Amazon Yanks Macmillan Books

Amazon fired the opening salvo in the latest skirmish over eBooks with mega-publisher Macmillan. Macmillan, one of the largest publishers in the world is at odds with Amazon over the pricing of Kindle books, so Amazon deleted all of the “Buy Now” buttons from all Macmillan published titles! I’m sure Amazon can predict the impact this move will have on Macmillan’s sales and think it will hurt enough to bring the publisher back ‘in line’. We’ll see.

Amazon has always artificially deflated the price of Kindle books, to get people to buy Kindles and to read Kindle books on their phones. Until the iPad, publishers had few choices as to other major hubs of online distribution. But I’m sure Macmillan feels they have a place to run. And Amazon has called their bluff.

The average cost per title on the Kindle is $9.99 and the publisher has little say in this. While Apple says publishers will be able to “adjust their own pricing” on the new iPad and upcoming iBooks store. Prices there are expected to be in the $12-$15 range.

For those still reading this, I would like to restate one point that many don’t realize: Amazon is artificially deflating eBook prices. So, even though they sell the Kindle book for $9.99, they are still paying the publisher royalties on the $12-$15 price the publisher wants. So, at this point, the publisher is still able to keep the lights on and pay its people. Macmillan’s complaint is that Amazon is ‘purposefully devaluing the product’. The fear is Amazon will so ingrain the $9.99 price in consumers’ minds that they can then quit subsidizing the pricing, forcing publishers to sell their products at loss at $9.99. So this isn’t a price “set by competition and market conditions” it’s a price set by a huge retailer with huge leverage to control the market and competition. I’m not calling sides here, but this is a very important point.

All I know is that no one wins when retailers pull books off the shelves, for any reason. And should sound as a warning to ALL publishers that they need to open themselves up to sell directly to consumers, at a minimum to offset crazy deals like this one.