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Will the Macmillan/Amazon dustup be a boon for the new Apple iPad?

February 2, 2010 11:50 by Tora Estep

Last week, schoolyard bully Amazon pounded on plucky Macmillan Publishers by disabling the buy buttons on nearly all editions of all its books, thus cutting off access to one of the publisher’s and its authors’ biggest markets. Why? Because Macmillan had the temerity to tell Amazon that it would provide access to its ebooks only if it switched to an agency model in which Amazon would make 30 percent of the proceeds of ebooks and Macmillan would set the prices (up to $15 per title). (Amazon wants to cap the price of ebooks at $9.99 and stick with its current model of buying at 50 percent of publisher cost and setting its own price.)

The media reaction to this event was generally to cast Amazon in the role of bully (for a sample, see this article from Fast Company) and thus Amazon was forced to back down.

The entire event set off a lot of talk about a prominent issue in the book industry: what is a fair price for ebooks? They are still pretty new, so no one really knows for sure what makes sense. The assumption has been that they don't really cost much to make, but that's not completely accurate (for a discussion of the costs of making books, check out Tobias Buckell's thorough discussion on his blog.). Amazon has been willing to operate its ebook business at a loss for a few years in order to dominate the market, but now all of a sudden here comes Apple’s iPad and iBooks and all bets are off. The entry of the iPad and iBooks suggests the potential for a fairer share of ebook proceeds for publishers and for authors, although at first glance it may seem to come at a loss for consumers. But does it? Cheaper isn't always better if you want to create the conditions that allow authors and publishers to thrive and publish books that matter. Clearly the Author's Guild thinks this is an important fight for the future quality of the publishing industry. To read their take on it, check out this article.

At any rate, the verdict on the pricing structure for ebooks is still out. I'll be interested to see how things shake out.

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