04/03/2010 05:12 am ET Updated May 25, 2011

Amazon Goes for the Jugular

If you're looking for a copy of Richard North Patterson's Degree of Guilt, Stephen Coonts' Deep Black, Ben Bova's Able One, or Jackie Collins' Drop Dead Beautiful, don't look on The same is true if you're planning to read about An End to Al-Qaeda by Malcolm Nance or dig into Pakistan: Deep Inside the World's Most Frightening State by Mary Anne Weaver. is refusing to sell any of them.

Those newly-released books and dozens of others have been de-listed by, because MacMillan Publishers refused to cave in to Amazon's outrageous pricing demands. According to MacMillan CEO John Sargent, Amazon informed him on January 29th that "they were taking all of our books off of the Kindle site, and off Amazon." (Publishers Weekly, 1/30/10). As of January 31, Amazon followed through with its threat. If you searched for any of MacMillan's newly released books, you were met with the statement "Sign up to be notified when this item becomes available."

This is not the first time that Amazon has done something like this. In past years, removed the books of other major publishers from its virtual shelves when the publisher refused to give it a special price that is not available to other booksellers -- a practice that would be illegal under the federal Robinson-Patman Act. The last time it happened, the issue was printed books; this time the dispute is over electronic books.

This is a fight that could drastically affect the future of American books and bookselling. The issue is this: can force down the price of e-books to the point where it can divert the lion's share of all book sales to its Kindle reader? Electronic books are here to stay -- no one disputes that -- and they are likely to be an important part of the book market. But if Amazon is able to drive down the price of e-books to an artificial level that is substantially below the price of the printed copies, the market for printed for printed books could dry up entirely. If that happens, e-books would be the only books left.

If e-books drive out printed books, the company with the most widely-known e-book reader would be in a position to dominate the market. Any guesses who that might be? When Amazon first introduced its Kindle reader, it gave many of them away to key executives to win them over. Since then, it has puffed up its Kindle sales numbers with free books. Unlike other e-book systems, Amazon has made sure that e-books sold on Amazon can only be read on Kindles and that Kindles will not accept downloads from any bookseller other than Amazon. This is all part of a consistent approach by -- including flouting state sales tax laws -- to gain market share at any cost.

It would be one thing if the price of electronic books were so inherently low as to give them an unbeatable advantage. But that's not so -- Amazon is simply trying to muscle the price down to a point where e-books will look like a much better bargain than printed books. Amazon has focused on an e-book price of $9.95 -- a number that has nothing to do with the economics of the book business but simply fits Amazon's marketing strategy. That same book might sell for around $26.00 in printed form, so Amazon likes the idea of a big -- maybe $16.00 -- price differential that it can point to in order to boost its Kindle sales.

In order to sell e-books at $9.95, Amazon is probably looking for the publishers to give them a wholesale price in the $4.00 or $5.00 range. That would be a reduction of about $9.00 over what publishers now charge for printed books. Although e-books involve some savings in printing and shipping costs, those savings come nowhere close to the price reductions that Amazon is demanding. If they acceded to Amazon's demands, publishers would have to squeeze authors to reduce their royalties on e-books and try to shift most of their other costs -- such as editorial, promotion, and sales -- to booksellers that sell printed books. The results would be disastrous for the book business.

What would the world be like if the Kindle was the dominant means of reading books and all titles for that reader had to be purchased from For one thing, you might not get everything you want. Who knows which future authors might be in the same position that Richard North Patterson, Stephen Coonts, and the others who now find themselves with their books de-listed from the system.