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Amazon “capitulates” to Macmillan

by Scott Bicheno on 1 February 2010, 10:14

Tags: Amazon (NASDAQ:AMZN)

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Yesterday, Amazon posted a message on the Kindle community forums saying that Macmillan - one of the ‘big six' book publishers - had announced it was committed to switching to an ‘agency model' in its relationship with retailers.

Previously Amazon had bought books - and e-books - from Macmillan on a wholesale basis, paying 50 percent of the cover price and then charging what it liked on the site. The agency model, which is thought to be the one adopted by Apple for its new e-book store, means the publisher uses the retailer as a sales agent and dictates the selling price itself, giving the agent a 30 percent cut.

Amazon clearly wasn't happy about this, stating in the forum post: "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. 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."

Now call us free market zealots if you will, but surely that's the whole point: Amazon customers will decide. What's the problem with that? Amazon seems to be trying to position itself as some kind of guardian of our best interests rather than what it actually is: a retailer, a middleman, a web-based fulfilment house. Also: "Macmillan has a monopoly over their own titles,". That doesn't even make sense.

Maybe Macmillan has got it wrong and is setting the price of its best-sellers too high. If so, they won't get bought and it will probably have to lower them again. That's how the market works. It makes you wonder what other issues are at stake to make Amazon throw its toys out of the pram so spectacularly.

 



HEXUS Forums :: 2 Comments

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My take is that this is more about Amazon distancing themselves from any future price-hikes. Amazon knows that the price increase will be unpopular, but if they simply said nothing and upped it, your average consumer-on-the-street will wonder why Amazon suddenly became more expensive. This way, they can shift the blame entirely to Macmillan.
Bloody Apple *shakes fist*

I do find it odd that Amazon gave in, you don't usually see that.