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FAQ: Amazon vs. Macmillan -- The iPad wins

Amazon likely to raise e-book prices, then blame publishers

By Matt Hamblen
February 1, 2010 05:09 PM ET

Computerworld - When Apple introduced the iPad last week, it launched a lot more than a tablet device. The announcement included the Apple iBook store, which in subsequent days provoked an e-book pricing firestorm, leading Amazon.com to temporarily halt sales of Macmillan e-books and paper books over the weekend.

Reactions to Amazon's pulling the plug on Macmillan, and Amazon's subsequent capitulation, took off in all directions. Macmillan authors, notably science fiction writer John Scalzi, were outraged by Amazon's action. Meanwhile, some Amazon.com e-book buyers blasted Macmillan, vowing they won't pay more than $9.99 for a first-release e-book and will take a pass on e-books that cost as much as $14.95, the price Macmillan is proposing.

The brouhaha between Amazon.com and Macmillan serves as a precursor to more e-book pricing and marketing battles in the months to come, said analyst James McQuivey of Forrester Research.

"There's going to be a whole bunch of crazy things happening in the e-book market this year," McQuivey said in an interview. "The fat lady is far away from singing."

McQuivey said the fallout from the weekend kerfuffle will ultimately lead to Amazon's raising its first release price for e-books to $14.99, up from $9.99, and then blaming publishers such as Macmillan as the cause for the increase.

Behind the battle is Apple, the iPad and the iBook store, McQuivey and other analysts said. Apple has allowed publishers to set their own prices for e-books, putting pressure on Amazon.com to do what the publishers want as well.

To sort out the issue, we present this FAQ to answer some of the major questions.

What transpired between Macmillan and Amazon after the iPad launch last week? Apple announced the iPad on Jan. 27, with CEO Steve Jobs identifying five publishers, including Macmillan, that will sell e-books from the iBook store for use on the iPad.

The next day, Macmillan CEO John Sargent met with Amazon officials in Seattle and proposed selling e-books for as much as $14.99, according to a statement and paid advertisement that Sargent made on Publishers Lunch, a Web site for the publishing industry.

Sargent said Amazon informed him the next day that all Macmillan e-books and printed books would be taken off Amazon.com and its Kindle e-book site, with Macmillan books available through third parties only.

What did Amazon say about this? Amazon issued a statement late Sunday on its Kindle forum indicating "strong disagreement" with Macmillan that led to its ceasing sales of Macmillan titles. But Amazon also said it will "ultimately ... capitulate and accept Macmillan's terms" because of the "monopoly" Macmillan has over its titles. Amazon added that customers will have to decide whether it is "reasonable to pay $14.99 for a bestselling book."



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