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Technology
Macmillan, Amazon Reach New Deal
From the Wall Street Journal of Thu, 18 Dec 2014 20:05:01 EST
Agence France-Presse/Getty Images

Amazon.com Inc. and Macmillan have struck a new multiyear agreement covering the sale of print and digital books, according to a letter posted on one of Macmillan’s websites and signed by John Sargent, Macmillan’s chief executive.

The pact, which goes into effect Jan. 5, assures that Amazon will continue to sell and promote Macmillan titles without disruption during the ongoing holiday selling season. Under the new e-book contract, Macmillan will set the consumer prices of its digital titles.

Macmillan, a unit of Germany’s Verlagsgruppe Georg von Holtzbrinck GmbH, owns such imprints as Farrar, Straus and Giroux, Henry Holt and Co., and St. Martin’s Press. Top-selling titles include “Killing Patton” by Bill O’Reilly and Martin Dugard, and the photo collection “Humans of New York” by Brandon Stanton.

“We are happy with this agreement, as it allows us to grow our business together with Macmillan and their authors,” said a spokeswoman for Amazon in a statement. “Importantly, the agreement specifically creates a financial incentive for Macmillan to deliver lower prices for readers.”

Macmillan confirmed that it will receive better terms from Amazon when it offers lower prices on its titles.

The agreement, reached late last week according to Mr. Sargent’s letter, is the third signed between Amazon and a leading publishing house in the last two months. In October, CBS Corp. ’s Simon & Schuster publishing arm reached a new multiyear print and digital pact with Amazon that enables Simon & Schuster to set the consumer prices of its e-books, although Amazon can discount titles in certain situations.

Amazon last month signed a multiyear agreement covering digital and physical books with Lagardere SCA’s Hachette Book Group, ending a lengthy and much-publicized dispute over e-book pricing and revenue division. That agreement, which goes into effect in early 2015, enables Hachette to set the consumer prices of its e-books, although it receives better terms from Amazon when its digital books have lower prices.

Mr. Sargent praised Amazon’s innovation and risk-taking, but also voiced concern that the online retailer accounts for 64% of Macmillan’s e-book business. Mr. Sargent described Amazon’s dominant market share as “one of the big problems in the digital marketplace” and said the publishing community needs additional channels to reach consumers.

In his letter, Mr. Sargent said the desire to broaden Macmillan’s distribution has prompted him to reconsider his earlier opposition to digital subscription book services that enable consumers to read an unlimited number of e-books in exchange for a monthly fee. Mr. Sargent had been concerned that such services would eventually “erode the perceived value” of books.

However, Macmillan intends to soon test the subscription model with older titles, primarily those that Mr. Sargent described as “not well represented at bricks and mortar retail stores.”

Write to Jeffrey A. Trachtenberg at jeffrey.trachtenberg@wsj.com



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