Amazon: Apple-Backed Publishers Pushed Us Around
Amazon.com Inc. (NASDAQ:AMZN) executive Russell Grandinetti, vice president of Kindle sales, testified in the third day of Apple’s (NASDAQ:AAPL) e-book trial, claiming that publishers led by Apple bullied Amazon into abandoning their e-book pricing model used to promote Kindle sales.
Grandinetti said that back in 2010 publishers pushed Amazon into a corner, saying that they had to abandon their pricing model if they wanted titles from those publishers available as e-books for Kindle. Amazon had only been charging $9.99 for new and popular e-book titles to promote sales of the Kindle e-reader, but the company relented under pressure from the publishers.
Apple is accused of herding the publishers into an agreement that would force Amazon to raise prices. Apple set up a pricing model in which the publishers could set e-book prices themselves and give Apple 30 percent commission on each sale.
The first publisher to approach Amazon about the issue was MacMillian, a subsidiary of Georg von Holtzbrinck Publishing Group. Grandinetti described a “tense” meeting with a representative of the company, which ended in Amazon agreeing to allow the publisher to set its own prices so that Amazon would still have access to sell MacMillian’s books.