Amazon and Macmillan: The Pricing Bowl

1. Does anybody out there believe Macmillan wants to sell electronic books? I don’t think they do.

There was an exciting and dramatic showdown this weekend between and Macmillan, the parent company of many top book publishers including Farrar Straus Giroux, Times Books and Tor. Amazon wants to price e-books at $9.99. Macmillan wants to price e-books higher and introduce tiered pricing so that an e-book costs more when it’s new. Amazon tried to kick Macmillan where it hurts by suddenly refusing to sell their books on, cleverly timing this surprising move for a weekend so as to blunt the press response. Macmillan held strong and Amazon gave in on Sunday afternoon.

Most of the commentary has followed the “Amazon blinked!” line. Obviously their gambit failed, and their strategy in threatening access to Macmillan’s books does not seem to have been well-chosen. Their strategy in pulling this stunt on a weekend failed too, because this is the weekend between the NFL playoffs and the Super Bowl and the suspenseful Amazon/Macmillan standoff only provided the gridiron battle football fans were missing. Still, I’m not joining the anti-Amazon cheering section today, because I believe a $9.99 price point will help e-books flourish. Book publishers are wary of e-books, and may use higher price points as part of a strategy to discourage and delay customer acceptance of electronic publishing.

If you’ve been around here a while, you know where I stand on book pricing. I think premium-level/tiered pricing is an archaic and dysfunctional tradition that discourages impulse buying and customer experimentation. I don’t understand why Amazon thought this weekend’s showdown would work, and I also don’t understand their use of the word “monopoly” to describe Macmillan (of course a book publisher has a monopoly on its own titles!). But Amazon is trying to create a new electronic marketplace for books, and Macmillan’s action to tightly control e-book pricing amounts to a chokehold for this marketplace. I’ll ask it again: does anybody out there really believe Macmillan wants to sell e-books at all? Sure, just as much as record companies want to sell MP3s instead of CDs.

This was a fair battle and Macmillan won, but the e-book pricing situation reminds me of Barack Obama’s smart question about health care reform during this week’s State of the Union address: “does anybody have a better idea?”. Macmillan’s victory is a victory for traditional premium/tiered book pricing. MobyLives’s closing line above says it best: “this ain’t over yet”.

2. I’ll be part of a panel discussion titled “The Oldest Media Goes Social” this Wednesday at 12 noon in New York City, along with author A. J. Jacobs, publicists Natalie Lin and Meryl Moss and entrepreneur Henry Copeland.

3. Notable novelists playing cards. Shut up and deal …

4 Responses

  1. Thank goodness someone else
    Thank goodness someone else agrees with me on this whole Amazon / Macmillan battle. I don’t think they want to sell eBooks at all, which is really a silly stance because not selling them will only force people to find eBooks through other means.

    Not that Amazon was any less dirty in the whole debate. Their entire goal seems to be product lock-in. Once you go Kindle, you don’t go back. Not because it’s better, but because you’ve sunk quite a bit of money into it.

  2. I’m still gathering info on
    I’m still gathering info on this whole debate, but it seems to me that Macmillian is thinking about profits (for themselves and authors), and not really about the format of the book. I can’t imagine $3-4 difference in pricing being enough to put off most readers. And based on what (admittedly little) I know of eBook pricing, authors and publishers don’t make much anyway. So, if the core of the debate is about maintaining money for authors, then I have to side with Macmillian (most authors get paid very little to begin with). If the core of the debate is truly about adopting the new format, then I would side with Amazon.

  3. I wouldn’t say that Amazon
    I wouldn’t say that Amazon lost and Macmillan won. I think Amazon accomplished their goal of positioning themselves as the “friend of the people.”

    It’s also a subtle way to remind customers that writers are taking a hit financially, like everyone else, so perhaps a percentage of readers will be less concerned with getting free stuff and gladly pay $9.99 to Amazon as a form of protest against fat cat Macmillan. This helps us writers to sell books and also gives customers a decent deal.

    I’m with Amazon.

  4. I’m not going to sign up for
    I’m not going to sign up for technological anything if it comes down to one company providing the content, such has what Amazon’s trying to do. (I’m not surprised. It’s the way business works.) So what I strive for and am waiting for, is a standardized reading implement, ala Kindle, but something which anyone can make and market and the content for which is available from more than one source.

    I’ve been burned too many times to bite on stuff like I-pods, I-books, Kindles, etc. etc. I’ve found alternatives which work just as well.

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