After refusing to sell any Macmillan books or ebooks for three days, Amazon.com today gave in to demands by the publisher that it start charging $15 for Macmillan ebooks, rather than Amazon’s customary $9.99. In a statement, Amazon warned that customers might “rebel against such a high price for books that cost far less to distribute than physical books.” Will they also rebel against a $259, black-and-white, DRM-laden e-reader that doesn’t let you share or re-sell books that you “own,” and can yank them back without notice at any time?

Publishers have long balked at Amazon’s $9.99 price, and many Kindle ebooks are priced higher. However, for most bestsellers, Amazon has stood its ground until now. However, with competition looming from Apple’s iPad and e-readers from Barnes & Noble, Sony and others, Amazon has clearly lost some leverage, and agreed to Macmillan’s terms. In a statement posted today, Amazon announced:

Macmillan, one of the “big six” publishers, has clearly communicated to us that, regardless of our viewpoint, they are committed to switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers and most hardcover releases.

We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles. We want you to know that ultimately, however, 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 to you 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.

We were always taught that competition drives prices down. However, in the ebook universe, it’s having the opposite effect. That might help Macmillan protect its margins in the short-run, but it isn’t exactly a great deal for consumers. And we all know what happened when record companies adopted a similar strategy a decade ago.

Announcement: Macmillan E-books [Amazon.com]

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