Select your localized edition:

Close ×

More Ways to Connect

Discover one of our 28 local entrepreneurial communities »

Be the first to know as we launch in new countries and markets around the globe.

Interested in bringing MIT Technology Review to your local market?

MIT Technology ReviewMIT Technology Review - logo

 

Unsupported browser: Your browser does not meet modern web standards. See how it scores »

Over the weekend, a massive disappearing act took place on the virtual shelves of Amazon.com. In a dispute over e-book pricing, the online retailer blocked customers from buying titles–e-book or print–from Macmillan, a publisher whose imprints include Nature Publishing Group, the literary line of Farrar, Straus, and Giroux, and the science fiction and fantasy line Tor.

Amazon’s extreme reaction to Macmillan’s pricing demands reflects, in part, the seriousness with which it views Apple’s impending move into the e-book business. By launching the iPad and a new application for buying and reading books, called iBook, Apple is offering publishers an attractive new way to sell and deliver their titles online. Shortly before the launch of the iPad last week, Apple’s CEO, Steve Jobs, also cut a deal with several major publishers–including Macmillan–to give them far greater say in e-books pricing than Amazon offers.

On Sunday, Amazon agreed to accept Macmillan’s new pricing model and said it would once again make the publisher’s titles available through its site. However, some analysts believe that it will ultimately be difficult for Apple, or anyone else, to challenge Amazon’s long-term dominance of the e-book market.

With every major Kindle release, Amazon CEO Jeff Bezos has emphasized that bestsellers are available on the device for $9.99. Under its existing model, Amazon buys books from publishers for a set fee in bulk. It reportedly often pays publishers more than $9.99 for some books, selling them at a discount in order to drive up adoption of the Kindle. But many publishers worry that this loss-leading strategy will make e-books less profitable for them in the long run.

Apple has negotiated a different deal with publishers, called the “agency model.” For its e-book store, publishers can set their own prices, giving Apple a percentage. According to a statement by Macmillan CEO John Sargent, the dispute began when the publisher asked Amazon to adopt the same model. “The agency model would allow Amazon to make more money selling our books, not less,” Sargent said, noting that Macmillan would also make slightly less. “Our disagreement is not about short-term profitability but rather about the long-term viability and stability of the digital book market.”

25 comments. Share your thoughts »

Credit: Apple

Tagged: Computing, Apple, iPad, e-readers, e-books, electronic readers, publishers

Reprints and Permissions | Send feedback to the editor

From the Archives

Close

Introducing MIT Technology Review Insider.

Already a Magazine subscriber?

You're automatically an Insider. It's easy to activate or upgrade your account.

Activate Your Account

Become an Insider

It's the new way to subscribe. Get even more of the tech news, research, and discoveries you crave.

Sign Up

Learn More

Find out why MIT Technology Review Insider is for you and explore your options.

Show Me
×

A Place of Inspiration

Understand the technologies that are changing business and driving the new global economy.

September 23-25, 2014
Register »