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Hey Amazon…

…sometimes it just isn’t about you! I would love to read the publishing news and NOT see your name for once.

   What is up with Amazon lately? In trying to hold on to their $9.99 Kindle ebook price model, they’ve dropped Macmillian titles from their site – both print and Kindle versions.

    Macmillian wants to increase the price of their ebooks to $14.99 to $15.99 AND take 70% of the cover leaving Amazon 30%.

    Normally I enjoy it when someone wants to stick it to Amazon but in this instance I have to agree with them. (I know, alert the media as this is very rare occasion)

    Let’s look at the print world…not that I’m saying it’s perfect mind you but it is the only established business model in publishing. The publisher sets the price of a book but they sell it to a book distributor. Ingrams is the largest book distributor in North America  and they sell the book to booksellers (Amazon included), ship the book, warehouse the book etc. Yes, there are exceptions but this is the ‘norm’ in the industry. 

   The standard cut for Ingrams is 55-60% of the cover price. So for a 7.99 book, Ingrams would receive $4.79. They maintain multiple warehouses across the US and (I believe) Canada where they hold the books. The bookseller orders, they pull the order then ship, deal with returns, etc. They also print catalogs and promote the books. 

   When it comes to Amazon and the Kindle ebooks, Amazon is not only acting as distributor (you can only buy Kindle books at Amazon and there is no centralized ebook distributor – Mobipocket comes the closest but in reality it is an affiliate program) they are also creating the actual Kindle files on their end – the publisher doesn’t do this so like the print model. Amazon also promotes and sells the books where the publisher usually doesn’t when it comes to ebooks. The Amazon cut for a Kindle ebook is 60 – 65% of the cover price, similar to the print distributors cut. (and yes, I think thats too high) 

   By Macmillian trying to force Amazon to sell their books for more than their business model price ($9.99), they are, in essence, trying to dictate how Amazon does business. As a former bookseller, I know if a vendor came to me wanting me to sell their books but they set the pricing, they decide how much I’d make per title – I’d tell them to piss off. In order for a bookseller to remain competative there has to be enough wiggle room to offer some kind of discount / rewards program to the readers. Booksellers know how to market to readers while publishers…not so much. 

   Not only is Macmillian trying to hogtie the vendor, they are are messing with good old fashioned competition in the market place. If a publisher is allowed to set their prices across the board then the readership will see discounts / rewards programs dry up. If they want to charge more for their books then they need to setup their own bookstore. Personally, I won’t pay more than $9.99 for an ebook and I applaud Amazon for taking this stand. 

* Dear Author has an excellent post about the legalities of this issue.

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