Amazon will allow publishers to decide the prices of new eBook releases, as it responds to renewed competition from Apple's iBooks store.

The retail giant had previously imposed a $9.99 price cap on new releases, but this was challenged by Macmillan, which pulled both eBooks and hardbacks from the store in protest.

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Amazon eventually buckled to Macmillan's pricing demands, opening the door to other publishers. According to the Wall Street Journal, the first to walk through will be Simon & Schuster and HarperCollins.

Under the new deal, the two publishers will ramp up the price of bestsellers to between $12.99 and $14.99, in line with the deal struck with Apple.

The report comes on the eve of Apple's iPad launch, which is expected to take a significant chunk out of Amazon's eBook market share.

Amazon currently holds around 90% of the global eBook market, but Spencer Wang, an analyst with Credit Suisse has predicted that this will fall to around 35% over the next five years, thanks to competition from Apple, Sony and other major players.

The companies refused to comment on the story, though Brian Murray, chief executive of HarperCollins told the Journal, "Our digital future is more assured today than it was two months ago."

FAIL...