Amazon on an ‘agency model’ pact with Macmillan

Daniel Posted On - June 9, 2015

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Amazon recently reached a pact with Macmillan regarding the sale of print and e-books. The development comes around when this high-notch U.S marketplace has been broiled in controversies with a major publishing house over sharing of e-book profits.

The agreement

John Sargent, the Macmillan CEO, had posted a letter on the company’s website declaring that the agreement with Amazon got struck early December and shall be implied from January 5. According to the agreement, the e-books shall be under an ‘agency model’ with the consumer prices of all digital books set by the publisher and retailers taking a cut of the sale.

Addressing the Macmillan’s authors, Sargent said that the net percentage of the proceeds would remain unhindered under this deal. He further added that the authors would be affected as they always have been, by the changes in prices. Yet the books would continue to be featured in Amazon promotions and deals. Sargent also expressed his fears of his concern about Amazon’s dominance in the e-book market and suggested broader channels to reach readers.

Amazon ‘content’ with deal: Spokesperson

Whereas the spokesperson at Amazon, Sarah Gelman, said that they are happy and content with the agreement. In an e-mailed statement, she said that it would allow Amazon to grow business with Macmillan. Gelman highlighted that the pact shall create a financial incentive for the publishing house in order to deliver lower prices for customers.

Tiff with publishers

The pact follows another one month between Amazon and the Hachette Book Group that had put an end to a rancorous half-a-year tiff. This tiff had cut off supplies of several of the publisher’s titles. Claiming that sales would zoom up resulting in much higher all-round revenue, Amazon had sought discounts upon e-books. Hachette had resisted this move, with the support of many authors; who said that such tactics were causing them to incur huge losses. Amazon had also signed a multi-year deal with publisher Simon and Schuster last October.

E-books crushing the print space

The publishing industry, of late, had been wrestling with the shifting business models as consumers have been adhering to digital books more rather than their print versions. According to Forester Research, Amazon dominates e-books sale occupying 60 per cent of the market. It also pioneered the e-book industry with induction of the Kindle device in the year 2007.

Macmillan to test “pay per read” model

CEO Sargent had also revealed in his letter that the publishing house is on a demo stage of a new subscription model in which consumers would need to ‘pay per read’. Macmillan intends to test this model for titles which are not well-stocked at retail outlets or with backlist books.

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

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