Hachette Gets Amazon Pricing Leverage from iPad Deal
Posted 02/05/2010 at 7:02am | by J.R. Bookwalter
(Image courtesy of DailyMail.co.uk)
It appears that Amazon’s $9.99 pricing model for new release e-books may be completely crumbling now that a third publisher has used the iPad as leverage in negotiating a new deal with the e-tailer. AppleInsider is reporting that Hachette Book Group is the latest to leverage its new iPad deal to increase e-book prices for Amazon’s Kindle. A letter from Hachette CEO David Young doesn’t specifically mention Amazon or raising new book prices, it does clearly state that the company plans to shift Amazon to an “agency model.”
Previously, Amazon received the majority of Kindle e-book sales, but the agency model will shift things more in line with how Apple’s App Store works, where Cupertino keeps a 30 percent cut of all sales and the rest goes to developers.
“There are many advantages to the agency model, for our authors, retailers, consumers and publishers,” Young writes. “It allows Hachette to make pricing decisions that are rational and reflect the value of our authors’ works.
“In the long run this will enable Hachette to continue to invest in and nurture authors’ careers -- from major blockbusters to new voices. Without this investment in our authors, the diversity of books available to consumers will contract, as will the diversity of retailers, and our literary culture will suffer.”
The announcement by Hachette comes on the heels of a very public pricing spat between Amazon and Macmillan, which briefly included Amazon pulling all books from the publisher over last weekend. HarperCollins has also voiced its intentions to renegotiate its deal with Amazon, which appears to now have no choice but to capitulate with three out of the five major publishers.
That leaves only Penguin and Simon & Schuster remaining, both of whom also have agreed to content deals with Apple for the iPad. If we were placing bets, we figure it won’t be long before they also chime in on the subject as well...