Amazon is starting to look desperate in the war for content control against Apple. The online retailer has now reportedly threatened to pull content from two more publishers (the first was Macmillan) if they don’t agree to three year pricing contracts for ebooks. The contracts are designed to guarantee that consumers will get the lowest possible price on ereader content in Amazon’s Kindle store. It’s not anything new. In fact, Apple is trying to lock up the same deal.

The deal is undeniably bad for publishers, though. It gives them no flexibility for change as the market matures, which it certainly will over the next three years. The New York Times article didn’t say which two publishers were being threatened, but you can bet no one wants these kinds of contracts. The fact that Amazon is actually going forward with such aggressive measures says only one thing: this is the last resort. If there were other, more suitable alternatives for both parties you can bet Amazon would have explored them. It would garner a lot less press attention and make the company seem far less money hungry and desperate in the eyes of the consumer.

Source: New York Times

Warner Music Group delivered some interesting news in the wake of the Macmillan/Amazon standoff. When Warner was finally given pricing flexibility for its iTunes content last April it kicked off a slow decline in sales growth.

As Warner put things, year to year “digital track equivalent album unit growth” was down from 10 percent in the September quarter to just 5 percent for the December quarter. We can still blame the recession in part, but the decline didn’t begin until prices went up. As Peter Kafka at AllThingsD notes, the digital music business is much more mature than the ebook industry. Also, despite the decline in sales growth, Warner CEO Edgar Bronfman Jr. said the change has been a net positive for his company.

Despite the warnings for publishers in this news, I still think the ebook industry is young enough to pull of the price increase without much negative impact.

Source: AllThingsD