Online Retailer Amazon.com Loses Marketing Battle
Amazon.com tried to use its considerable retailing clout to ban ebook titles published by Macmillan this week. In the end, they failed and the Macmillan ebooks where restored to the Kindle catalog. But in the process Amazon.com tipped its hand by showing a willingness to sacrifice publisher relations and customer convenience on the altar of their own higher profits.
Problem Starts with iPad
Problems started when Apple announced the release of the iPad, and that they would be selling ebooks, and that publishers would be able to set their own ebook prices. Amazon.com’s Kindle ebook reader has been the market leader, but it is the general consensus that Kindle dominance will end when the iPad is released. That suits publishers because Amazon.com has been keeping ebook prices artificially low. Macmillan CEO John Sargent visited Amazon.com on January 28 to discuss better terms for the sale of ebooks in light of new competition from the iPad.
Apparently the talks did not go well because by the time Sargent made it back to New York City from Seattle, Amazon.com was already wiping Macmillan ebooks from their database.
This was the second time Amazon.com has had a showdown with the publishing industry. In 2008, it removed all titles by Hachette Livre U.K. on its U.K. website in a retaliatory action over Hachette’s demands for better terms.
Amazon Raids Individual Kindles to Delete Books
In a swipe at consumers, Amazon.com also raided individual Kindle devices and removed Macmillan titles from wish lists and deleted sample chapters by means of the wireless connections used to deliver Kindle ebooks. Amazon.com has raised the ire of their customers in the past, and attracted some lawsuits, by removing purchased ebooks from individual Kindles. No ebook is safe on the Kindle if Amazon.com decides to remove it.
A few days later Amazon.com reversed its decision against Macmillan, but only grudgingly. In an announcement on to the Kindle Community, Amazon.com said, “ultimately” it had to capitulate “because Macmillan has a monopoly over their own titles,” forcing Amazon to sell its titles “even at prices we believe are needlessly high for ebooks.” Amazon concluded, “We don’t believe that all of the major publishers will take the same route as Macmillan” and called it likely that “many independent presses and self-published authors will see this as an opportunity to provide attractively priced ebooks as an alternative.”
Of course, this is wishful thinking on the part of Amazon.com because the iPad has the potential to turn the Kindle into a paperweight. All publishers will want to sell through the Apple iPad ebook store because they will not have to give in to Amazon.com’s own monopolistic pricing and discount policies (they take a 55% cut of the retail price in most cases), and that will improve publisher profitability.
eBook Marketing Will Change
While the iPad will likely be a game-changer, and bring a new revolution to the e-book market, it will be unsettling for retailing giant Amazon.com. They will have to change their game plan in order to conform to new market realities. Publishers and other industry pundits have been concerned that the Amazon policy of selling ebooks for $9.99 will create an unsustainably low customer expectation about what constitutes a fair price for ebooks and that such pricing taints all book pricing. Simon & Schuster CEO Carolyn Reidy recently told employees that they must resist the “the downward pressures exerted by the marketplace” and “the perception that “digital” means “cheap.””
Amazon.com has put many local bookstores, including Christian bookstores, out of business. Now it seems that competition from an Apple iPad store will put a dent in Amazon.com profits. The competition from the iPad will likely help create a more robust book market.
Posted Feb 2, 2010