Amazon Agrees To Higher Prices For eBooks

The price of electronic books is going up. Just days before Apple releases its iPad, gave two major publishers permission to raise the price of their eBooks for Kindle readers. The agreements with Simon & Schuster and Harper-Collins give the publishers the ability to break from Amazon's policy of holding new titles to a price of $9.99.

Under the terms of the agreement, eBooks from Simon & Schuster and Harper-Collins can now be sold for $12.99 or $14.99. The agreement is similar to the deal Apple has made with publishers. Although sought to keep the price of eBooks low, publishers have argued that digital versions were worth more than Amazon allowed them to charge. Thanks to competition from various eReaders in the market, publishers are now able to dictate their own terms.

When the iPad was unveiled, chief executive Steve Jobs announced deals with five major publishers. He also announced an agreement that allowed publishers to set higher prices while giving Apple a 30% cut. Prior to this agreement, Amazon had been selling digital versions of hardcover new releases and bestsellers for $9.99 with the goal of driving sales of its Kindle eReader. At the time, publishers were opposed to the low price but were not in a position to argue since Amazon was the main player in the market. Today this is no longer the case.

After the announcement of the iPad, publisher Macmillan told Amazon it wanted to charge $12.99-$14.99 for its eBooks. Amazon protested and even pulled Macmillan titles temporarily. Ultimately, Amazon gave in and said it had to accept Macmillan's terms. Hachette Book Group quickly followed Macmillan in charging higher prices.