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Winning a key battle with Amazon may not be working out the way publishers wanted

In the last year, all of the “Big Five” publishers — HarperCollins,Simon & Schuster, Macmillan, Penguin, and Hachette — all signed new agreements with Amazon that allows them to set their own e-book prices.

For Hachette in particular, there was a long, brutal negotiation period as Amazon tried to persuade the publisher to price all its e-books at $US9.99.

But even though Hachette and the others technically won the battle to set their own prices, it could be hurting them now, according to a report by The Wall Street Journal’s Jeffrey Trachtenberg.

People might not be willing to pay as much for e-books as the publishers want to charge.

HarperCollins, Simon & Schuster, and Hachette all reported declining e-book revenue in their last quarter (Macmillan doesn’t report its earnings, and Penguin’s deal with Amazon just went into effect in September). The industry on the whole saw a decline in sales too.

Although part of the problem could be a dearth of particularly hot titles recently, experts also point to the fact that e-books from the Big Five cost double, on average, of all the other e-books in the Kindle store.

“Unfortunately, it may be that consumers aren’t happy with the higher prices,” Mike Shatzkin, chief executive of publishing consulting firm Idea Logical Co, told Trachtenberg.

The CEO of industry research group Codex agrees.

“Since book buyers expect the price of a Kindle e-book to be well under $US9, once you get to over $US10 consumers start to say, ‘Let me think about that,'” Peter Hildick-Smith says (the average Big Five book costs $US10.81, with new titles sometimes only cents cheaper at $US14.99 than hardcover options sold on Amazon).

Ultimately, publishers told The Wall Street Journal that the pricing model they agreed to with Amazon “involves some sacrifice” but was necessary, and seems to correlate with an increase in sales of physical books.

Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.

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