Book War: Amazon.com vs. Apple

iPad's not out yet, but has already kicked off publishing-industry feud

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    NEWSLETTERS

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    Jeff Bezos is playing hardball to keep control over the ebook market.

    How much should an electronic book cost? And who gets to decide?

    Those are the questions rocking the tech and publishing worlds after Amazon.com pulled all of Macmillan's titles, digital and physical, off its virtual shelves late last week.

    That move was the opening salvo in a war between Amazon and Apple over the future of ebooks.

    Amazon's boycott came one day after Macmillan CEO John Sargent flew to its Seattle headquarters to ask for flexible pricing on books sold through Amazon's Kindle e-reader -- and just a few days after Apple announced that its upcoming iPad tablet would feature an ebook store.

    Currently, Amazon.com sets the top price on most Kindle titles at $9.99. Macmillan hoped to raise prices to $14.99 -- the price point Apple announced for the iPad's iBookstore.

    The talks did not go well. Sargent left Seattle empty-handed -- and then blogs like VentureBeat began noticing that Macmillan's books were gone from Amazon. (Amazon.com still offers Macmillan titles sold by third parties.) He announced the dispute in an open letter to authors and retailers.

    On Sunday, Amazon announced that it was "capitulating" to Macmillan's higher prices.

    The issue isn't really the price point, though publishers would obviously like to charge as much as they can. The real issue is who sets the price. Currently, Amazon essentially acts as a publisher for Kindle ebooks, licensing the copyright from book authors and publishers and paying them a cut.

    Macmillan and others would like to sell directly to online consumers, setting the price and paying the operator of an ebook store a smaller percentage of sales. That's the business model Apple is offering.

    Amazon may appear to be taking a pro-consumer stance in favor of lower prices. Indeed, Kindle customers have announced a boycott of any publisher who tries to sell an ebook for more than $9.99. And Amazon has indicated it will tacitly encourage its customers to buy cheaper ebooks even if it allows Macmillan to raise prices.

    If Amazon is the only one who can set prices, or if it can run its store in such a way that high-priced ebooks are disadvantaged, what's stopping them from raising prices later? Or dropping them to the point that book publishing becomes unprofitable?

    Authors have weighed in on the issue, too. Tobias Buckell writes that he's no longer going to buy from Amazon or link to its site.

    And all this before Apple has sold a single ebook. Imagine how messy this will get once the iPad actually goes on sale in March.