Amazon Reaches Multiyear E-Book Pact With Macmillan Publishers

Amazon.com Inc. and Macmillan have reached a deal covering the sale of print and e-books, the latest agreement between the online retailer and a publishing house following controversies over the share of e-book profits.

Macmillan Chief Executive Officer John Sargent posted a letter today on the publisher’s website saying he had struck an agreement with Amazon last week, with the pact going into effect on Jan. 5. Under the deal, e-books will go under an “agency model,” with the publisher setting consumer prices of the digital books and retailers taking a cut of the sale.

The agreement follows one last month between Amazon and Hachette Book Group, which ended an acrimonious six-month standoff that cut off supplies of some of the publisher’s titles. Amazon had sought e-book discounts, arguing that the move would boost sales and result in higher total revenue. New York-based Hachette had resisted the move and gained the backing of many authors, who said the online retailer’s tactics were causing the loss of income. Amazon also signed a multiyear deal with publisher Simon & Schuster in October.

“Under our deal with Amazon your net percentage of the proceeds will not change,” Sargent wrote to the publishing house’s authors in his letter today. “You will be affected, as you always have been, by our changes in price. Your books will continue to be featured in Amazon promotions and deals.”

Sarah Gelman, a spokeswoman for Amazon, said the company is happy with the agreement.

“It allows us to grow our business together with Macmillan and their authors,” she said in an e-mailed statement. “Importantly, the agreement specifically creates a financial incentive for Macmillan to deliver lower prices for readers.”

E-Book Dominance

The publishing industry has been grappling with shifting business models as fewer consumers buy print books and instead turn to digital versions. Seattle-based Amazon dominates e-book sales with 60 percent of the market, according to Forrester Research Inc. The company also helped pioneer the e-book market with the introduction of the Kindle device in 2007.

Macmillan, owned by Germany’s Verlagsgruppe Georg von Holtzbrinck GmbH, has imprints in the U.S., Germany, Australia and elsewhere. Its U.S. imprints include Henry Holt, Picador and St. Martin’s Press.

In his letter, Sargent said he was concerned about Amazon’s dominance of the e-book marketplace and added that “we need broader channels to reach our readers.”

As such, Macmillan is testing a subscription model for books where consumers would “pay per read,” he wrote. Macmillan plans to try such a plan with titles that aren’t well stocked at retail outlets or with backlist books.

“Our job has always been to provide you with the broadest possible distribution, and given the current financial and strategic incentives being offered, we believe the time is right to try this test,” Sargent wrote.

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