Amazon Removes Macmillan Books (over e-pricing)

in iPad edited January 2014
Ahh the war with Amazon has begun...

(shamelessly ripped from the NY Times)


Amazon Removes Macmillan Books


Published: January 30, 2010

NY Times has pulled books from Macmillan, one of the largest publishers in the United States, in a dispute over the pricing on e-books on the site.

The publisher?s books can be purchased only from third parties on

A person in the industry with knowledge of the dispute, which has been brewing for a year, said Amazon was expressing its strong disagreement by temporarily removing Macmillan books. The person did not want to be quoted by name because of the sensitivity of the matter.

Macmillan, like other publishers, has asked Amazon to raise the price of e-books to around $15 from $9.99.

Macmillan is one of the publishers signed on to offer books to Apple, as part of its new iBookstore on the iPad tablet unveiled earlier this week.

Macmillan?s imprints include Farrar, Straus & Giroux, St. Martins Press and Henry Holt. Popular books, including ?A Long Way Gone? by Ishmael Beah, ?Wolf Hall? by Hilary Mantel, ?Middlesex? by Jeffrey Eugenides and ?Finger Lickin? Fifteen? by Janet Evanovich, could be purchased only from third-party sellers on Friday night.

Apple will allow publishers more leeway to set their own prices for e-books. Although the prices will be tethered to print book prices by a formula that will generally yield prices between $12.99 and $14.99 for most fiction and general nonfiction, that is significantly higher than $9.99 discount that Amazon offers on its Kindle.

Publishers have been concerned that such pricing devalues books. Tensions between publishers and Amazon have been rising as publishers have withheld select e-book editions for several months after the release of hardcover versions of books.

It is not clear yet if publishers can withhold books from Amazon while giving them to other parties like Apple. Antitrust lawyers said it could raise legal issues.

Macmillan and its imprints have not yet returned requests for comment. Amazon refused comment.

The higher the content prices are, the less people will justify buying the hardware, resulting in diminished hardware sales.

iPods sold a lot because people could buy 99¢ songs or rip their existing songs off cd's.

Steve is giving the book publishers a better deal than Amazon, variable pricing, to get them on board the iPad.

So apparently Steve is banking not on the publishers to help sell a lot of iPads, but something else entirely. Perhaps a trojan horse, killing off the retail book stores by getting to the customer first though their computers.

Usually people who read are a bit more intelligent and have access to their own computer, so I see having book publishers on board is drawing these computer people into the Apple world.


  • Reply 1 of 11
    for the life of me what's a fair price for an ebook? no materials cost, no storage costs, no trees, no ink,no overheads, no retail space, no staff costs. a consumer can quiet rightly claim to be ripped off no matter what the cost, and early figures of $9.99 to $14.99 are insulting at best and simply scandalous.

    and worst of all, once you have finished your ebook, you can't give it to someone else to enjoy or donate/give it to a library.

    i'm sticking to REAL books, i think.
  • Reply 2 of 11
    mr. memr. me Posts: 3,221member
    Originally Posted by bluefox9er View Post

    ...,no overheads, ....

    To the contrary, virtually all of the costs involved in publishing and distributing ebooks can be classified as overhead.
  • Reply 3 of 11
    mactrippermactripper Posts: 1,328member
    Once again here's the breakdown...(not verified of course)


    Author – Creation. 8-15% Royalties.

    Publisher – Being the Curator, Polishing, Manufacturing, Marketing. 45-55% (includes Author’s Royalties). Note that Printing accounts for just 10% of the book price.

    Distributor – 10%.

    Retailers – 40%.

    That article also lists the cost estimates from other sites like Bookfinder:

    Book Retail Price: $27.95.

    Retailer (discount, staffing, rent, etc.) – $12.58. That’s 45%.

    Author Royalties – $4.19. Exactly 15%.

    Wholesaler – $2.80. Exactly 10%.

    Pre-production (Publisher) - $3.55. That’s 12.7%.

    Printing (Publisher) – $2.83. Translates to 10.125%.

