Macmillan Strikes an Ebook Deal with Amazon, Explores Subscriptions

macmillan amazon ebooks agency pricingMacmillan becomes the latest Big Five publisher, after Hachette and Simon & Schuster, to reach a new multiyear print and digital distribution agreement with Amazon that returns to a version of the agency model of ebook pricing.

The deal goes into effect on January 5, 2015, and allows the publisher to set its own ebook prices. Macmillan CEO John Sargent announced the agreement in a letter today to authors, illustrators and agents, pointing out that the company’s “consent degree” with the U.S. Department of Justice expires today. The provision had required Macmillan to allow ebook retailers, including Amazon, to discount the publisher’s titles.

But while Apple appeals an ebook price-fixing ruling against it, an injunction allowing Apple to discount ebooks remains in effect for Macmillan’s titles until October 5, 2017; the stipulation will expire for each of the Big Five publishers on a staggered basis up through that date, with Macmillan last in line.

That, in Sargent’s words, “will ensure a muddled and inefficient market” in the interim, with Apple the lone ebook retailer operating outside the agency model.

“This odd aberration in the market,” Sargent tells authors, “will cause us to occasionally change the digital list price of your books in what may seem to be random fashion. I ask for your forbearance. We will be attempting to create even pricing as best we can.”

Sargent’s letter today strikes a markedly different tone than those issued by Hachette and Simon & Schuster upon reaching similar deals with Amazon, both of which expressed their satisfaction with the terms involved, as Sargent’s does not. Instead, Sargent emphasizes that “we have not addressed one of the big problems in the digital marketplace” from the publisher’s point of view, which is that “Amazon holds a 64% market share of Macmillan’s ebook business.”

In order to begin reducing that share, Macmillan will head into 2015 actively pursuing new distribution channels, including ebook subscription services.

Beginning with back-list titles, the publisher will selectively offer parts of its ebook catalog to those services, with a focus on “titles that are not well represented at bricks and mortar retail stores.”

Sargent frames that move in terms of cautious optimism: “Many of you know that we have long been opposed to subscription. We have always worried that it will erode the perceived value of your books. Though this significant long-term risk remains, we have decided to test subscription in the coming weeks.”

The market for subscription ebooks continues to evolve and expand. Just today Oyster announced a partnership with Bloomsbury, and yesterday the subscription-based social e-reading platform Bookmate launched in Singapore.

Skepticism like Sargent’s lingers throughout the industry even amid these advancements for the model, and major providers like Oyster and Scribd have moved in recent months to expand their profiles and product offerings beyond strictly distributing ebooks by subscription.

Learn more: Subscription Ebook Leaders Simon Dunlop of Bookmate, Matt Shatz of Oyster and Andrew Weinstein of Scribd Join Digital Book World 2015

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