Jan 30 2010
You can read the full text for free here but essentially it sounds like this dispute is not one that will end happily for readers. Macmillan wanted to sell the books via an agency model wherein the publisher sets the price and the retailer gets a cut. In an open letter to Authors, Illustrators, and Agents (not readers, because who cares about them), John Sargeant said:
I told them they could stay with their old terms of sale, but that this would involve extensive and deep windowing of titles…Our plan is to price the digital edition of most adult trade books in a price range from $14.99 to $5.99. At first release, concurrent with a hardcover, most titles will be priced between $14.99 and $12.99. E books will almost always appear day on date with the physical edition. Pricing will be dynamic over time.
Macmillan wants to be in control of the prices and will not allow discounting beyond a certain point. This is called retail price maintenance. It used to be illegal for years and years, but in 2007, the Supreme Court in Leegin said that RPM was okay. Many states are opposed to this and have sought Congressional help in overturning Leegin. It will be an evolving legal issue.
Amazon clearly wants to sell books for $9.99. It has created consumer expectation at this price point. Because Amazon won’t agree to Macmillan’s pricing, Macmillan won’t allow the sale of Kindle versions of its ebooks. In response to Macmillan’s desire to dictate minimum pricing, Amazon has removed the buy it now links for the paper books although all the books appear to be available from the secondary market on Amazon.
The reason for Macmillan’s position isn’t that they want to bring reasonably priced ebooks to the market. The reasoning is that $9.99 ebooks devalue the hardcover and move consumers away from being willing to pay a hardcover price (although very few people pay full retail for a hardcover). Teresa Nielsen Hayden (Tor publisher, division of Macmillan) puts it this way over at Boing Boing
I was just explaining over at Making Light, while a fixed $10 price point would undoubtedly be good for Amazon’s ebook business, it would take a shark-sized bite out of the market for hot new bestsellers, which is trade book publishing’s single most profitable area.
This certainly isn’t the end of the Macmillan and Amazon story. It is merely the beginning. As an avid ebook reader, I know I’m getting the shaft here by both Macmillan and Amazon. Amazon cares about creating market dominance. Macmillan cares about pricing ebooks as high as possible to preserve the exalted hardcover (and Macmillan’s business model).
Other publishers can follow suit although they can’t collude together to blackball Amazon. This would be clearly anticompetitive but there’s nothing improper about Macmillan signalling its intent to do something in hopes that all other publishers will follow suit. The more publishers that do what Macmillan is doing, the less power that Amazon has to create its own market price for ebooks.
In the meantime, what does a Kindle owner do in order to keep using the device but still avail themselves of the books out there? There is a fix that don’t involve stripping the DRM. One is to figure out what your Kindle PID is and use that to download Mobipockets at other stores. The second step is to fix the mobipocket so it can be read on the Kindle. This does not strip the DRM but rather merely replaces one code for another.
Of course, the best thing for the reader is to strip the DRM and there are many, many tools out there to do this.