Consumers lose as e-book battle heats up

Typically, consumers benefit when two companies compete, but the opposite could happen if e-book publishers play Apple and Amazon against each other.

The New York Times reports on one such situation with Macmillan, one of the largest publishers in the United States. Yesterday, Macmillan’s books temporarily and mysteriously disappeared from Amazon’s Web site. According to anonymous sources from both companies, the removal was a direct reaction to a dispute over e-book pricing.

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Amazon sells most e-books for $10 each in what’s described as a wholesale model. The retailer sets sale prices, and pays publishers half the books’ hard copy list price. Apple, however, is offering a potentially more lucrative deal for its upcoming iPad: Publishers get to set their own prices, and Apple takes 30 percent, in what’s called an agency model.

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Reportedly, Macmillan is pressuring Amazon to adopt the agency model by saying it’ll delay the release of Kindle books by seven months from the hard cover release date. The Times says Amazon removed Macmillan’s books as a form of retaliation.

Whether Macmillan can get away with keeping books from Amazon isn’t clear; antitrust lawyers tell the Times it could raise legal issues. Either way, this is not a good development if you own an e-reader. Macmillan is essentially saying it wants to jack up the price of e-books or delay their release well beyond the hard copy, and it’s not the only publisher who feels that way. Earlier this month, Kindle owners revolted against publisher HarperCollins for delaying the e-book release of “Game Change,” as the publisher tried to drive up sales of hard copy books to yield higher profits.

All of this strikes me as foolish. If publishers shop around to whomever will make customers pay the most, and customers favor the platform that lets them pay the least, everyone loses.

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