Amazon and Penguin make e-book pricing deal

Secret agreement ends stalemate that began April 1

Published May 26, 2010 8:47PM (EDT) Inc. and book publisher Penguin Group reached an agreement regarding the pricing of Penguin's electronic books, the online retailer and book publisher said Wednesday.

With the new agreement, which both companies declined to detail, Penguin's newest e-books will begin selling through Amazon. In April, Penguin halted sales of new e-books published after April 1 -- about 150 books -- though it continued to offer its older e-books through Amazon.

David Shanks, CEO of Penguin Group (USA) detailed the company's action in a letter sent to agents at the time, saying the books were not available from Amazon as the companies worked to come up with a new pricing agreement in the U.S.

Amazon signed pricing agreements with several other publishers in April -- Simon & Schuster, which is owned by CBS Corp., and HarperCollins, which is owned by News Corp. -- just as Apple Inc. was about to launch its iPad, a competitor to Amazon's Kindle.

Publishers' relationships with Amazon, which released the Kindle in 2007, have been strained by the company's insistence on charging $9.99 for some best-selling titles.

Publishers have complained that it is an attempt to get consumers used to unsustainably low prices. The publishers fear that Amazon will force publishers to lower their wholesale prices, cutting into their profits.

Apple's pricing model for books sold through its iBookstore application has some books costing up to $14.99 initially, and Apple insists publishers can't sell books at a lower price through a competitor. The iBookstore launched with books from major publishers including Penguin, Simon & Schuster, HarperCollins and Macmillan.

Penguin is owned by Pearson PLC, based in London.

Shares of Amazon, based in Seattle, fell 77 cents to $124.09. Shares of Pearson rose 6 cents to $13.51.

By Rachel Metz

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