January 31st, 2010

News: Amazon Pulls All Macmillan Titles

Amazon.com Pulls Macmillan Books From Site in Pricing Dispute

January 31, 2010, 04:22 PM EST

By Greg Bensinger

Jan. 31 (Bloomberg) -- Amazon.com Inc. has removed print and electronic versions of books from Macmillan after a dispute over pricing of titles for the Kindle digital reader, the publisher said.

Macmillan proposed new terms for prices of electronic books last week, Macmillan Chief Executive Officer John Sargent said in an e-mailed statement. In response, Amazon.com said it was removing Macmillan’s print and electronic books from the site, he said.

“Amazon and Macmillan both want a healthy and vibrant future for books,” Sargent said. “We clearly do not agree on how to get there.”

Under the new terms, Macmillan wants to be able to set the prices of electronic books individually, with most new titles costing $12.99 to $14.99. Amazon.com charges $9.99 for most best-sellers and new releases. Retailers would get a 30 percent commission under the proposal, Macmillan said.

Titles such as “Sarah’s Key " by Tatiana de Rosnay and “Wolf Hall” by Hilary Mantel, listed as best sellers on Macmillan’s Web site, weren’t available for purchase from Amazon.com today. Macmillan books are still available on the site from third-party sellers, Sargent said.

Drew Herdener, a spokesman for Seattle-based Amazon, didn’t immediately return a voicemail message seeking comment outside normal business hours.

Amazon, based in Seattle, lost 62 cents to $125.41 on Jan. 29 in Nasdaq Stock Market trading. The shares have lost 6.8 percent this year. Macmillan, which has offices in New York and London, is privately held.

--Editors: Jonathan Thaw, Jeffrey Taylor

Original article  link: http://www.businessweek.com/news/2010-01-31/amazon-com-pulls-macmillan-books-from-site-in-pricing-dispute.html


Some other interesting links:
CEO of Macmillan John Sargent's announcement:

This past Thursday I met with Amazon in Seattle. I gave them our proposal for new terms of sale for e books under the agency model which will become effective in early March. In addition, I told them they could stay with their old terms of sale, but that this would involve extensive and deep windowing of titles. By the time I arrived back in New York late yesterday afternoon they informed me that they were taking all our books off the Kindle site, and off Amazon. The books will continue to be available on Amazon.com through third parties.

Author Tobias Buckell's reaction: http://www.tobiasbuckell.com/2010/01/31/why-my-books-are-no-longer-for-sale-via-amazon/
He is published by TOR, one of Macmillan's subsidiaries.  His essay is very long, but well worth the time to read.

So as of right now, you can’t buy my books via Amazon, as they have stopped selling all Macmillan books (both mailing print books to you, and selling Kindle books).

So, Amazon wants to sell books for $9.99 or less, my publisher wants to sell books for a more dynamic range of $5.99 to $14.99.

Right. So Amazon and Macmillan are in the middle of negotiations about how to sell eBooks. Amazon had, for a while, paid publishers an agreed upon price, and then discounted them to $9.99. Amazon’s reasoning: this would move eBooks, in particular Kindle eBooks (and maybe some Kindles, though I think Amazon’s creating a Kindle was to move more eBooks).

Author Charles Stross's opinion:
Some of his books are published by a subsidiary company, others are not.

This whole mess is basically about duelling supply chain models.

Publishing is made out of pipes. Traditionally the supply chain ran: author -> publisher -> wholesaler -> bookstore -> consumer.

Then the internet came along, a communications medium the main effect of which is to disintermediate indirect relationships, for example by collapsing supply chains with lots of middle-men.

From the point of view of the public, to whom they sell, Amazon is a bookstore.

From the point of view of the publishers, from whom they buy, Amazon is a wholesaler.

From the point of view of Jeff Bezos' bank account, Amazon is the entire supply chain and should take that share of the cake that formerly went to both wholesalers and booksellers. They do this by buying wholesale and selling retail, taking up to a 70% discount from the publishers and selling for whatever they can get.

I don't know what I think of everything yet.  I mean, on the one hand Amazon's got the right to refuse to sell certain publishers if they want to and I'm going to argue against that.  Macmillan's either doing something very brave or very stupid but I don't have enough industry knowledge to be sure which.  I use Amazon.com affiliate links in my reviews because they are the biggest online store, and most people that I know use them for reference if not for actually purchasing, but I'm hesitant to continue doing as their business tactics continue to show values I don't care to promote.
So at this point, I'm trying to sort everything out in my head.