Amazon u-turns over e-book policy

Amazon has been forced to u-turn over the pricing of e-books.

Over the weekend, the online retail giant pulled e-books published by Macmillan from its website.

It appeared to be a response to Macmillan plans to sell its books at a higher price through Apple's new iBookstore. Currently, Amazon charges less than $10 for each e-book, Apple plans to sell them for around $15.

Critics of Amazon claim the lower pricing is designed to lure readers into buying their proprietary Kindle device. Just last week, Apple launched the iPad, which is predicted to do for electronic publishing what the iPOD did for music.

It is now assumed that Amazon will have to match Apple's price for e-books on Macmillan titles.

"We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles," Amazon said, adding, "We want you to know that ultimately, however, we will have to capitulate and accept Macmillan's terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for ebooks."

Critics say Amazon has devalued the e-book, conditioning consumers to pay too little and jeopardising the publishing industry in the long term.

Some publishers sensed Amazon gearing up for a legal fight with its use of the word "monopoly" in its response. In the UK, the deal between Apple and its publishing partners has been likened to the Net Book Agreement, which aimed to keep retail prices high and was eventually declared illegal in the 1990s by the UK's competition authorities.

The traditional set-up sees publishers sell their books at wholesale price to retailers who can then set their own price. Apple has proposed a new deal whereby it takes a commission from each sale, allowing publishers to dictate price. It is the way many smaller e-publishing sites already operate directly with writers.