Removes e-books from Kindle service, but tells customers it will capitulate.
How much should e-books cost? Amazon thinks they should be $9.99, but one of the world's biggest book publishers - Macmillan - disagrees.
The two companies engaged in a war of words late last week over the issue. First, Macmillan CEO John Sargent took out an advertisement in trade mag Publishers Lunch, explaining that he'd met with Amazon.
"I gave them our proposal for new terms of sale for e books under the agency model which will become effective in early March. In addition, I told them they could stay with their old terms of sale, but that this would involve extensive and deep windowing of titles," he wrote.
"By the time I arrived back in New York late yesterday afternoon they informed me that they were taking all our books off the Kindle site, and off Amazon."
The agency model would see Macmillan pricing its e-books individually, with Amazon taking a 30% commission.
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"Our plan is to price the digital edition of most adult trade books in a price range from $14.99 to $5.99," wrote Sargent.
"At first release, concurrent with a hardcover, most titles will be priced between $14.99 and $12.99. E books will almost always appear day on date with the physical edition. Pricing will be dynamic over time."
Amazon's Kindle team then responded, via a post on its official forums:
"We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles," says the post.
"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 e-books."
Amazon says it hopes customers will "decide for themselves whether they believe it's reasonable to pay $14.99 for a bestselling e-book", and stresses that it doesn't expect other publishers to follow suit.
"Kindle is a business for Amazon, and it is also a mission. We never expected it to be easy!"
