Amazon falls out with publisher

ONLINE BOOKSELLER Amazon, which last week announced that when it has titles in both formats it sells six Kindle books for every ten real ones, fell out with one of the world's largest publishers and then quietly backed down.

Over the weekend in an advertisement in the Publishers Lunch magazine, John Sargent, boss of Macmillan, published an open letter to his staff and the publishing community in which he revealed his reasons for the tiff that saw Amazon pull Macmillan's books off its virtual shelves in a row over pricing.

According to the letter book pricing power is weighted heavily in Amazon's favour, and Sargent is also concerned about the future of real books and wants to retain some control over their pricing before it becomes too late and Jeff Bezos starts posting messages like "All your books are belong to us."

"I regret that we have reached this impasse. Amazon has been a valuable customer for a long time, and it is my great hope that they will continue to be in the very near future. They have been a great innovator in our industry, and I suspect they will continue to be for decades to come," he wrote.

Sargent wants to create a future in which the hard copy book is valued as highly as e-books, and therefore isn't priced out of the market. "Looking to the future and to a growing digital business, we need to establish the same sort of business model, one that encourages new devices and new stores. One that encourages healthy competition. One that is stable and rational. It also needs to insure that intellectual property can be widely available digitally at a price that is both fair to the consumer and allows those who create it and publish it to be fairly compensated."

According to Sargent, the way Amazon does business, or was proposing to do business, would have had a negative affect on the publishing industry, while having a positive one on e-commerce booksellers called Amazon.

"The agency model would allow Amazon to make more money selling our books, not less. We would make less money in our dealings with Amazon under the new model. Our disagreement is not about short-term profitability but rather about the long-term viability and stability of the digital book market," he explained. It is reckoned that under Amazon's so called agency model publishers would get to set prices but Amazon would take a thirty per cent chunk of the sales revenues.

Others are more sceptical however, and over at the Scrivener's Error blog, a site about publishing and the law, C F Petit wrote, "Macmillan is willfully and misleadingly mislabelling its 'new model'; leaving aside that it isn't at all new, it is not an agency model. It is, instead, a fewer-layers version of the present book retailing model, which is not a sales model: Instead, the 'new' model is a single-layer consignment instead of a multilayer consignment," futher muddying the waters around e-book pricing.

In a blog post, Amazon has since revealed that it has changed its plans and will put Macmillan's books back up online, despite some reservations. "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," the e-tailer said in an anonymous and well hidden post.

It's probably worth mentioning that unless Amazon had a large hole that needed filling near its warehouses, it would have had a lot of Macmillan books lying around until it, or the publisher, capitulated.

"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," it added sniffily.

Regardless of its capitulation, the firm seems to doubt whether Macmillan will be able to continue to set its own prices, particularly in the face of cheaper competition.

The firm adds, "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."

We'll leave the publishers and booksellers to fight this one out amongst themselves. µ