Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Amazon Gives In -- It Should Not Be Telling Publishers What To Charge

Posted by Tom Foremski - January 31, 2010

Amazon decided that fighting with Macmillan over book pricing was a wrong move. [Analysis: DRMStore Wars Begin...Bad News For E-Books, E-Readers But Good For Notebooks]

Sunday afternoon Amazon published this notice:

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 customers will at that point decide for themselves whether they believe it's reasonable to pay $14.99 for a bestselling e-book. We don't believe that all of the major publishers will take the same route as Macmillan. And we know for sure that many independent presses and self-published authors will see this as an opportunity to provide attractively priced e-books as an alternative...Kindle is a business for Amazon, and it is also a mission. We never expected it to be easy!

Good news. Amazon should not be in the business of telling publishers what they can charge for their books. It might have been able to do that if it had a monopoly on e-readers, but thankfully it doesn't.

Amazon should just distribute the books and collect the money. It already gets a big chunk of the revenues. It charges newspapers as much as 70 per cent of the revenue to distribute on the Kindle! For what? For pushing some bits over a pipe? How much creativity went into that?

Dallas Morning News CEO James Moroney told a Senate subcommittee yesterday that the Kindle isn't a "platform that's going to save newspapers in the near term." According to Moroney, Amazon demands 70 percent of subscription revenue from newspapers, and further requires content owners to grant Amazon the right to republish content to other devices -- like, say, the iPhone.


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