Amazon's Grip on E-book Pricing Slackens, But the War's Not Over

Last Updated Feb 9, 2010 5:18 AM EST

The e-book pricing war between Macmillan and Amazon (AMZN) is still raging but Amazon's lost two more battles, further loosening the online retailer's choke hold on the $9.99 price point for digital books. Publishing heavyweight Rupert Murdoch voiced his displeasure during a News Corp. (NWS) earnings call on Tuesday.
We don't like the Amazon model of selling everything at $9.99. They don't pay us that. They pay us the full wholesale price of $14 or whatever we charge. We think it really devalues books and it hurts all the retailers of the hard cover books.
Keep in mind that News Corp. owns HarperCollins, the innovative publisher pioneering new business models for author royalties and acquisitions. Standing up to Amazon is just one more way to shake up the status quo. Furthermore, Murdoch pointed out that even though the publisher would make less money per book in a deal with Apple (AAPL) it's willing to take $10 per book --instead of the $15 wholesale it collected from Amazon-- in order to maintain some control over suggested retail pricing (and avoid the $1 download debacle the music industry faced to boot).

Now, Hachette Book Group (LGDDY) has banded together with Macmillan and HarperCollins, touting the benefits of the agency model in which the publisher sets the price and the retailer gets a cut -- to the tune of 30 percent. In an email to agents, Hachette CEO, David Young, echoes the sentiments of Murdoch and Macmillan's John Sargent. But Young takes it a step further:

In the long run this will enable Hachette to continue to invest in and nurture authors' careers--from major blockbusters to new voices. Without this investment in our authors, the diversity of books available to consumers will contract, as will the diversity of retailers, and our literary culture will suffer.
Meanwhile Macmillan is practically taunting Jeff Bezos to put up his dukes or roll over. Today, the publisher's full page NYT ad for The Checklist Manifesto features an eye-catching statement at the bottom which reads, "Available at booksellers everywhere except Amazon." Bezos must be listening, because Murdoch said Amazon is willing to renegotiate. Yet the retailer only restored the option to sell Macmillan titles directly late Friday, and still hasn't spoken a word to any of the Big Six publishers. Amazon's share price continues to fall.