Blog Post

Macmillan CEO Promises Most (Older) E-Books Will Still Be Under $10

Weeks after Macmillan CEO John Sargent told Amazon (NSDQ: AMZN) the publisher was switching to the agency model for e-book sales — prompting the e-tailer to black out its e-books for several days, he is still trying to explain what the change means for publishers and consumers. After Amazon pulled Macmillan’s books off its virtual shelves, Sargent used an ad on Publishers Lunch and the corporate blog to tell his side of the story. A couple of days later he was back online with an update and the hope “that this is the last time I will be writing to you on this subject.” But he’s back — because “no news story or 140-character snippet can adequately address” these complex issues.

Sargent wants consumers to understand one detail in particular: the majority of Macmillan’s books will still sell for under $10. He can say that because so far new releases — the category where the price is going up — only make up one third of Macmillan’s digital sales. Some of Sargent’s key points:

— At the end of March, Macmillan “will move from the ‘retail model’ of selling e-books (publishers sell to retailers, who then sell to readers at a price that the retailer determines) to the ‘agency model’ (publishers set the price, and retailers take a commission on the sale to readers).”

— Macmillan is slamming windows shut, promising to publish e-books (when it has the rights) at the same time as print first release, and is working to expand its number of digital titles. “Readers were clearly frustrated at the lack of availability of new titles, and the change to the agency model will solve this problem.”

— Forget what you’ve heard or read about the disappearance of $9.99 e-books, at least where Macmillan is concerned. Sargent promises a wide range of prices with most Macmillan e-books still priced below ten dollars. But it is the end of $10 digital versions of new hardback releases. “Generally e-book editions of hardcover new releases will be priced between $14.99 and $12.99; a few books will be priced higher and lower.” New York Times (NYSE: NYT) bestsellers will be priced at $12.99 or lower while they are on the list. And Sargent promises that e-books editions of new paper backs “generally” will run between $6.99 and $9.99.

— E-book pricing will reflect lower prices as paperback editions are released. “If we do issue a paperback, we will drop the digital price to $9.99 or lower at publication date (if not before). The price differential between the book and the e-book will become smaller at the lower price points.”

We’re looking forward to the next installment. Sargent promises to explain the long-term or author royalty consequences of the switch to agency.