Amazon Agrees to Higher E-Book Prices
Amazon.com has agreed to book publisher Macmillan's demands to sell e-books for the Kindle reader for a higher price following a very public dispute between the two companies over the weekend.
The standard price for new Kindle e-books is currently $9.99, which many publishers have protested is too low. Under the new agreement, new Macmillan e-books would cost $12.99 to $14.99.
Amazon's announcement came just two days after the retail giant surprised the publishing world by yanking all of Macmillan's books – both electronic and print versions – from its online store.
During that time, customers could not buy Macmillan titles directly from Amazon, although the books were still available on Amazon through third-party vendors.
But on Sunday, Amazon posted a letter to customers on its Web site saying it will "capitulate" to Macmillan's terms.
"We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles," the letter reads.
"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."
In a letter published in Publishers Lunch on Saturday, Macmillan CEO John Sargent explained that under Macmillan's proposed plan, retailers such as Amazon would get a 30 percent commission for each e-book sold.
"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," Sargent wrote. "Our disagreement is not about short-term profitability but rather about the long-term viability and stability of the digital book market."
The higher prices are expected to take effect at the beginning of March.
The new agreement means that Macmillan e-books for the Kindle will cost the same as for Apple's upcoming iPad device, which can also serve as an e-book reader.
In a recent interview with Wall Street Journal reporter Walt Mossberg, Apple CEO Steve Jobs predicted that publishers would pressure Amazon to increase prices for Kindle e-books until they were the same price as e-books for the iPad.