MacMillan Admits To Having Problems With Amazon

When Steve Jobs told Walt Mossberg that the eBook prices of the iPad and the Kindle were going to be the same, everyone assumed that iPad prices would be lowered. What people forgot is that if a CEO is saying that instead of saying that the prices will be lowered, there’s a catch.

And it has become apparent that the situation could indeed be the opposite of what people have been hoping for. MacMillan issued an ad in Publishers Lunch to specifically tell everyone that the rumors are true — the publisher and Amazon are having problems with the pricing of eBooks on the Kindle.

MacMillan wants to change the system into the new agency model where they want to raise the average price of eBook titles. This is because they want to sell titles through resellers and the agents will charge their normal 30% commission for their services. Amazon of course does not want to raise their prices beyond the $9.99 that currently gets them a lot of business.

If MacMillan has its way, each eBook will be priced between $5.99-$14.99 and will generally be on the higher end of things ($12.99-$14.99). The publisher has however added that they will dynamically bring the prices down over time, which means you will feel the sting less and less with time. Amazon’s desire to hold on to their current pricing is so strong that they have officially suspended selling all MacMillan books.

However, Amazon does acknowledge that MacMillan books are important enough (and quite a lot in number) for them to eventually accept the revised pricing. What this means to other eBooks readers is not as important as what it means to the current leader and its latest and greatest rival — Kindle v/s the iPad.

It is no secret that publisher have been unhappy with Amazon and hence there have been steps like artificially creating a gap between the actual release and the electronic release of a book to sell more physical books that are always more profitable. Apple might’ve seen an opportunity and pulled just the right strings and pressed the right buttons to start a chain reaction in the publishing industry.

With the super successful iTunes Store, Apple is in a position to credibly say that they will sell a lot of content on a new device that is focussed on content consumption. And if they offer higher cuts than their competition to the publishers, it is likely to cause the publishers to taste the money and try and raise it everywhere else. Hence, whilst the iPad will debut with the high price tag, Amazon will have to hike the price without anyway to add any value to justify the hike. Overall, the integrated experience on the iPad is likely to be better thanks to the iTunes Store and hence it will make it harder for Amazon to compete.

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