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Monday, February 08, 2010, 05:15 am PT (08:15 am ET)

Higher Amazon e-book prices expected to coincide with iPad launch

Amazon and publisher Macmillan finalized their agreement for higher-priced e-books over the weekend. The deal is expected to serve as a template for other publishers, and the new prices should take effect in March, when Apple's iPad goes on sale.

While Amazon said a week ago it would "ultimately" have to concede to Macmillan's demands for higher e-book prices, a formal settlement between the two companies came over the weekend, and Macmillan-published books went back on sale on Amazon.com. The Wall Street Journal noted that the agreement between the two parties will likely "set the stage" for changes in the e-book market in 2010, as Apple enters the fray with its new iPad.

"By agreeing to accept a new pricing model, Amazon has publicly acknowledged the sudden emergence of a rival that may not only threaten its highly popular Kindle franchise but also its total domination of e-books," the report said. It noted that new, higher prices, at least for Macmillan, would begin when the iPad goes on sale in March.

It is Apple's entrance into the e-book market, with its new iBooks application and accompanying iBookstore, that has caused a new rift between publishers and Amazon. Following Macmillan's lead, Hachette Book Group and HarperCollins have both announced their intent to ink new deals with more flexible price structuring with Amazon.

Based on their content deals with Apple, publishers will offer new hardcover bestsellers for between $12.99 and $14.99 on the iPad's iBookstore. Publishers want to offer books under the same pricing structure on Amazon's Kindle.

Last week, Hachette CEO David Young said the price increase is not a way for publishers to make more money on books. In fact, he said, they will make less on each e-book sale under the new model, but authors and agents will be able to make money on every digital sale. He and others in the publishing world believe the new prices will "protect the long term viability of the book marketplace."

While Amazon has dominated the e-book market since its e-ink Kindle reader debuted in 2007, Apple's entrance with its $499 iPad has forced the bookseller to renegotiate its content deals under pressure from publishers. With Hachette, Macmillan and HarperCollins, three of the five major publishers highlighted by Apple at its iPad unveiling have revealed their interest in higher e-book prices.

The moves confirm comments from Apple co-founder Steve Jobs, who said that publishers were upset with Amazon and could begin to pull their content from the bookseller. Declining to elaborate, he simply said that the Kindle and iPad would offer bestsellers at "the same" prices.

The Journal also noted that the only major publisher that has not struck a deal with Apple for iPad content is Random House. The company is said to be "studying the matter."