Amazon vs. MacMillan: Who really blinked?

Amazon withdrew some MacMillan Publishing titles from its Kindle, and then reinstated them after succumbing to pressure to raise its retail price above 9.99. There is a lot of speculation that Amazon “blinked” partly in response to Apple’s e-book retail model for its iPad. I’m not sure I see it that way…my comments from RetailWire follow:

If it’s correct (as reported) that Amazon and other book resellers are paying 50% of the cover price to publishers, it shouldn’t matter to those publishers whether Amazon loses money at 9.99. If anything, the price point is driving much greater unit volume than if the same best-sellers were priced at 14.99. It’s hard to determine whether the publishing industry as a whole is ready to take on the 800-pound gorilla of the book retailing business (whether online or e-books) as well as other fast-growing resellers of books like Walmart who are engaged in a price war with Amazon anyway. Bottom line: price maintenance hurts the consumer, curtails demand and is a hard business model to maintain over the long run.


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