Monday, May 03, 2010

Amazon's New Negotiating Tactic

When last we left, the e-retailer was negotiating electronic book rights with the Big Six publishers.

As a reminder, in mid-January before the release of the i-Pad, Apple and five of the biggest publishers agreed to a new publishing sales model for e-books. To distinguish it from the traditional wholesale model, the new model was called the "agency model." Under it, the publisher retains control over pricing of the e-book, and retailers such as Apple receive a commission for acting as the publisher's sales agents. Apple and other authorized retailers cannot set the price of the e-book as they did under the wholesale model.

A month ago, Publishers Weekly had this to say:
Predictions that the move to an agency model would be messy have proven correct with the most serious consequence being the inability of Penguin and Amazon to reach an agreement over terms of sale. As a result, Penguin e-books released beginning today [April 1] will not be available at the Kindle store. E-books released prior to April 1 are still for sale at the $9.99 price.
On Friday, Teleread summed up the problem here this way:
Penguin is the only one of the "agency pricing five" not to have come to an agreement [with Amazon] yet, and so after thirty days, Penguin’s e-books still are not available via Amazon.
Amazon decided to resort to a rather unique and unilateral approach to breaking its impasse with Penguin.

On Friday, The Business Insider reported here that "In the middle of negotiations over e-book pricing, Amazon is taking an aggressive swing at Penguin Books."

The Wall Street Journal (WSJ) described Amazon's new negotiating tactic here:
... Inc. has begun selling a number of new hardcover books published this month by Pearson PLC's Penguin Group (USA) for only $9.99 amid a dispute between the two companies over electronic books ... Since Amazon can't sell the digital editions of Penguin's books, it is, in effect, showing its customers that Amazon is still the place to go for discount pricing. The low price also serves to put pressure on Penguin ...
As an example, the new Sookie Stackhouse "True Blood" novel goes on sale tomorrow.

A reader can pay $12.99 over at Apple iBookstore for the e-book version or s/he can pay $9.99 [plus shipping] at Amazon for the hardcover version.

That ought to liven things up a bit around the Penguin conference table.


India Drummond said...

Interesting! I hope they get it sorted out soon. Readers don't care about stuff like this. They just want their books. It will be them, and authors, that suffer in the end.

Maya Reynolds said...

India: I disagree that readers don't care about prices. That's the main reason so many independent booksellers have gone out of business. The independents have been unable to match the deep discounts given by the large bookchains, the internet sellers and the big box stores. I think $9.99 hardcover books will attract reader attention.

Katie said...

I agree Maya. I'm not willing to pay a whole lot of money for an ebook. It has to be really good to pay even 9.99 much less anything higher. Prior to getting my Kindle, I never bought hardbacks because they were too expensive, I'd either go to the library or buy used paperbacks. In the absence of new Penguin ebook releases from Amazon, I'm buying books from other publishers, getting what I want from the library or explore new, fun, and inexpensive indie authors.