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WAS MACMILLAN WISE TO DEMAND
HIGHER PRICES FOR ITS E-BOOKS?
In the humble opinion of this writer, Amazon CEO Jeff Bezos has one of the keenest minds in the publishing world on issues related to marketing and sales. And that, of course, includes pricing as well. He’s proved it time and again with the remarkable success Amazon has experienced.
The executive team at Macmillan too can be proud of its long history of success with print books. But how well do they understand the digital marketplace, an arena in which Bezos shines?
The real question in my opinion is whether short-term profits blurred Macmillan’s long-range view when they used their “monopoly of content” to force the bookseller to agree to higher e-book prices.
The Wall Street Journal stated the issue very simply, “It’s no doubt gratifying to publishers…to see Amazon affirm their (the publishers’ ) control over their own products. But it won’t help publishers if they raise prices so far they kill the burgeoning market for e-books.” And that is the fundamental problem.
It is generally believed that consumers feel e-books should cost less than print because production, storage and shipping fees are so much less. That apparently is Jeff Bezos’ opinion as well. Macmillan’s CEO John Sargent argues that profit at Amazon will increase with the new pricing policy. What he doesn’t stop to consider is that it can only happen if sales remain strong, and as every retailer knows, rate of sale is directly dependent on pricing levels. Mr. Sargent is taking a helluva risk.
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