Amazon-Macmillan Battle

Amazon has revolutionized the e-book reader market with the introduction of their Kindle device. They’ve made it easy and fun to buy e-books from anywhere and enjoy them instantly. One roadblock that they’re running into is agreements with publishers, however. They’ve devised a pricing scheme that’s financially great for both publishers and consumers. Amazon charges $9.99 for the e-book, and they pay half of the hardcover retail price to the publisher, often times losing money themselves. Publishers fear that this pricing will create a negative public perception of the price of books by lowering the value of books in the minds of consumers. Macmillan has pulled all of its books from the Amazon book store until it reaches an agreement with Amazon about pricing. Since then, they’ve run a full page ad in the New York Times, saying “Available at bookstores everywhere except Amazon,” further adding to the negative press that Amazon has received due to this.
This dispute between Amazon and Macmillan show how important it is to build strong business partnerships. Amazon made this innovative pricing scheme and they implemented it even though they had little support from the publishers for it. Because of that, they’re currently unable to sell dozens of books and they’ve gotten a lot of negative publicity. It’s important to consult partners and reach an agreement before doing something that could affect them so that both businesses stay on the same page and relations between them stay good. This particular dispute was over the mental perception of how much a book is worth. It may have been a good idea for Amazon to consult Macmillan’s marketing department to gather their feedback. Macmillan’s marketing department would have a lot of information about what the perceived value of the books they sell are, and they would’ve been able to give good feedback about the change.