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Amazon capitulates in pricing war with Macmillan, but not without a fight

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It was shaping up to be a battle royale. In one corner, Amazon, reigning king of e-book sales. In the other, Macmillan, a leading US publisher. Over the past few months, Macmillan and Amazon have tussled repeatedly over the pricing of e-books, which Amazon says should remain at $9.99. Macmillan, on the other hand, maintains its titles should sell for closer to $15 – a price tag which the company says more fairly compensates authors and publishers.

Over the weekend, Amazon took the decisive step of eliminating all Macmillan titles from its digital shelves. By Sunday, after many industry insiders expressed shock over Amazon's actions, the Macmillan books were online again – but so was a note from Amazon, which lashed out at Macmillan in no uncertain terms. Here's an excerpt from the Amazon statement:

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.

In relenting to Macmillan's demands, Amazon said it doubted that many publishers would push for the same price tag 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," the statement said.

Still, it's not clear that all – or even most – major publishers would toe the $9.99 price line. Over at the Moby Lives blog, Melville House publisher Dennis Johnson predicts that other companies are about to "issue statements of solidarity with Macmillan and follow suit in its implementation of the agency model," which allows publishers to set the price of the book.

For more on Macmillan's perspective, check out this open letter from Macmillan CEO John Sargent:

In the ink-on-paper world we sell books to retailers far and wide on a business model that provides a level playing field, and allows all retailers the possibility of selling books profitably. Looking to the future and to a growing digital business, we need to establish the same sort of business model, one that encourages new devices and new stores.

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