Amazon freeze Penguin & Hachette ebooks; Analyst calls for Kindle price-slash

Apr 2, 2010
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If you thought the ebook saga was settled after Amazon conceded to agency model pricing with both HarperCollins and Simon & Schuster, think again.  Certain Penguin and Hachette Book Group ebook titles have been removed from sale by the retailer, as independent negotiations with each publisher continue to take their toll.  Meanwhile, analysts are calling for Kindle prices to be slashed in response to the iPad.  Amazon have described the Hachette freeze as an "interim" measure, but the Penguin situation looks like the retailer attempting to ramp up pressure.

It's not a new move for Amazon; the retailer yanked all Macmillan titles - both print and electronic - back in January 2010 after the publisher demanded agency model pricing.  However it later capitulated, though described Macmillan's prices as "needlessly high".  In the case of Hachette, it seems that Amazon have reached another agency agreement but that "operational" issues mean the updated catalog won't be ready until April 3rd:

"We recently signed an "agency" agreement with Hachette and we are working with them to offer their books under these terms in the coming days. This means we will not be selling Hachette ebooks in the interim. Update: Hachette has disallowed the sale of ebooks except on agency terms effective as of 12:01 am this morning. We came to terms late last night but we cannot be operationally ready to sell their ebooks on agency terms until two days from now -- April 3 -- when we will also cut over for the other publishers that are switching to agency. If we can get a two day extension from Hachette to continue selling their ebooks under the prior terms, we can have the Hachette ebooks promptly back for sale today. If not, then they will be back on April 3." Amazon Kindle Team statement

It's unclear how much financial damage the delay might cause Hachette.  As for cut-priced Kindles, Piper Jaffray analyst Gene Munster is quoted as saying that he believes Amazon "should stick to what they're good at," not compete with the iPad directly, and reduce the Kindle from $259 to just $149.  Nonetheless, even if Apple do eat into Kindle sales, Munster reckons Amazon can still do well, based on their underlying retail business: "Amazon can lose the Kindle and succeed in broader e-commerce" he maintains.  Kindle has previously been described as a means to an end for Amazon, merely the necessary hardware to drive their ebook sales.


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