updated 11:20 am EST, Sat January 30, 2010
Amazon protests demand for Kindle price hike
Amazon has pulled Macmillian's books from the Kindle store in a protest over pricing that could signal a conflict with Apple, a source said late Friday. An insider claims that Macmillan had asked Amazon to raise prices from $10 to $15 and, as a pressure tactic, Amazon is temporarily denying sales. The NYT contact doesn't say how close Amazon and Macmillan are to clearing the impasse and which side has the upper hand.
The retaliation supposedly follows after about a year of debate but has come to a head just as Macmillan has publicly announced a deal with Apple to supply the iBookstore with titles. Neither of the newer partners has detailed pricing, but very detailed rumors have suggested that Apple will let publishers charge more for the titles they offer to the iPad and other devices. These could include prices as high as $15 for a bestseller and, through a deal that gives publishers a 70 percent cut, would provide more revenue per book than a Kindle book's actual price. Amazon actually takes a loss to reach its $10 price but is believed to have hard-locked price terms that leave publishers no opportunity to set prices themselves, unlike Apple's rumored conditions.
It's not certain if Macmillan can permanently withdraw its books from the Kindle store to serve Apple, as it may raise issues of unfair competitive practices. However, Amazon's leverage may also be in question as it has to maintain support from publishers to prevent them from defecting either to Apple or to other rivals such as Barnes & Noble or Sony.