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Hachette emerges as new challenger in Amazon pricing war

Hachette joins Macmillan in demanding that Amazon sell its e-books for more than $9.99.

By Matthew Shaer / February 5, 2010



As the launch of the Apple iPad grows nearer, the spat between book publishers and Amazon is getting louder. First, let's get you up to date: Macmillan, one of the biggest publishers in the US, doesn't like Amazon's policy of charging $9.99 for every e-book. Amazon, on the other hand, doesn't want to listen to anymore complaints from the suits over at Macmillan, and last weekend, the online bookseller temporarily barred sales of thousands of Macmillan titles.

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On Monday, Amazon issued a terse press release, capitulating to Macmillan's request that publishers be able to set their own e-book prices. "We accept Macmillan's terms because Macmillan has a monopoly over their own titles," an Amazon rep wrote, "and we will want to offer them to you even at prices we believe are needlessly high for e-books. Amazon customers will at that point decide for themselves whether they believe it's reasonable to pay $14.99 for a bestselling e-book."

It's not yet clear what Amazon customers believe about the whole kerfuffle. What is clear is that Macmillan has succeeded to rousing the ire of its fellow publishers. Simon and Schuster are reportedly considering joining Macmillan in making a stand against Amazon, and on Friday, David Young, the chairman and CEO of Hachette Book Group, said his company would demand higher rates for its titles.

“It's important to note that we are not looking to the agency model as a way to make more money on e-books,” Young wrote in a letter to agents picked up by Mediabistro. “We're willing to accept lower return for e-book sales as we control the value of our product--books, and content in general. We're taking the long view on e-book pricing, and this new model helps protect the long term viability of the book marketplace.”

Let's do some quick translation here: the "agency" model mentioned by Young means a model where the publisher can set the price range for the title. Currently, Amazon sells e-books for ten bucks, and does not allow publishers to vacillate from that price point. Hachette and Macmillan, crucially, are not asking to set their own price because they want to immediately make more cash on the transaction.

Instead, as Young notes, they're taking the "long view" – arguing, in essence, that e-books should be valued more highly than they are currently valued by Amazon. Amazon CEO Jeff Bezos hasn't commented on the situation yet, but the impending release of the Apple iPad puts pressure on Bezos to settle the situation before Hachette and Macmillan pick up their toys, and go home to Apple.

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