Some see Amazon’s response as a sign of its trepidation over the prospect of competing with Apple. “The way in which Amazon was willing to engage with the nuclear option to lock in what it has right now indicates that it thinks the iPad is an extraordinarily serious threat,” says Tobias Buckell, a science fiction author whose books were temporarily removed from Amazon.com in the dispute. Buckell notes that e-books don’t typically sell in high volumes, so it makes sense to publishers to start with a higher price and lower it over time.
Venting obvious frustration, Amazon issued a statement on Sunday that said “we will have to capitulate and accept Macmillan’s terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books.” (Amazon never removed the option to buy Macmillan books from third-party sellers).
James McQuivey, a principal analyst with Forrester Research, says that pressure from the iPad “is precisely the reason” why the dispute happened. But, even though Amazon backed down, McQuivey believes the company still has a strong hold over publishers.
“Amazon demonstrated very clearly that it has the power to cut off the lifeblood from a publisher if it really wants to, because it doesn’t just control e-book sales,” McQuivey says. “Apple has no leverage in this market, because it doesn’t even control e-books at this point, much less paper sales. Amazon has both.”
Other e-book makers may have an even more difficult job competing with Amazon, McQuivey says, since they lack the reputation and distribution channel of Apple.
Authors, meanwhile, felt the weight of Amazon’s decision keenly. “Most of my books are sold online because I have a prominent blog, and that really hit me where it hurt,” says Buckell. “No bookstore has ever yanked books in a publishing dispute; it never occurred to me that Amazon would turn to this as an option.”