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How Macmillan and Amazon.com settle their week-long dispute?

By Amarendra Bhushan for CEOWORLD Magazine Updated:February 8, 2010

Macmillan and Amazon.com (AMZN, News, Press Releases: 132.76 +1.42 +1.08%, yield: N/A, cap: 59.018B, 1yr target: 161.74) have resolved their dispute over over ebook pricing between the publisher and the retailer. Macmillan and Amazon were in a dispute about what the online retailer would charge for e-book editions of the publisher’s titles. Amazon’s retail price for many e-books from Macmillan was $9.99, and Macmillan would like the right to raise those prices to between $12.99 and $14.99 for most of its titles.

“I am delighted to be back in business with Amazon,” John Sargent, Chief Executive of Macmillan, said in an e-mail message, according to New York Times. The e-book mart has now a strong rival for Amazon in the form of the Apple device. The agreement terms are sure to have comprised higher prices for e-books, it is believed. So, as soon as the iPad goes on sale this March, Amazon is expected to usher in the new pricing strategy.

Paul Carr explains at TechCrunch. In the UK, way back in 1900, publishers corralled retailers into the Net Book Agreement (NBA); an agreement between British publishers and booksellers that books would be sold at the price specified on the cover. If a bookseller offered so much as a penny discount, then the publisher would simply withdraw all of their books from that bookseller and encourage other publishers to do the same. The arrangement suited everyone; book shops were the only place to buy new books and the NBA meant they didn’t have to worry about rivals undercutting them; this particularly benefited independent bookshops. For their part, publishers knew exactly how much they’d be getting for each title and authors knew how much of that would form their royalty.

Hachette Book Group and News Corp’s HarperCollins have also said they will try to renegotiate terms with Seattle-based Amazon. Apple’s (AAPL, News, Press Releases: 224.65 +0.53 +0.24%, yield: N/A, cap: 203.7B, 1yr target: 255.49) introduction of its iPad tablet on January 27 provided publishers with another channel for the sale of e-books.

Under the agreement, Macmillan will set the price of e-books, with most new titles costing 12,99 to 14,99. That compares with the 9,99 Amazon had been charging for most bestsellers. Macmillan will also get a 70% cut of sales, the publisher said. Amazon had typically given authors half the list price and set the retail price, according to the Authors Guild, a group that advocates for writers.

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