This morning brings news (from an article in the New York Times and a blog post in MobyLives) that Amazon “has threatened to stop directly selling the books of some publishers online unless they agree to a detailed list of concessions regarding the sale of electronic books” (NYT).
Amazon is trying to prevent publishers from making deals with Apple to sell their ebooks on the iPad using the agency model. Amazon is apparently refusing to negotiate an agency model with any publishers other than the five majors who’ve already made deals with Apple. According to the MobyLives post, independent publishers are being told that “if they switched to an agency model for ebooks, Amazon would stop selling their entire list, in print and digital form.”
Amazon and Apple are each requiring publishers to agree to restrictive terms, which may in effect force publishers to choose between Amazon and Apple. From the Times article:
Five of the country’s six largest publishers — Macmillan, Simon & Schuster, Hachette, HarperCollins and Penguin — have already reached deals with Apple to sell their books through its iBookstore, which will be featured on the iPad. (The holdout is Random House.)
Under those agreements, the publishers will set consumer prices for each book, and Apple will serve as an agent and take a 30 percent commission. E-book editions of most newly released adult general fiction and nonfiction will cost $12.99 to $14.99.
Amazon has agreed in principle that the major publishers would be able to set prices in its Kindle store as well. But it is also demanding that they lock into three-year contracts and guarantee that no other competitor will get lower prices or better terms.
Apple, for its part, is requiring that publishers not permit other retailers to sell any e-books for less than what is listed in the iBookstore. So the publishers have sought to renegotiate agreements they have with Amazon under which they sold books to it at wholesale, allowing Amazon to set the consumer price….
According to three people briefed on the discussions, publishers are reluctant to sign three-year contracts because the digital book world is changing so rapidly and they want room to adjust as it takes shape.
Amazon has also begun talking with smaller publishers that have not yet signed contracts with Apple. In those conversations, according to one person briefed on the discussions, Amazon has said it prefers to retain its wholesale pricing model, as opposed to Apple’s so-called agency model.
But some of these smaller publishers have begun talking with Apple, which has effectively said that any publisher that wishes to sell its books on the iPad must offer the same terms to all booksellers. In other words, to do business with Apple, publishers must export Apple’s business model to all retailers. Amazon, by contrast, has not promised to adopt the agency approach for any but the largest publishers.
Amazon appears to be responding to the Apple threat by waging a publisher-by-publisher battle, trying to keep as many books as possible out of Apple’s hands, while preserving as much flexibility as it can to set its own prices.
But if Amazon tries to enforce its demands by removing “buy” buttons from some pages again, some believe it could harm its reputation in the eyes of customers and the publishing industry….
Amazon may have more leverage with smaller publishers, which typically sell their books in fewer outlets and thus tend to rely more on Amazon for sales. Amazon may believe that if it can keep those publishers from moving to an agency model, Apple will choose not to sell their e-books, and Amazon will be seen as having a broader selection.
For those of you who want a reminder of the Amazon/Macmillan boycott battle and the ebook agency vs. wholesale sales model controversy, here are links to a two of my blog posts about it from late January and early February: