“In a fight over the price of electronic books, Amazon.com has blinked,” Brad Stone and Motoko Rich report for The New York Times.
“On Friday, Amazon.com shocked the publishing world when it pulled both the digital and physical books of Macmillan, the large international publisher, after Macmillan said it planned to begin setting higher prices for its e-books,” Stone and Rich report. “Until now, Amazon has been setting e-book prices itself, and has established $9.99 as the common price for new releases and best-sellers.”
Stone and Rich report, “But in a message to its customers posted to its Web site on Sunday afternoon, Amazon said that while it strongly disagreed with Macmillan’s stance, it would concede to the publisher.”
Full article here.
[Thanks to MacDailyNews Reader “dd for the heads up.]
This will be a lot different than the iPod/iTunes/Music label model. Initially, the music download industry had no prior model on which to be based. Now that Apple has matured and perfected(?) the music download industry they have turned their attention to the book and advertising industry.
I believe that instead of raising prices on books in the future (as Apple let happen with music) and foregoing the initial price adjustment what we will really see is future price reductions in the ebook industry.
Once the iPad becomes widespread and penetrating many market segments, Apple will begin to reduce ebook prices. Several factors will enable this. The biggest factor will be competition, as Apple’s slice of the pie grows it will force pressure on Amazon and Google to reduce their profits. Apple profits from both the ebook and the reader. Amazon’s Kindle is soon to be history if they can’t change drastically and I don’t think Amazon has the DNA for the hardware like Apple does. Give it several years, I bet Apple announces a price reduction.
Second, associated purchases will let Apple profit additionally (via ads and advertising-re Quattro Wireless) via ebook elinks.
That is not all, think music videos, movies, TV shows. And the list really begins to grow. Add in Apple Publishing (direct to web writing/sales), Apple Music -they will have to buy the Apple label though.
Currently, I own Macs, iPhones, iPod Touches (kids) and use them at home and work (also PCs, but trying to weed them out.) Prior to the iPad, I am not that much an electronic consumer of books or movies although I do purchase music via iTunes. However, I do see myself purchasing more books and movies online for consumption with an iPad.
Finally, per Steve’s comment about the intersection of technology and liberal arts. We are on the cusp of really, finally entering the digital age. You ain’t seen nuthin’ yet.
@simple: That actually makes sense; cutting edge folks will spring for the full $16, just like the folks that rush out & buy hardcovers, while others wait for the paperback or for the book to hit the bargain price tables.
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@DRMSSDB
There are many “don’t knows” in your post. When you “don’t know” then “don’t post” – then you’ll avoid letting everyone else know that you “don’t know” what you are talking about…
@theloniousMac
Apple takes 30%, as they do for music.
@Creatives Deserve to be Compensated
Right on mate!
Independent musicians can sell their music on iTunes and reap 70% of the revenue. Independent film-makers can, with some wiggling, get their films onto iTunes and reap 50% of the revenue. It won’t be long before authors get their books onto Apple’s bookstore.
Apple is not targeting the creatives – Apple is changing the way creative people bring their products to market, and increasing their share of the revenue. Note, however, that listing your song, film or book is one thing – marketing it so that people hear about it and actually buy it is something else. That is the job of the publishers – who still have a place in the new e-world….
…it’s just that they are now a lot more accountable…
Apple, of course, has not been in the book distribution business.
I think it was a brilliant move to offer increased prices and splits to publishers to get them on board.
The marketplace and competition will ultimately dictate the prices.
In addition it wouldn’t surprise me if Apple opened up their ebook store to authors directly.
In that case many authors could choose to get one master put together and self publish. They may not be in book stores but being in the Apple book store may do for ebooks what I tunes does for music.
It could operate on the same principle as app developers. A successful private author could make a nice living from just the Apple bookstore with no publishing costs other than producing the master. This could explode e-publishing by individuals.
Did I mention that the iPad wil be big? Really big.
Producing a e book is much simpler than making a recording. With a Mac and the iTunes Store, I wonder why an author still need the middle man.
This looks like Apple did not want another long running big fight on its hands, so settled generously with the publishers rather than risk missing the boat and letting a competitor steal a march.
That Amazon are now flexible proves the worth of Apples strategy before a single iPad or eBook is sold. Amazon know who is going to be king of the ebook market and it wont be Kindle.
Tick-tock, I just want to get mine ordered and in my hands.
Apple is letting the publishers set the price of books jus like it let’s app developers set the price of apps. And it forced Amazon to abandon it’s ridiculous split where it kept most of the profit. I see nothing wrong with that.
@ iMaki, R2 and dalix
I’ve got a driveway that needs the snow shoveled.
Stop by and shovel it for for me for free.
Oh OK, I’ll pay ya 99¢.
I haven’t paid much attention to the ebook phenom. Someone posting above, under the name “simple”, mentioned out of print pricing. Have books that were previously out of print been resuscitated as ebooks? That would be a welcome bonus to this current shift to digital readers.
@all the people who think they know how e-publishing works:
Please, please, please STFU. Even if it is the comment section of a blog, It’s embarrassing.
Mea culpa:
Regarding the Kindle, I wrote “…do you want the black-and-white version with no pictures?”
That is incorrect. I should have said “do you want a grayscale display that updates at a slow rate?”
The Kindle can display graphics.
Macmillan does not Need Amazon.
If Macmillan’s books were only available on the iPad, that would only hurt the Kindle, which Amazon has only sold a couple of million. Apple will sell that many iPads in the first few months.
You could still buy Macmillan books On Amazon, just not From Amazon.
I believe that Amazon actually pays around 14.99 now for ebooks and takes a 4.00 loss on the 9.99 sales. I like the lower cost to me, but losing that much on each sale is not sustainable.
jax44
My problem with paying $15 for an ebook is that whereas when I purchase a physical book I actually ‘own’ something (if only the physical medium), when I buy an ebook I own nothing – I am merely ‘renting’ the right to access the content. It is inevitably a temporary thing – whether the DRM on the product sets a time limit, or the ability to access the media goes out of style/availability; whether my hard drive crashes or whether my copy ‘in the cloud’ suddenly disappears when Company X goes out of business. I have paperback books today purchased decades ago that I can still enjoy (or give away, for that matter). I seriously doubt that decades from now the ebook I paid $15 for is still going to be accessible.
And if I’m merely renting the right to access something, why pretend I’m actually ‘buying’ something, something to own? With DRM, as I’ve mentioned above, I don’t ‘own’ anything.
While I agree that whoever created the content should get a ‘fair share’ of the profit, why must the profit be so high for something I’m only renting?
Wow! What a stunning lack of confidence in free market capitalism is going on here. From what I’ve read, Amazon is taking a loss of around $5 a book on the bestsellers it’s pricing at $9.99, with the difference going to the publishers. They’re basically using the bestsellers as loss leaders to both sell Kindles and propagate the ebook format.
The publishers’ objections to this, as far as I can tell, isn’t what they’ve been receiving under the Amazon regime so much as it is that they don’t want the $9.99 price to become established as a ceiling for ebooks. Under their agreements with Apple, the price of bestsellers will fluctuate — more upon release, less over time — and eventually achieve a decent equilibrium. But the key point is that it will be the publishers — whose goods are being sold — who will make those decision and deal with the market forces. As it should be.
Of course, most authors — except mega-sellers with clout — will get screwed under any pricing regime, but even more so if written intellectual property becomes permanently devalued, as it arguably is with Amazon.
Correction: I should’ve said that one of Amazon’s objectives is to establish its *proprietary* ebook format.
I agree with “Creatives Deserve to be Compensated”
It’s also unfair to compare the music pricing with books. Books have always cost more than music records. Most professional musicians make their bread and butter from live performances; the records provide income, but are mostly promotional material. Authors can’t sell our 100,000 seat stadiums to fans wanting to hear them read aloud. Books typically take longer to both write and consume than does a song. You can wake up late and still bang out a hit single before lunch if your semi-talented.
A song is a snack. A book is a meal. Most new hardcover releases are between $25 and $40. It sounds like $14-$15 is already a pretty heavy discount for the electronic version.
How long before we see authors SELF PUBLISH at half the price or less. Cutting out the middle men and sell direct. I could see that become a VERY attractive option for some authors.
Me? I always wait for the paperback and I always wait for it to go on sale. Screw anything over $8 for a physical copy and forget anything over $3 for a eCopy that I can’t loan out to a family member or friend or recycle after I’ve read it once.
There’ as many books in the world as songs, why should they cost anymore. At least a song you generally listen to over and over again. Why should eBooks be a substantially different pricing model than music?
$.99 per 5 min. song = $12 / hour. That’s reasonable.
“The actual hard cost for a printed book (hardcover) is very cheap.
Less than a buck.”
What volumes are you talking about? I spent 30 years as a technical writer, and besides printing costs being very dependent on order volume, we wouldn’t see prices anywhere near the $1/ea range cost to us for anything larger than a very slim document, folded once and stapled, and large print runs.
On the other hand, $15/ea is a lot more than it would cost to print; I’m seeing about $8/ea + $.02 per page for hardcover, no jacket. Paperback saddle stitched or perfect bound around $2+. You’ll get lower prices on much larger volumes, but except for best-seller fiction, it doesn’t pay to print too many at a time, what with warehousing and related costs.
Which explains in part why print on demand is so popular; it’s not that you save a huge amount on direct print costs, you don’t get mauled by overhead.
Everybody got hammered in the mid-90s by printing costs going through the roof, they haven’t come down *that* much since.