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February 3, 2010

eBooks get more expensive

Posted: 11:15 AM ET

Amazon has given in to publisher pressure and agreed to abandon their $9.99 price point for eBooks.

Publisher Macmillan felt that the $9.99 price devalued many of its bestsellers, which often sell for $30 in hardcover format. In response to the pricing dispute, Amazon briefly removed all Macmillan books from its store last week. However, the boycott lasted only a few days before Amazon gave in to Macmillan's demands.

In a statement Sunday, Amazon defended its position to customers:

Macmillan, one of the "big six" publishers, has clearly communicated to us that, regardless of our viewpoint, they are committed to switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers and most hardcover releases.

We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles. We want you to know that ultimately, however, we will have to capitulate and accept Macmillan's terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books.

Amazon's decision to throw in the towel may be related to Macmillian's recent agreement to sell books in Apple's iBookstore. Amazon has captured an overwhelming share of the eBook market with its Kindle reader, but if the iPad becomes successful publishers may turn to Apple to sell their eBooks.

During a recent News Corp. earnings call, CEO Rupert Murdoch indicated that HarperCollins may follow Macmillan's example. "We don’t like the Amazon model of $9.99," Murdoch told investors, according to a recap in MediaMemo. "We think it really devalues books and hurts all the retailers of hardcover books... Apple in its agreement with us, which has not been disclosed in detail, does allow for a variety of slightly higher prices."

Publishers seem more interested in protecting the value of their hardcover books than competing in a digital format. Will higher eBook prices convince you to purchase a physical copy of your next novel, or will accept a modest price increase given that eBooks are typically cheaper?

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Filed under: Amazon • Apple • books • e-readers • iPad

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