Catching Up on the E-Book Pricing Debate

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While booksellers were at the Winter Institute a lot was shaking in the e-book world. With something as elemental as what constitutes a book being debated, it's not surprising that distribution models are also in flux. and Macmillan had their very public negotiations over e-book pricing (which saw Amazon suspend sales of Macmillan titles for a time), and Hachette also announced that they, like Macmillan, would base pricing of e-books on an agency model. Here's a quick recap.

On January 31, Amazon sent out a letter stating that "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." The Amazon letter noted that "ultimately, however, we will have to capitulate and accept Macmillan's terms." "Ultimately" turned out to be about a week; Amazon restored its "buy" buttons for Macmillan titles on February 5.

In the meantime, Macmillan CEO John Sargent wrote to authors and agents about Amazon's letter, and went on to post several updates, including explanations of the publisher's rationale. Retailer-determined pricing of e-books "combined with the traditional business model we were using, was creating a market that we believe was fundamentally unbalanced," he said. About Amazon, Sargent wrote, "Though we do not always agree, I remain full of admiration and respect for them. Both of us look forward to being back in business as usual."

On February 4, Hachette CEO David Young also sent a letter to agents that outlined the publisher's reasons for deciding to use the agency model for e-books, which will allow the publisher to set the price, while the retailer retains a percentage of the sale. "It allows Hachette to make pricing decisions that are rational and reflect the value of our authors' works," he said. "In the long run this will enable Hachette to continue to invest in and nurture authors' careers -- from major blockbusters to new voices. Without this investment in our authors, the diversity of books available to consumers will contract, as will the diversity of retailers, and our literary culture will suffer."

Young said that these terms would "open doors to all online e-book service providers and create more avenues for delivering e-books to readers." Hachette also plans to release HBG e-books simultaneously with the hardcover (or first-format print edition). --Karen Schechner