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On this blog we will track down the latest Amazon Kindle news. We will keep you up to date with whats hot in the bestsellers section, including books, ebooks and blogs... and we will also bring you great Kindle3 tips and tricks along with reviews for the latest KindleDX accessories.

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February 2012
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Amazon Kindle Loses Access to 5,000 Titles in IPG Dispute

In response to some arm twisting by Amazon, the Independent Publishers Group has decided to take a stand and pull all of their titles from the Kindle Store.  While the Kindle is a great device and the Kindle platform is possibly the best on the market for the consumer right now, this is a move that both makes sense and needed to happen.  The only question now is whether or not either side will be willing to explore the options presented by the situation rather than simply holding their ground and waiting to see who blinks first.

Basically, the problem is over pricing.  The Big 6 Publishers have enough clout to force Amazon to accept the Agency Model price scheme with all of their titles.  I’ve gone into why this is not a good thing plenty of times before and will do so again in the future, so it isn’t really worth indulging in today.  Smaller publishers, including the IPG, sell their content to Amazon wholesale.  This means smaller profits on each individual sale and it allows Amazon to exercise more control over the prices offered to readers.  This is also not necessarily a good thing, as in this case when Amazon is using their position as the main supplier of eBooks in the world to force their suppliers to offer more favorable terms than they can afford.

So we have Amazon wanting to lower prices on Kindle Editions and the IPG wanting to maintain their profits at a level roughly similar to what is made off of print books (based on statements taken from the IPG’s main site).  What we really need is not for one side to win over the other so much as a more adaptive model to emerge.  It makes sense for new releases of Kindle books to be priced similarly to their printed counterparts.  There should always be a premium on new media like that, although the savings inherent in using the eBook format should still be reflected in the price for readers.  When it comes to older titles, though, something else needs to be done.  Unlike physical reprinting, there is no ongoing cost of production.  Aside from the author royalties, they are pretty much pure profit for publishers and distributors.  Perhaps a tiered system would make more sense?

Regardless of any proposals for revamping the system, this is probably going to end messily somehow.  While the loss of a mere 5,000 eBooks won’t make a huge dent in the Kindle’s selection, the press surrounding the drama taking place won’t help Amazon any.  They are as likely to be persuaded to offer somewhat better terms just for the PR boost as to ignore the problem entirely.  On the other hand, the IPG is going to be hurting fairly quickly from the lack of Amazon as a channel.  They can’t last forever.  Where this goes will be based on the support they receive and the pressure that can be brought to bear on Amazon.  If you get the chance, lend your support in some way.  They’re going to need it, and Amazon is going to need an overhaul of some sort sooner or later to keep quality content coming in for their Kindle customers.

3 comments to Amazon Kindle Loses Access to 5,000 Titles in IPG Dispute

  • Jim

    This is the part that I don’t get: “It makes sense for new releases of Kindle books to be priced similarly to their printed counterparts.” Beside the cost of paper and ink, printing equipment amortization, building space, printer salaries, warehousing, distribution, damage and loss, and returns or disposal, and risks of misprints, you’ve also got financing costs for doing the above until it sells and opportunity costs if your book oversells.

    It’s pretty clear from the behavior of the kindle markets and the number of self-publishers that costs are considerably different for Kindle at least at the base level. Keeping prices equivalent makes sense for the publishers, but not for anybody else.

  • Typity

    > Smaller publishers, including the IPG,
    > sell their content to Amazon wholesale.
    > This means smaller profits on each individual sale

    I don’t understand how wholesale means smaller profits for the publisher. It means smaller profits for Amazon if they decide to discount it or to sell it at a loss to themselves – but they will in any case have to pay the publisher whatever price they had agreed on initially.
    This is why the reason of Big6′s push for Agency model wasn’t “we’re not getting enough money” but “customers will get used to cheap books and then everyone will die”.

  • matthew

    Typity,

    What I was getting at there was specifically per-unit profits. Both the wholesale model and the Agency model, by my understanding, handle their pricing based on the suggested sale price. What is happening here is Amazon demanding that these publishers both reduce the expected sales price in the equation, thereby reducing their per-unit profits further, while also insisting on greater participation in related things like author interaction with the Amazon site and other such marketing tactics.

    I agree with you about the fact that Amazon’s discounting of their inventory has no effect on what a publisher gets on each eBook, though. That is definitely correct. In fact, it is likely to increase the volume sold. There are definite issues with what’s happening here, but most of them relate to Amazon’s attempt to alter an existing wholesale agreement through coercion.

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