February 1, 2010

Amazon Pulls E-Books Over Pricing Dispute

New books published by Macmillan were removed from online shelves at Amazon.com on Saturday due to pricing disagreements that have been ongoing over e-book prices.

John Sargent, CEO for Macmillan told the Associated Press that Amazon agreed to remove copies of Hilary Mantel's "Wolf Hall," Andrew Young's "The Politician" and other books published by Macmillan, as well as e-books for Amazon's Kindle e-reader. Books will still be available, however, from private vendors and other parties.

Officials from Amazon met with John Sargent last week to discuss a new pricing system for e-books. The new system would allow Amazon to make more money selling Macmillan books while the publishing firm would make less. Sargent disclosed that the dispute was over "the long-term viability and stability of the digital book market."

Amazon has been criticized by Macmillan and other publishers over its pricing scale. Best-selling e-books that are selling for $9.99 for Amazon's Kindle, are priced too low and could possibly hurt hardcover sales, which usually sell for more than $24.

Sargent praised Amazon as a "valuable customer" and a "great innovator in our industry." However, a strategic business plan needs to be implemented that will provide equal opportunities for all retailers. Macmillan's proposal, set to take effect in March, will set book prices at $12.99 to $14.99 for new releases, and prices will drop over time.

Amazon would rather keep a tight lid on prices as its competitors try to challenge the dominancy that Amazon has on the expanding market. Both Barnes & Noble and Sony Corp have released their own versions of e-readers. But the one Amazon is keeping its eye on now is Apple's new iPad tablet computer and new online book store modeled after iTune's success.

In an interview with The Wall Street Journal, Apple CEO Steve Jobs proposed that publishers may offer some titles to Apple before they are allowed to go on sale at Amazon.

The e-book market is big business for Amazon. Although they haven't released any sales figures on the Kindle, CEO Jeff Bezos commented Thursday that "millions" are owned. Amazon sells six e-books for every ten physical books.

Some publishers are seeking to impose delays on digital books in order to give extended business to its hardcover business.

This was not the first time that digital books have been removed from Amazon's shelves.

Books from author George Orwell were recalled last summer over piracy concerns. Many customers who had purchased books such as "Animal Farm" and "1984" were shocked to see that their copies had vanished and money refunded. Customers felt robbed; that books they bought and thought were their own could be revoked by the retailer. Amazon's Kindle operates on a wireless connection that it ultimately has control over. Amazon later apologized for the ordeal and offered customers free books or $30.

John Scalzi, a writer for sci-fi publisher Tor, speculated on the latest clash of the titans. It will likely cause "a long-term effect on Amazon's relationship with publishers, and not the one Amazon is likely to want," he wrote on his Web site.

Macmillan is one of the world's largest English-language publishers. Its divisions include St. Martin's Press, itself one of the largest publishers in the U.S.; Henry Holt & Co., one of the oldest publishers in America; Farrar, Straus & Giroux; and Tor, the leading science-fiction publisher.


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