associated with non-virtual content, profits on ebooks figure to be far higher at the same price-point. Assuming that all the people in either pipeline are more interested in those profits than in the warm fuzzy glow of everyone's appreciation (shocking), eBooks _should_ sell for less than paper books.



    The average cost of a new hardcover is $26 (http://www.nytimes.com/2009/05/17/we...ew/17rich.html). At least as applied to new books, assuming the price is, say, $15, that's more than 40% off. That $11 difference should more than handily cover savings from the ".....producing, storing, crating, distributing, shipping, uncrating, retailing, recrating, reshipping, and re-storing...." costs.
  • Reply 12 of 102
    Apple should have defended the consumer here and insisted on the lower pricing that amazon.com charges. It costs next to NOTHING to distribute an eBook... $9.99 is MORE THAN ENOUGH to charge for an eBook. It's a real shame that Apple didn't go to bat for consumers this time around, while amazon.com did.
  • Reply 13 of 102
    john.bjohn.b Posts: 2,716member
    I thought this article from an author (published by one of Macmillan's many imprints) was insightful.



    Amazon, Macmillan: an outsider's guide to the fight



    Note: I have no affiliation with Amazon, Apple, Macmillan, or the author.
  • Reply 14 of 102
    Quote:
    Originally Posted by aresee View Post


    And the 10 to 15 dollar eBook price is less than the 25 to 30 dollar price for hardbacks.



    And don't forget that cost of producing eBooks (writing, editing and page layouts) is the same.



    I don't know where you get your books, but I usually see new hardcovers for $12-15. Nobody ever seems to sell them for MSRP.





    I can't believe that people are defending Apple for undoing all the good work Amazon has done for consumers. I like Apple and I love my Macs, iPods, and iPhone, but because of this and other anti-consumer issues, I wish the iPad didn't exist.
  • Reply 15 of 102
    john.bjohn.b Posts: 2,716member
    Quote:
    Originally Posted by JasonQG View Post


    I can't believe that people are defending Apple for undoing all the good work Amazon has done for consumers. I like Apple and I love my Macs, iPods, and iPhone, but because of this and other anti-consumer issues, I wish the iPad didn't exist.



    Strawman.



    Amazon hasn't done good work for consumers, Amazon is doing good work for Amazon.



    From the above linked blog post from an author (bold is mine, for emphasis):

    Quote:
    Originally Posted by Charles Stross, author


    Just before Apple announced the iPad and the agency deal for ebooks, Amazon pre-empted by announcing an option for publishing ebooks in which they would graciously reduce their cut from 70% to 30%, "same as Apple". From a distance this looks competitive, but the devil is in the small print; to get the 30% rate, you have to agree that Amazon is a publisher, license your rights to Amazon to publish through the Kindle platform, guarantee that you will not allow other ebook editions to sell for less than the Kindle price, and let Amazon set that price, with a ceiling of $9.99. In other words, Amazon choose how much to pay you, while using your books to undercut any possible rivals (including the paper editions you still sell). It shouldn't surprise anyone that the major publishers don't think very highly of this offer ...



    If this is true (and I have no reason to believe it's not), then I think Amazon is about to get some of that down-home DOJ lovin'...
  • Reply 16 of 102
    solsunsolsun Posts: 763member
    Quote:
    Originally Posted by JasonQG View Post


    I don't know where you get your books, but I usually see new hardcovers for $12-15. Nobody ever seems to sell them for MSRP.






    $20 maybe, not $12-$15. At least not in the Target's, Borders, and Barnes & Nobles in Orange County, California..
  • Reply 17 of 102
    mactrippermactripper Posts: 1,328member
    The justification for buying a iPod was satisfied because of the combination of iTunes "ala carte" song purchases for 99¢ and being able to rip your existing cd music collection.



    If prices for the content for the iPad is high, why bother when one can buy real books and resell them for less than the cost of the iPad?



    Of course if the iPad allows RENTING of books, like videos, boy look the fsck out, it will sell a lot!
  • Reply 18 of 102
    Quote:
    Originally Posted by Dave K. View Post


    Interesting read...



    Google entered the phone business (and really the OS business) because they want to keep their search business dominance.



    Its been said many times before, that one has to wonder how smart it was for Apple to keep Google's CEO on its board for as long as he was... Even if he didn't visit Apple's R&D labs on a daily basis, I can't imagine that he didn't know Apple's long-term business plans.



    Actually that is easy to answer, no he did not because he was excused from any discussions. Standard practice at majority of corporations.
  • Reply 19 of 102
    finetunesfinetunes Posts: 2,065member
    Shame on Amazon. While I don't necessarily agree with the pricing of eBooks, just because there is a dispute on what a publisher wants for a book, it is not right of Amazon to deny their customers the right to get a Macm book from Amazon or Kindle. The market will bear what price people are willing to pay to get an eBook or hard copy. If publishers want more for new books and if they pass this on to the authors, then it is only right that a new book should get a higher price. If you go to a bookstore, you would pay more for a just released novel. You as a consumer can decide to wait until the price comes down and buy the book three or four months later. Suppose that Borders or any other retailer decides not to carry ANY books of a publisher because of a pricing issue on a new book--almost borders on censorship. It would have been more reasonable if Amazon told Macm we won't increase the price so you have the option of not listing any new books with us or you can allow us to list them at our agreed to price; but to remove all Macm books that is just plain shameful.
  • Reply 20 of 102
    Quote:
    Originally Posted by souliisoul View Post


    Actually that is easy to answer, no he did not because he was excused from any discussions. Standard practice at majority of corporations.



    No thats not true. It was only very late in his tenure did he excuse himself from OS and phone discussions once google started to enter those arena's. Thats when it wasn't worth the time cause I'm sure he spent more time in the hallway towards the end.
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