Fight between Amazon and publisher may be ending

[February 05, 2010]  NEW YORK (AP) -- A standoff between Amazon.com and a leading publisher that has limited the availability of Andrew Young's "The Politician" and a wide range of other books amid a pricing dispute may be ending.

CEO John Sargent of Macmillan, which has been fighting Amazon over e-book prices, released a memo Thursday saying that a resolution was "near at hand." Amazon has been selling popular digital editions on its Kindle e-reader at $9.99, a price publishers believe is too low and could damage the value of books overall.

There was no immediate comment Thursday from Amazon, which has been strongly criticized by publishers, authors and agents. Sargent declined to comment beyond what was included in his memo, addressed to Macmillan authors and illustrators, but shared by the publisher with The Associated Press.

Macmillan and other publishers favor an "agency" model that gives them more control over prices; e-books would cost $12.99 to $14.99 when first released and prices would change over time. Under the new revenue sharing system, profits for publishers would likely decrease initially. But publishers, authors and agents believe that setting a higher price benefits the industry in the long-term.

Amazon, in an open letter last week to it customers, indicated it would "have to capitulate" to Macmillan's demands because the publisher "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 has been dominating the growing e-book market, but faces tough new competition with the unveiling of Apple's iPad, scheduled to go on sale in March and expected to use the revised model. Another online giant, Google, also is planning to enter the e-book business.

Sargent's memo stated that all of Macmillan's other "digital partners" have agreed to "move to the agency model." The president of Barnes & Noble, Inc., which had been offering best-sellers for $9.99 or less on its Nook reading device, confirmed that the superstore "fully" supported the new system.

"They have a great catalog of books and our priority is to give our customers not only access to Macmillan's catalog but to the most content possible," said Barnes & Noble.com president William Lynch.

Under the agency system, publishers are expected to cut back or eliminate altogether the recent practice of withholding e-editions for weeks or months after the hardcover release. Publishers had worried that $9.99 e-books would hurt hardcover sales.

Since last Friday night, Amazon has stopped selling new copies and electronic editions of Young's best-seller about former presidential candidate John Edwards and of works by Barbara Ehrenreich, Jonathan Franzen and other Macmillan authors.

Macmillan's divisions include a leading literary publisher, Farrar, Straus & Giroux, and the more commercially minded St. Martin's Press, which released the Young book.

While authors and agents have strongly backed Macmillan against Amazon, Sargent's memo addressed an issue that has divided the industry: royalties. Publishers have been offering 25 percent royalties, or less, for e-books, while authors and agents have been calling for 50 percent.

According to Sargent, Macmillan has been talking to the Author's Guild, which represents thousands of writers, and was "prepared to move to a higher rate for digital books." Similar discussions have been taking place with agents, Sargent said.

"The change to an agency model will bring about yet another round of discussion on royalties, and we look forward to solving this next step in the puzzle with you," Sargent wrote. Macmillan angered authors and agents last fall by lowering its proposed royalty to 20 percent.

The Authors Guild, on its Web site, said that negotiations with Macmillan strongly suggested the publisher would raise the royalty back to 25 percent. Sargent's memo offers no specific numbers.

"We believe that 25 percent of receipts is a transitional royalty rate for e-books," the Guild said on its Web site. "We look forward to continuing to discuss with Macmillan other provisions of its proposed new contract."

[Associated Press; By HILLEL ITALIE]

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.