In recent news, Amazon removed thousands of titles from its Kindle store because a Chicago distributor would not agree to new terms. Independent Publishers Group (IPG) claims the new electronic book agreement favored Amazon too much. When IPG's contract with Amazon came up for renewal, it rejected the new and revised version because the proposed terms, according to the president of IPG, "increasingly reduce already narrow margins." Amazon comprises only 5 percent of IPG's business. This has led to a heated dispute.
The digital publishing industry is still evolving. In the beginning, e-books were pretty straightforward. Now, the Kindle Store offers more than one million books. In the new age of digital titles, retailers can sell books for a relatively low price. That's exactly what Amazon did.
Traditionally, publishers set guidelines for the price of books in a very arbitrary way. However, once bookstores purchased books from wholesalers, they could set their own. When Amazon priced e-books so low, the industry's lead publishers were upset.
As a result, Apple, which was also competing with Amazon, initiated the agency model. This allowed publishers to set prices, and give a percentage of the profits to retailers.
The recent contract dispute between IPG and Amazon is just part of the e-book saga. Recently, Barnes & Noble announced that it is refusing to sell books published by Amazon because of its efforts to sign exclusive deals.
As one can see, contract disputes can get messy. Hopefully, IPG and Amazon will work out a deal that will keep e-readers happy.
Source: Time Business, "Amazon pulls 5,000 books from kindle store," Jill Priluck, Feb. 24, 2012