    Marketing (Publisher) – $2. That’s approximately 7.15%

    And Apple is supposed to want 30%.

    You can do the math. The publisher has to pay out half the costs with a e-book than a traditional book sold in the stores.

    Then they want to raise e-prices 33% too. Amazon has booted one publisher for wanting to charge $15 instead of $10.

    But Apple is going to allow variable pricing. The publishers are falling all over themselves.
  • Reply 4 of 11
    vineavinea Posts: 5,585member
    Originally Posted by MacTripper View Post

    Once again here's the breakdown...(not verified of course)

    And Apple is supposed to want 30%.

    So minus retailers, minus distributors, minus 10% for printing and add Apple's 30% and you get the discount. 1/3 off.

    The publishers then want to increase the e-price from $10 to $15.

    Yes we are being screwed and so is the bookstores who most likely have pressured the publishers to raise the e-book prices as not to decimate them.

    Thanks for quoting me but I dunno where you got the conclusion from that publishers are screwing us with a $14.99 price.

    Assume $9.99 e-book price.

    Apple's 30% cut = $3.32

    Author royalties (assume 15%) = $2.10

    Preproduction costs = $3.55

    Marketing = $2.00

    = $10.97

    Gee...that number is higher than $9.99.

    A the $14.99 price point the cost distribution looks like this:

    Apple's 30% cut = $4.50

    Author royalties (assume 15%) = $2.25

    Preproduction costs = $3.55

    Marketing = $2.00

    = $12.30

    Publisher's cut $2.70 (18%)

    Gee...that's a number that's lower than the sale price which is how things are supposed to work.

    I can see why publishers were pissed about $9.99 given when the book first comes out it has the most sales and where they need to make enough money back to cover duds that don't sell and be a profitable company.
  • Reply 5 of 11
    areseearesee Posts: 776member
    Isn't Amazon keeping 70%?

    It's easy to see why Macmillan and authors wouldn't be happy with that deal.

    Using the above numbers Macmillan would be losing $4 per book.

    $3.00 from Amazon

    $1.50 paid to the author(s)

    $3.50 preproduction costs

    $2.00 marketing
  • Reply 6 of 11
    im hoping people who read REAL books are smart enough not to tuch an ebook with a 10ft stick...there's somehting not quiet right about paying $15 for an ebook and not actually *owning* to loan to a friend or donate/give to a library after you have read it. surley the first steps of destroying real reading to satisfy corporate greed havn't been taken?

    i for one will do everything i can to make sure reading REAL books is something humanity fights the corporates to preserve.
  • Reply 7 of 11
    mactrippermactripper Posts: 1,328member
    ahhh it's all over now, well at least Amazon had the decency to stand up for us consumers

    (not ashamed at all that I ripped this from the NY Times)


    Amazon Concedes on Electronic Book Pricing


    Published: January 31, 2010


    In a fight over the price of electronic books, has blinked.

    Skip to next paragraph


    Amazon Removes Macmillan Books (January 30, 2010)

    On Friday, shocked the publishing world when it pulled both the digital and physical books of Macmillan, the large international publisher, after Macmillan said it planned to begin setting higher prices for its e-books. Until now, Amazon has been setting e-book prices itself, and has established $9.99 as the common price for new releases and best-sellers.

    But in a message to its customers posted to its Web site on Sunday afternoon, Amazon said that while it strongly disagreed with Macmillan?s stance, it would concede to the publisher.

    ?We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles,? Amazon said. ?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.?

    The message went on to suggest that Amazon customers may rebel against such a high price for books that cost far less to distribute than physical books. ?

    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,? Amazon?s online message said.

    Macmillan officials were not immediately reached for comment on Sunday.

