Just read that Amazon has decided to give in to publisher Macmillan's demand that the online bookseller sell its books under an agency model for the price the publisher sets (which for the new books that make up most of the market will be 30-50 percent higher than the $10 Amazon currently charges).
For a few days, Amazon tried to play tough by removing Macmillan's books - both physical and digital - from its inventory (tho the titles were still available from third parties). But that didn't last long and the company has put a statement on its Web site that it "will have to capitulate and accept Macmillan's terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books."
To be honest, Amazon's decision to cave was a no-brainer. By showing some defiance, Amazon was able to get press to show that they were trying to be an advocate for the consumer, and now if the price changes stick and other publishers even adopt a similar strategy, Amazon could actually make money on its e-book sales as opposed to the losses it currently incurs when selling new titles at the $9.99 price point. The decision by Apple to agree to the higher price points for its imminent iPad tablet made it even tougher for Amazon to play tough.
Of course, Macmillan's decision is a complete joke. The idea that digital books - which have a near-zero marginal cost of production (printing, transportation and distribution costs are all basically de minimus) - should cost the same as a printed copy is laughable. i don't think other publishers will play along here, but even if they do, the higher prices will only lead to people buying fewer books or pirating more content.
When will old school, offline companies learn the lessons of recent history? Book publishers - which in the end are mere middlemen - should be trying to do whatever they can to embrace and encourage legal consumption of their content in the new medium and not go down the same path as the music industry.
I have no doubt that the wholesale cost of e-books will eventually be cheaper than their physical counterparts. And over time, more and more authors will take advantage of the opportunity to go direct (Amazon offers authors a 70% split on titles sold without a publisher), bypassing the middlemen completely.
For the truth of the matter is, neither Macmillan nor Amazon will in the long-run be able to set what they think the ultimate fair price of a book should be. Assuming competition is allowed to flourish and regulation remains minimal, the market will be the decider.
And trust me, the market - and time - is on the consumer's side.