Amazon Gives In To Publisher's Demands For Higher E-Book Prices

The decision ends a dispute between the two companies that at one point resulted in Amazon temporarily removing all Macmillan titles from its Web site over the weekend. Macmillan's books include such best sellers as Michael Cunningham's "The Hours" and "Wolf Hall" by Hilary Mantel.

Macmillan is demanding that Amazon charge between $12.99 and $14.99 for digital versions of Macmillan titles that can run on Amazon's Kindle electronic book reader, as well as other portable devices.

The Amazon-Macmillan face-off is the latest battle between book publishers and e-book retailers, including Amazon, Barnes & Noble and Wal-Mart, over how to price digital versions of books. Publishers worry that the low prices charged by Amazon and other e-book sellers will reduce sales of hardcover books and the profits they generate. Industry observers have painted incidents like the Amazon-Macmillan dispute as part of a larger battle over who will ultimately control the digital book business.

Several published reports said Macmillan CEO John Sargent proposed the higher prices last week in an e-mail to authors and agents. Macmillan said the publisher will set the price of e-book versions of its titles with retailers earning a 30 percent commission on those sales. Sargent reportedly flew out to Seattle to visit Amazon executives last Thursday to discuss the pricing model.

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"We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles," said in a statemant posted on its Website Sunday. "We want you to know that ultimately, however, we will have to capitulate and accept Macmillan's terms." The statement said Macmillan "has a monopoly over their own titles, and we want to offer them to you even at prices we believe are needlessly high for e-books."

Wholesale revenue from e-book sales in the U.S. reached $46.5 million in the third quarter of 2009, almost triple the $13.9 million in e-book sales reported in the third quarter of 2008, according to statistics from the Digital Publishing Forum cited in a Reuters story.