Next threat to Amazon? Murdoch

Feb 03, 2010

NEW YORK, Feb. 3: Enjoy $9.99 electronic books while you can — for they soon may be a thing of the past.

News Corp Chief Rupert Murdoch, who oversees a media empire than includes HarperCollins books, home to authors like Michael Crichton and Janet Evanovich, made clear on Tuesday his displeasure with the low price Amazon.com Inc has set for electronic books.

In order to raise prices, Murdoch wants to renegotiate the current deal with Amazon, and said the world’s largest retailer appears "ready to sit down with us again" to talk about new terms.

"We don’t like the Amazon model of selling everything at $9.99," Murdoch said when asked about electronic books during a conference call with analysts on Tuesday.

"They pay us the wholesale price of $14 or whatever we charge," he said. "But I think it really devalues books and it hurts all the retailers of the hard cover books." Amazon did not immediately respond to request for comment.

If Murdoch’s HarperCollins manages to work out a new deal, it would deal a major, and perhaps final, blow to Amazon's current pricing. Just days ago, the world’s largest online retailer bowed to pressure from another major publisher, Macmillan, which insisted on charging $12.99 to $14.99 for its books.

Book pricing has been key to pushing growth of Kindle e-reader since its launch in 2007, since cheap e-books help consumers justify the cost of purchasing the device. It has also put Amazon at odds with publishers, however, who say that the low prices will cannibalize sales of higher-priced hardback copies.

Fresh competition from Apple Inc — which is rolling out the iPad — has only cast more attention on pricing. Publishers are more anxious than ever to protect their profit margins, and now have some leverage in negotiating against Amazon.

Murdoch, while keeping mum on the exact deal with Apple, suggested the terms of are more favorable to HarperCollins than Amazon’s.

"Apple, in its agreement with us, which is not been disclosed in detail, does allow for a variety of slightly higher prices," he said.

Paul Thomasch

— Reuters

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