Peter Kafka

Recent Posts by Peter Kafka

The Apple-Amazon Book War Heats Up and Claims Macmillan as a Casualty

Apple has yet to sell its first e-book, but it is already engaged in a bruising battle with Amazon for control of the market. The most recent salvo: Amazon has stopped selling all books–both digital and physical–from Macmillan, apparently in response to the publisher’s plans to sell its books at a higher price point through Apple.

UPDATE: That was quick: Amazon has conceded to MacMillan’s demands.

Amazon (AMZN) sells most e-books for $9.99 or less, and Apple (AAPL) plans to sell e-books for 30 percent to 50 percent more. How long can this disparity last? It won’t, Apple CEO Steve Jobs told Walt Mossberg on Wednesday: “The prices will be the same.”

The implication of that comment is clear: Jobs believes publishers will use Apple’s e-book store as leverage to force Amazon’s prices up.

As I noted earlier, this is an inversion of Apple’s relationship with the big music labels, whereby it demanded that those companies sell their songs as $1 singles instead of $15 CDs–and helped accelerate the industry’s demise along the way.

In that scenario, the labels had no option but to play along, because Apple controlled the digital music market. Here, Amazon has the clear lead in digital books, having sold “millions” of Kindles, but the market is still nascent, so the retailer’s lead alone isn’t enough.

But Amazon does own the market for physical books sold on the Web, so pulling those off its virtual shelves is powerful leverage indeed.

Next step: Keep an eye on books from the other four publishers Apple touted during Wednesday’s iPad launch: Pearson’s Penguin Group, News Corp.’s (NWS) HarperCollins, Hachette Book Group and CBS’s (CBS) Simon & Schuster.

All of them are selling their wares through Amazon for the time being. Wonder how long that will last.

Below, Kara Swisher’s video of Mossberg’s chat with Jobs following the iPad debut, in which the two men discuss the brewing book war.


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