Macmillan US does agency deal with Amazon

Macmillan US does agency deal with Amazon

Macmillan in the US has reached a new multi-year deal with Amazon, including an agency deal on e-books. But in a carefully worded blog and letter to authors, Macmillan chief executive John Sargent hit out at the failure to address “one of the big problems in the digital marketplace”, namely that Amazon has a 64% share of the company’s e-book business in the US. Sargent revealed that the company was planning to test a subscription model in the coming weeks, even though it has “long been opposed to subscription” but because it needed “broader channels to reach our readers”.

Macmillan is the third company to make public a recently-reached agreement with online retailer Amazon, following Simon & Schuster and Hachette . The deal comes on the day (18th December) that Macmillan's agreement with the Department of Justice, made following the price-fixing case, that allowed retailers to discount e-books comes to and end. As part of the deal, Apple will be allowed to continue setting discounts on Macmillan e-books until 5th October 2017.

“Late last week Macmillan reached an agreement with Amazon on a multi-year deal for print books as well as a multi-year deal on the agency model for e-books, starting on January 5, 2015,” Sargent said. “All our other retailers will also be on the agency model, leaving Apple as the only retailer who is allowed unlimited discounting. Irony prospers in the digital age.

“This odd aberration in the market 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.

“Under our deal with Amazon your net percentage of the proceeds will not change. You will be affected, as you always have been, by our changes in price. Your books will continue to be featured in Amazon promotions and deals.

“In reaching agreement with Amazon, we have not addressed one of the big problems in the digital marketplace. Through great innovation and prodigious amounts of risk and hard work, Amazon holds a 64% market share of Macmillan’s e-book business. As publishers, authors, illustrators, and agents, we need broader channels to reach our readers.”

As part of its exploration of new routes to market, Macmillan will start exploring subscription though worries about the erosion of the perceived value of books remains, said Sargent. The subscription will begin with Macmillan’s backlist books, and “mostly with titles that are not well represented at bricks and mortar retail stores”.

“Our job has always been to provide you with the broadest possible distribution, and given the current financial and strategic incentives being offered, we believe the time is right to try this test,” added Sargent.

Macmillan has not said which subscription service it will be making its titles available through. HarperCollins and Simon & Schuster currently both use subscription services Oyster and Scribd.