updated 08:15 am EDT, Thu March 18, 2010
Amazon, Apple demanding best e-book prices
Amazon has escalated the growing feud between itself and Apple by issuing ultimatums to e-book publishers, inside stories from the industry claimed on Thursday. The online retailer has allegedly been pressing major publishers to sign three-year contracts that not only guarantee Kindle books for the period but would prevent them from offering a better price to Apple or any other e-bookseller. These publishers could use the agency model and set their own prices, the NYT noted, but only if Amazon was given equal or better treatment.
At the same time, Amazon is said to be using its 90 percent market share of US e-books as a club against smaller publishers. Here, Amazon has not only tried to insist on buying books wholesale, which would let it set the price as it has in the past, but has supposedly threatened to pull publishers' books off of the Kindle store altogether if they don't agree.
Both large and small publishers are said to be opposing the measures, at least partly due to the potential for sales on the iBookstore and the iPad. Three sources for the story said that larger publishers didn't want to sign contracts and lock themselves into long-term deals in an evolving market. Smaller firms, meanwhile, have been talking to Apple and have been told that they must use the agency model elsewhere and get no deal more favorable than the 70 percent revenue cut they will have on the iBookstore.
The request puts the small publishers at a crossroads where they may have to choose between either Amazon or Apple, as it's unlikely Amazon will bend to accommodate Apple's business model for publishers that don't have significant clout. Some may opt for the existing arrangement due to market share and would potentially give Amazon an edge by letting it claim a lower absolute price.
However, Apple is likely to be counting on its willingness to charge a higher $13 to $15 for most new books as an incentive to all publishers, which like Macmillan have been frustrated with Amazon price caps that prevented them from selling books above $10. In a more overt bid to court less mainstream publishers, Apple has posted a job listing for an Independent Publisher Account Manager that would negotiate and promote books.