Saturday, January 30, 2010

Amazon vs. Macmillan Inc. has removed all e-book titles published by Macmillan off Amazon and its Kindle e-reader site, according to a statement issued by Macmillan late Saturday.

Macmillan CEO John Sargent said he visited Amazon on Thursday in Seattle to discuss "new terms of sales for e-books" and that by the time he returned to New York, he'd been informed that Macmillan's e-books would only be for sale on "through third parties," according to the statement, which appeared as an advertisement on publishing industry Web site

An Amazon spokesman didn't respond immediately to a request for comment regarding Mr. Sargent's statement.

Here is the Macmillan side of the story.

Here is an excellent blog post on the economics involved. Most people really don't understand how little of a popular book's price goes to cover its physical production.

Here is Charlie Stross on the subject.

Andrew Wheeler comments.

Here is John Scalzi on the subject.

Macmillan has proposed a model where ebooks start at up to $15 when first released in hardback and eventually drop to $6, and they get 70% of the retail price. This would approximate what they get from the wholesalers for physical books, minus the cost of production.

Amazon has been marketing many popular ebook titles at $9.99 even though it seems that their agreement with the major publishers gives them about half of the hardback price, or around $12.50. This is not sustainable.

One possibility is that Amazon is doing this as a massive act of altruism to the reading public.

Another is that they plan to destroy enough of the business of other distribution channels that they can make the money back later, either from the customers or publishers and authors, or both.

In the meantime, I suggest you take another look at Amazon's competition, because there are a lot of excellent authors that Amazon won't sell you at the moment.

And because we've just seen an example of why greater market share for Amazon might not be a good thing.

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