E-Book Prices Ratchet Up - InformationWeek

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E-Book Prices Ratchet Up

The Amazon model of selling e-books for $9.99 is being challenged by publishers, who are setting tiered pricing for digital books.

The number of publishers ready to ditch the $9.99 pricing model for digital books has grown to three, marking the likely end to the bargain that has been enjoyed by customers of Amazon and other online retailers.

HarperCollins, owned by News Corp., and Hachette Book Group are getting ready to join Macmillan in setting tiered e-book pricing, sharing a percentage of sales with retailers. Under the so-called "agency model," retailers get 30% of sales.

News Corp. and Hachette made their plans known just days after Amazon lost a high-profile dispute with Macmillan over e-book pricing. The disagreement led to Amazon suspending sales of Macmillan books briefly. Amazon, however, capitulated and agreed to let the publisher set its own price of between $12.99 and $14.99, depending on the popularity of the work.

In an e-mail sent to booksellers Thursday, Hachette Chief Executive David Young painted the company's move to the agency model as better for the industry and consumers because the publisher can set prices that are "rational and reflect the value of our authors' works."

"In the long run, this will enable Hachette to continue to invest in and nurture authors' careers -- from major blockbusters to new voices," Young said in the e-mail reprinted by the blog GalleyCat. "Without this investment in our authors, the diversity of books available to consumers will contract, as will the diversity of retailers, and our literary culture will suffer."

An immediate benefit to consumers, according to Young, is Hachette's plans to release e-books simultaneously with hardcover editions, which are typically the first format in the release of new books.

News Corp. CEO Rupert Murdoch also made it clear that he would abandon the current $9.99 pricing model used by the company's book-publishing unit, even though publishers are typically paid more and the retailer subsidizes the lower price.

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