Amazon To Raise E-Book Prices

Amazon, which had promised to sell the digital versions of bestsellers for $9.99, has lost a standoff with Macmillan and has agreed to jack up the price by as much as $5 for some of the publisher's books.

The online retailer had suspended sales of print and electronic versions of Macmillan titles on Friday, apparently hoping to pressure the publisher into sticking with the lower price. However, on Sunday Amazon resumed selling the books, acknowledging that Macmillan had the right to set its own price of between $12.99 and $14.99, depending on the popularity of the work.

In accepting Macmillan's demands, Amazon said it had little choice but to let customers decide whether they will pay more.

"Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books," the retailer said in the company blog.

Amazon didn't believe that other major publishers would follow Macmillan's lead and said it expected many independent presses and self-published authors to take advantage of the higher prices by offering their works at a lower price.

Whether Macmillan represents the start of a trend remains to be seen, but the company is certainly not the first to demand higher prices from an online retailer. Apple refused to budge from its 99-cent cap for songs sold on iTunes until mounting record-company pressure forced the company to introduce tiered-pricing in April 2009 that raised the price of popular songs to $1.29.

Keeping prices low is beneficial to retailers because it brings in more customers. However, companies that own the music, movies, or books believe they should sell for what the market will bear and want to charge more for their most popular works.

The tension between retailers and suppliers did not start with the Web. Wal-Mart, for example, is known to use its size to squeeze lower prices from suppliers.

Amazon has become a leading e-book seller through the success of its Kindle reader. The thin, lightweight gadget is the leading e-reader, accounting for about 60% of the market, according to some analyst estimates.