The New York Times Bits Blog reported yesterday that Amazon has temporarily removed Macmillan books from its website over a disagreement about e-book pricing. The disagreement is nothing new: Amazon wants to stick with its $9.99 price point (and stop losing money because of it), and publishers want to make people believe that e-books are worth more than that (although if the standards of e-book production remain low, the value of an e-book might further decline).
We don’t have all the details about this since Amazon and Macmillan aren’t commenting, but from the outside, this looks like a pretty nasty move on Amazon’s part. How much money will Macmillan lose until this is solved? Whatever the figure, it shows the kind of power that online giants have over content producers. Amazon needs to go back and watch the Spiderman movie where Peter Parker’s uncle tells him, “with great power comes great responsibility.” Many businesses rely on Amazon to drive a significant portion of their sales, and shutting off the hose is an irresponsible way to treat publishers. (At the DLD conference, Burda Media CEO Paul Bernhard-Kallen had this same discussion with David Drummond, Google’s Chief Legal Officer—skip ahead in the video to minute 24:40.)
I wonder if this is a move on Amazon’s part to secure its pricing advantage for customers ahead of the launch of Apple’s iBook Store. The new royalty split that Amazon announced earlier (70% for publishers on e-books) indicates they are bracing for impact. But I’m not so sure the impact will be huge. People are underwhelmed by the iPad, and the addition of another proprietary e-book infrastructure (despite the ePub format, I would not be surprised if iBooks require with some kind of proprietary software or hardware) only further fragments the market.
Personally, I am in favor of a $9.99 price point on e-books. Sorry publishers, but you can’t teach the market a lesson by charging more for an e-book. Someone else is always going to undercut your price.
Amazon got it right when it integrated a very convenient purchasing system into the Kindle. Apple got it right with the iTunes store. When it’s easier to buy a product than to pirate it, most people will buy it. The people who won’t buy it through such a system wouldn’t have bought it in the first place.
But Amazon needs to remember that it is a sales gateway for a lot of businesses and it needs to act according to that responsibility.