Peter Kafka

Recent Posts by Peter Kafka

Hachette Joins Apple’s Anti-Amazon Book Club

Here’s another publisher publicly throwing its weight behind Apple–and against Amazon–in the e-book pricing war. Hachette Book Group says it will pursue the “agency model” for pricing e-books: It sets the retail prices and the retailer gets a 30 percent cut.

Translated into more practical terms, this means Hachette will demand that Amazon (AMZN) and other retailers–but really, this is aimed at Amazon–raise the prices on their e-books from the $9.99 standard they’ve adopted. Instead, the publisher will want them to use the $12.99-$14.99 standard for new books, which Apple (AAPL) introduced last week along with its iPad.

Hachette is one of five publishers that participated in Apple’s iPad launch event last week. Macmillan, one of the other five, has spent the past week engaged in a public battle with Amazon over the pricing model. On Sunday, Amazon said it would capitulate to Macmillan’s demands.

Macmillan and Amazon have yet to actually resolve their dispute, though, and as of Thursday night, Amazon was still not selling Macmillan’s books on its electronic shelves.

In Thursday’s New York Times, Macmillan advertised one of its titles by noting that it is available “at booksellers everywhere except Amazon.” Macmillan CEO John Sargent also defended his position, again, in an open letter to his book agents.

Meanwhile, look for the other three publishers that have allied with Apple–Pearson’s Penguin Group, News Corp.’s (NWS) HarperCollins and CBS’s (CBS) Simon & Schuster–to fall in line. On Tuesday, News Corp. CEO Rupert Murdoch said he expected to renegotiate his publisher’s deal with Amazon soon.

Again, it’s important to remember that by embracing the agency model, the publishers will actually make less per book than they do with the current version, whereby they sell the books at a wholesale price. But the publishers think this is their only chance to keep the prices of e-books from plummeting and undercutting sales of their ink-and-paper books.

The publishers hope this strategy will help them escape the fate of the music labels, which saw their $15 CDs replaced by $1 singles. To hear a (mostly) persuasive argument about why they’re wrong, check out this blog post from David Pakman, a digital music veteran now working as a venture capitalist with Venrock.


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