  • Reply 8 of 11
    vineavinea Posts: 5,585member
    Originally Posted by MacTripper View Post

    ahhh it's all over now, well at least Amazon had the decency to stand up for us consumers

    (not ashamed at all that I ripped this from the NY Times)

    Geez. Amazon was not standing up for consumers but standing up for Amazon. Consumers have to stand up for themselves. The $9.99 stand was to lock in the industry to Kindle and not a whole lot more. Same for Apple's $0.99 songs...that wasn't any more of a stand for consumers either. Amazon's failure was to not dominate the ebook industry decisively when it had the 2 year window to do so. Had it done so neither Apple nor Macmillan could have done squat.

    If you don't like $14.99 ebooks...don't buy any.

    Amazon makes money off selling books and not kindles. If they had started with a fair split between content producers and themselves like Apple did and sold bare bones Kindles (say no keyboard or wireless but had to sync manually) for $99 at a loss until economies of scale made them break even they would have stood a far better chance of either a) optimally convinced Apple that the eBook market was not one they wanted to be in or b) been able to partner with a tablet maker to release the Kindle Color sometime this year to minimize the impact of the iBook store.

    They have $4B in cash. How much was owning the eBook market worth to them? Not enough to invest enough to decisively win and now they have a real fight on their hands for control. 2 years was an advantage they'll never regain.
  • Reply 9 of 11
    vineavinea Posts: 5,585member
    Link of one author's view of Amazon:
  • Reply 10 of 11
    vineavinea Posts: 5,585member
    Another author about Amazon's role and what their objectives were:

    "From the point of view of Jeff Bezos' bank account, Amazon is the entire supply chain and should take that share of the cake that formerly went to both wholesalers and booksellers. They do this by buying wholesale and selling retail, taking up to a 70% discount from the publishers and selling for whatever they can get. Their stalking horse for this is the Kindle publishing platform; they're trying to in-source the publisher by asserting contractual terms that mean the publisher isn't merely selling them books wholesale, but is sublicencing the works to be republished via the Kindle publishing platform. Publishers sublicensing rights is SOP in the industry, but not normally handled this way -- and it allows Amazon to grab another chunk of the supply chain if they get away with it, turning the traditional publishers into vestigial editing/marketing appendages.

    The agency model Apple proposed -- and that publishers like Macmillan enthusiastically endorse -- collapses the supply chain in a different direction, so it looks like: author -> publisher -> fixed-price distributor -> reader. In this model Amazon is shoved back into the box labelled 'fixed-price distributor' and get to take the retail cut only. Meanwhile: fewer supply chain links mean lower overheads and, ultimately, cheaper books without cutting into the authors or publishers profits."

    THIS is why publishers are willing to buck Amazon. This was also a friction point between Apple and music companies.

    "(Note that Amazon have been trying to grab a larger share of the cake by dipping into the publishers -- and the authors -- share of what meagre profits there are (book publishing is notoriously, uniquely unprofitable, within the media world), even though they've already got the wholesale and retail supply chains stitched up. Their buy wholesale/sell retail model screws publishers' ability to manage their cash flow and tends to induce price wars on the supply side, which is okay if we're talking widgets with a range of competing suppliers, but books are individually unique products and the industry already runs on alarmingly narrow margins: this isn't the music or movie biz.)"

    "It's interesting to note that unlike the music industry who had to be pushed, the big publishers seem to be willing to grab a passing lifeline."
  • Reply 11 of 11
    mactrippermactripper Posts: 1,328member
    Originally Posted by vinea View Post

    ...If you don't like $14.99 ebooks...don't buy any...

    I don't plan too buy too many at that price point, especially for something that has no value after I'm done reading it.

    I much rather prefer a rental price, with the option to buy at a slightly higher cost, with a further option to transfer the content at a even higher cost. Three sets of prices.

    This way I can try before I buy, for instance a good cook book or a text book, which I may decide to pony up the higher price to keep as a reference.

    But still the highest option should be less than 30% of the paper version, because that 30% is going into the device, namely a iPad which we own.

    If anywhere along the line I can get the same information from a new or used bookstore for less than the e-Book, I'm going that way.

    Amazon has the ability to sell real new and used books, so once I'm done with a new version I can see by other sales what I can get for it used.
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