[T]he e-book pricing wars came to a head on Friday and Saturday, when Amazon stopped selling Macmillan titles (St. Martin’s, Holt, and Farrar, Straus and Giroux books), though customers could still purchase books on the site from other sellers. Macmillan CEO John Sargent issued an impassioned plea on Saturday night to explain his company’s position, and last night, Amazon gave in, posting a statement to customers on its Kindle page that said, in part, “We want you to know that ultimately, 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 toyou 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. We don’t believe that all of the major publishers will take the same route 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. Kindle is a business for Amazon, and it is also a mission. We never expected it to be easy!”
Read the rest of the article HERE
While I can understand Amazon's reluctance to price an e-book at $14.99, from a publishing point of view, it's not as simple as Amazon thinks. Macmillan is right in that too low of a price point just doesn't make sense. Books are a business. One with very low profit margins, at that. EW points out that 3% is considered a healthy profit margin in the industry, which is startlingly low. Publishers also lose money of 90% of their titles. Most people don't know that. They think we're over here swimming in dough, but it's just the opposite. There are a lot of expenses that go into making, selling, and promoting a book, not to mention paying the advance to the author and salaries (though miniscule) to the employees. And then on top of that, 90% of the books don't even earn out, so the publisher doesn't even break even. This is why Macmillan has such a beef with Amazon's set pricing of e-books. While yes, e-books are less expensive to produce than physical books, it still costs money, and e-book sales are a necessary and helpful part of trying to earn out on a title.
Buy buttons for Macmillan's physical books have yet to return at Amazon (at least in any meaningful way), but the publisher quietly launched what may soon be just a remnant of their earlier strategy to keep up the price of ebooks: the "enhanced" edition.
Kristin Hannah's Winter Garden, which released yesterday, was one of the few (if only) Macmillan books you could buy directly from Amazon, which was offering the Kindle version only and not the trade hardcover. But the book carries the curious digital list price of $29.99--three dollars higher than the print book list price.
The Amazon information page offered no obvious explanation for the new pricing. But at Barnes & Noble.com, they helpfully (and prominently) explained that the ebook version of Winter Garden is a "Special Edition eBook" with "a number of exciting features, including: An exclusive conversation with the author; a special essay written by the author describing her research process for the book; delicious recipes for making Russian food favorites in your kitchen at home; and more."
Read more HERE
I'm not sure "enhanced e-books" are necessarily the way to go, but it's one alternative. At least Macmillan is trying to do something productive and solve the problem. They aren't just crying and stamping their feet like some other company I know.