I am sure most are aware, but since I did do a ranty blog post about why I am Team Amazon the other day, I thought I would go ahead and update on the situation. After pulling all versions of books published MacMillan on Friday, Amazon.com issued a statement Sunday, January 31st:

Dear Customers:

Macmillan, one of the “big six” publishers, has clearly communicated to us that, regardless of our viewpoint, they are committed to switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers and most hardcover releases.

We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles. We want you to know that ultimately, however, 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 customers will at that point decide for themselves whether they believe it’s reasonable to pay $14.99 for a bestselling e-book. We don’t believe that all of the major publishers will take the same route as Macmillan. And we know for sure that many independent presses and self-published authors will see this as an opportunity to provide attractively priced e-books as an alternative.

Kindle is a business for Amazon, and it is also a mission. We never expected it to be easy!

Thank you for being a customer.

Basically, they have no choice but to try to work something out with MacMillan. Amazon would prefer to keep the current model of buying ebooks which matches their model for all other books. They buy a book at approx. 50% of the cost and then set their selling price. As an example, a new released hard cover may have a list price of $29, chances are amazon would buy that ebook for $15 and then turn around and sell it for $9.99. They do this to encourage people to buy Kindles and because it gives them a large share of the ebook market. MacMillan is forcing a switch to an agency model where Amazon simply becomes a distributor who gets what amounts to a commission. MacMillan sets the selling price and Amazon keeps 30% of it. The irony is that Amazon makes more money in the agency model since they are not taking a loss on bestsellers, the publishers will lose money in the short term. For some reason, publishers are convinced that this model will be better for them in the long run….I guess we will have to wait and see.

As of this blog post, MacMillan books were not yet reinstated to Amazon.com store. There were some sightings of books earlier today, including MacMillan ebooks priced as high at $16.49, but they seem to have been taken down again.

So what can you do now? Unfortunately not much except vote with your money. If you agree that 14.99 or higher is too much for an ebook, don’t buy it! Wait for it to come down in price or find it at the library or borrow a friends “dead tree” version.

For now, this new pricing just applies to MacMillan yet there seems to be some talk that are leading people to think other publishers could be following suit:

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