Flash! Amazon cuts Penguin p-book prices

Flash! Amazon cuts Penguin p-book prices

Jeffrey Trachtenberg of the New York Times reports in

this article

that Amazon has cut prices on some paperbooks (p-books) from Penguin to $9.99.

Why does that matter to people who use EBRs (E-Book Readers)?

This may be part of a negotiation going on over e-book prices.   There are no e-books from Penguin in the US Kindle store that have been published since April 1st, 2010.  That’s the date that several publishers implemented the Agency Model.  Amazon has reached agreements with four other agency publishers (HarperCollins, Simon & Schuster, Hachette Group, and Holtzbrinck (which includes Macmillan).

Penguin and Amazon are still negotiating.  Penguin e-books published since March 31 2010 are not available in the Kindle store, and the old books are apparently under the old wholesale model.

We don’t know what the sticking point is.  We don’t know if it’s on Amazon’s side or Penguin’s side, although I guess the latter (since Amazon reached an agreement with four other publishers). 

This has gone on for almost a month.  During that time, authors have lost royalties they would otherwise have earned.  Penguin has lost money, Amazon has lost money.  I’ve read several people saying that this might be enough to drive them to a competitor.  That, by the way, seems ill-advised…there are a lot more in-copyright books available from the Kindle store than those competitors overall.

Let’s postulate the hypothesis that Penguin wants something Amazon doesn’t want to give them, something more than the other agency publishers wanted.  What can Amazon due to get them to an agreement?

With Macmillan, Amazon took them off sale directly from Amazon.  That was bad publicity for Amazon…many people (especially) authors expressed anger about the inability to buy the books.

Lowering prices on the p-books, though?  That definitely makes Amazon look like the good guy.  It doesn’t take any books off sale, and in fact, makes them more easily available to readers.

Does it hurt Penguin?  Not directly.  They get the same amount under the wholesale model, regardless of what Amazon charges a customer for it.  This is key: Amazon is probably taking a loss on many of these.  

I took a look, and actually didn’t find all that many Penguin 3-books with the $9.99 price.   However, I did find a few.  I found a popular one* at $9.99 with a list price of $27.99.  Under the traditional arrangement, Amazon probably paid $13.98 to Penguin for that one.  So, they are losing $3.99 for each copy.

That’s good for readers in the short run.  Assuming Amazon sells more copies at that price, it’s good for Penguin in the short run.  It’s bad for Amazon in the short run, of course.

How does this pressure Penguin?  They don’t want people to think of $9.99 as the price for a hardback.  I have to also guess the other agency model publishers don’t like it, and there may be some awkward lunches among publishing friends in the near future…although they can’t discuss setting prices, there may be some hard stares.  ;)

People might guess this is just a coincidental sale, but that seems unlikely. 

I don’t think this pricing can go on for very long, so if you still buy p-books, look for bargains.

I’d love to know what it is Penguin wants, but I respect that the negotiations are happening in private. 

For those of you who have suggested Amazon could do more to get this resolved…this is more, and you pay less…nice, huh?  ;)

* I’m not naming the individual title because Penguin blocks text-to-speech access in at least some of their Kindle editions.

Tip of the day: when you use your 5-way to move over an image an a Kindle and see a magnifying glass, you can click to zoom that image.

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

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2 Responses to “Flash! Amazon cuts Penguin p-book prices”

  1. Mary Says:

    Bufo, it is not only Penguin that Amazon is doing this with. Around April 1st, A Murderous Procession by Ariana Franklin was published. This is the 4th in the Mistress of the Art of Death series. The others have been available upon publication for the Kindle, that is, those published since the Kindle came into existence. Putnam is the publisher here and I suspect has delayed the e-book. Thus, from the outset, the paper edition has been selling for $9.99. Is Putnam part of Penguin? If not, then there is more going on, and Amazon is setting these low prices in retaliation for no immediate e-book. I took the easy way out and read it from the library.

    On the other hand, Random House published an e-book of Anna Quindlen’s Every Last One, which is on the best seller list and 9.99.

    Elizabeth George’s new book, (Harper) had a pre-order 9.99 price, published April 20th along with the hardcover, and is now 14.99.

    It is hard to know what to think, other than to grab those pre-orders when available.

    • bufocalvin Says:

      Thanks for writing, Mary.

      Putnam is part of Penguin, along with (among others) Ace and Dutton.

      E-book prices are very volatile, as you note. Sometimes they go up at publication, they used to often go down (but that’s a bit harder to predict since we are in the brave new agency world. When you see an e-book at a price that you think is a good one, I’d get it. :)

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