Amazon gives in to Macmillan thanks to power of Apple

In a posting on its forum, Amazon has declared defeat in its disagreement with Macmillan over ebook terms – one most likely influenced by Apple which is offering better terms to publishers for its forthcoming iPad:

Macmillan, one of the "big six" publishers, has clearly communicated to us that, regardless of our viewpoint, they are committed to switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers and most hardcover releases.

We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles. 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 customers will at that point decide for themselves whether they believe it’s reasonable to pay $14.99 for a bestselling e-book. We don’t believe that all of the major publishers will take the same route as Macmillan. And we know for sure that many independent presses and self-published authors will see this as an opportunity to provide attractively priced e-books as an alternative.

While Amazon is focusing on the higher price, what really counts here is who sets the price and how much money goes back to the publisher. It’s not clear to me why any publisher would not do the same as Macmillan, since it is to their advantage.

I am surprised Amazon gave in so easily. Its PR has has been clumsy – first, to withdraw titles from sale thus ensuring strong opposition from frustrated authors, and coming over as a bully; and second, to state so clearly, early in the battle, that “we will have to capitulate” – not language you normally hear from a major corporation.

It is evidence of Apple’s extraordinary power to disrupt markets.

If you missed the background, see yesterday’s post.