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Book publishers, like record labels before them, are struggling to adapt to the digital world. And their struggles are only growing larger thanks to the growing e-book market, where a price war has broken out.

The price war, which has driven down the cost of e-book bestsellers, is of concern to book publishers for several big reasons, a primary one being that low-priced e-books could potentially devalue their physical counterparts.

Macmillan, one of the largest English-language book publishers in the world, last week decided to take action. On Thursday, it met with Amazon.com. Its proposal: increase the price of the e-book versions of its bestsellers from $9.99 to a range between $12.99 and $14.99. According to Macmillan's CEO, John Sargent, the company's proposal would actually help Amazon make more money.

On Friday, however, Amazon responded to Macmillan by pulling all Macmillan books -- both physical and digital -- from its virtual shelves. Amazon customers looking for books published by Macmillan and its subsidiaries only had one option: buy them through third party vendors who sell on Amazon.

It was a forceful move, one that many questioned the wisdom of. As John Scalzi, an author published by one of Macmillan's imprints, wrote that Amazon's actions would have "a long-term effect on Amazon's relationship with publishers, and not the one Amazon is likely to want".

That may be why Amazon's Macmillan ban didn't last the weekend. Late yesterday, Amazon gave in and agreed to sell Macmillan e-books at higher prices. But Amazon made it clear it doesn't think Macmillan's pricing is a good idea. Amazon's Kindle team posted a message yesterday that stated in part:

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 may very well be right about Macmillan's pricing. But at the same time, throwing Macmillan under the bus was not a wise strategic move. Therefore, it's good that Amazon has taken the high ground and reversed course.

Like record labels, book publishers will have to swallow some tough pills as they try to adapt their business models for the digital world. But if one lesson has been learned from the battles fought in the music industry, it's this: hard feelings can last a long time and they end up harming just about everyone, especially the consumer.

By taking a step back, I believe Amazon has done the e-book market a small but important favor. While the tensions over e-book pricing certainly haven't been dealt with fully, it would be nice to see companies like Amazon work with book publishers to address that tension without the posturing and drama that has been so damaging to the music industry.

Photo credit: Ian Wilson via Flickr.

Patricio Robles

Published 1 February, 2010 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2429 more posts from this author

Comments (3)

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Dom

Smart move by Amazon on both counts. It distances itself from a pricing structure which the majority of it's customers will ultimately come to regard as excessive but then gets back into bed with the hand that feeds it (to crucify a few metaphors!).

There are already a number of very good ebook t0rrent sites so it is only a matter of time before prices tumble in the ebook market.

almost 7 years ago

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veiko herne

The thing I learned once from Corey Rudl'i (founder of Internet Marketing Center) was that price isn't always an issue. Why you need to sell your eBook at few dollars, when you can name it as Self-Study course and ask at least $75 from it.

And setup the two tier affiliate program with generous commisions (70% first tier, 20% second tier) to sell it.

You will make much more money than trying to sell something for few dollars one by one.

almost 7 years ago

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Fred Newtz

It didn't last long. Amazon is already courting book agents and authors directly. Amazon is a large company and can go toe to toe with publishers. As everyone and everything has come to find out, internet marketing has changed the face of marketing in general.

over 6 years ago

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