In a recent drama, MacMillan made it publicly known that they were having problems with Amazon over the pricing scheme of eBooks on the Kindle platform. MacMillan was apparently already in talks with Amazon for quite sometime about the prices being raised from Amazon’s current $9.99 maximum price.
Whilst everyone can see that over pricing digital content can really backfire (look at digital music or movies for lots of examples), it seems like MacMillan has been really hell-bent on increasing the pricing based on their latest agency model. Under this model, MacMillan would like to make sales through agents, who would charge the normal 30% commission that standard throughout the industry. The extra cost of course gets pushed on to the buyers and this is where Amazon did not want to comply with MacMillan’s requests.
After negotiations broke down, Amazon took off all MacMillan books from the Kindle store. However, even then the Kindle makers acknowledged that MacMillan owned too many important titles for Amazon to be able to keep those books away from Kindles. And true to their predictions, Amazon ultimately had to give into MacMillan’s demands to increase the prices.
Under the current model, the eBook prices will be capped at a maximum of $14.99 instead of $9.99 as per existing models. The average prices are supposed to start from $5.99 and go up to $12.99 but the real situation would be that most important titles will be priced between $12.99-$14.99. MacMillan gave everyone a glimmer of a hope saying that they will bring the prices down dynamically. However, that simply means that they will gradually reduce prices on existing titles but will likely price newer titles high.
These new prices put Kindle costs on the same level as those on iPad, making the gap between the two become much smaller when it comes to pricing.
