“Days after Macmillan essentially forced Amazon to accept higher prices for its Kindle e-book titles, Rupert Murdoch, chairman of News Corp., said his publishing company HarperCollins is also in talks to increase titles beyond $9.99,” Slash Lane reports for AppleInsider.
“During his company’s earnings call this week, Murdoch revealed that he doesn’t like the $9.99 pricing currently employed by Amazon because it devalues books and hurts retailers who sell the hardcover editions,” Lane reports. “But he noted Apple’s content deals for its new iPad allow publishers more flexibility to set prices at a level they believe is fair.”
“‘Apple — in its agreement with us, which has not been disclosed in detail — does allow for a variety of slightly higher prices,’ Murdoch said. ‘There will be prices very much less than the printed copies of books, but still will not be fixed in a way that Amazon has been doing it.’ Now, Murdoch said, Amazon is ‘ready to sit down’ with HarperCollins to renegotiate pricing of books on the Kindle,” Lane reports.
Full article here.
MacDailyNews Note: Author Charles Stross blogs, “Just before Apple announced the iPad and the agency deal for ebooks, Amazon pre-empted by announcing an option for publishing ebooks in which they would graciously reduce their cut from 70% to 30%, ‘same as Apple.’ From a distance this looks competitive, but the devil is in the small print; to get the 30% rate, you have to agree that Amazon is a publisher, license your rights to Amazon to publish through the Kindle platform, guarantee that you will not allow other ebook editions to sell for less than the Kindle price, and let Amazon set that price, with a ceiling of $9.99. In other words, Amazon choose how much to pay you, while using your books to undercut any possible rivals (including the paper editions you still sell). It shouldn’t surprise anyone that the major publishers don’t think very highly of this offer.”
Full article here.
Apple destroys yet another model
Rupert Murdoch … there’s someone I want to do business with. “Yeah, right”.
Bad news for consumers.
Yea, I don’t understand why this is a win for anyone but the publishers? All Amazon tried to do to the publishers is what Apple themselves did to the record distributors: force a reasonable price (e.g., $0.99/song) on a cartel. Doesn’t seem to bad to me.
Apple, because they are “late” to the game, gets to humiliate Amazon with this, but that’s about all it’s good for. Do you all really want to pay $15 instead of $10 for books?
I can see people calling Apple hypocritical, as they originally forced the music biz into $0.99 songs (rightfully so to get digital music retail off the ground), but when Amazon does the same thing with ebooks, ($9.99 to get the ebook biz off the ground), Apple comes in and allows flexible pricing, something the music biz craved for while before eventually getting three tiers of pricing. ($0.69 – $1.29)
I realize the difference between the 2003 and 2010 e-commerce landscapes, but it won’t prevent people from calling out Apple on this.
Just sayin’
The single biggest thing Apple did was allow single cuts of an album to be bought at $.99. Essentially albums were no less expensive than if bought at a store once you take into consideration the cost of media and distribution. I am sure Apple and publishers will consider selling books by the chapter or maybe with every other word missing at a lower cost if there is enough demand!
Apple is playing into the hands of the content providers to ensure adoption.
You can’t have it both ways.
You either settle for low prices or the full catalogue.
Apple needs to get publishers “on-board” with the iPad. In a few years when the iPad becomes ubiquitous, Apple will then have more leverage to dictate terms to the book publishers, movie houses, and other content providers.
You would think apple would want to keep the 9.99 price point to entice people to buy more books on the iPad. Sure it’s a better experience, but this could hurt sales potentially. I’m not sure on this one.
the comment by the_steenmachine is very good – i ask only that we carefully consider the historical implications of price fixing called dumping … the japanese did it with steel and electronics, and many enterprises were killed through this method … is it reasonable amazon to subsidize losses on one product through their margins on others when the net effect is the publisher and traditional booksellers face lower demand because amazon is dumping?
while your initial reaction might be that this is good for the consumer, you might have shares of the publisher in your 401k, and when amazon harms that share price, you pay, and when amazon kills that company, you pay … because the consumer isn’t operating in a vacuum, there are a number of balancing interests in this equation
just sayin
All these comparisons to music sold by Apple are BS. It’s not comparable. The music industry faced steep declines in physical sales for years mostly brought on by digital pirating but also because they were putting out crap.
Book publishers on the other hand are doing quite well with physical sales and want to open up another venue via digital sales. They don’t want one to destroy the other.
Think before you go off on some knee-jerk tangent that is only valid fodder for shallow media outlets. Americans are so dumbed down by their media that its laughable; only able to make superficial arguments that are nothing but pap! I’d feel sorry for them if it wasn’t of their own lazy making.
I’ve posted it before, but in Amazon’s press release from a week ago when they upped their royalty split to 70-30 to match Apple, they detailed how the OLD split on a $8.99 ebook broke down:
$0.80 author
$2.35 publisher
$5.84 AMAZON
They also note that it costs less than a dime for bandwidth costs, so it’s clear that Amazon is not making any money on Kindles but is using ebooks to subsidize sales of the Kindle. They were raping authors and publishers blind.
Now, it’s clear that while prices were fixed, similar to what Apple did with songs, they were taking the lion’s share of revenues, while Apple was taking a fraction. Completely different revenue models.
What Amazon was trying to do was take as much of the distribution pie as possible, as wholesaler, distributor and retailer. MDN talks about cutting out the Middlebronfman, and that’s what Amazon was doing, and taking their shares.
I would also point out that Apple’s flexibility in pricing allows for lower pricing while giving authors and publishers more. I hope to see more books available for less.
Also, no one knows what Apple asked for first from the publishers.
Maybe they Apple did go to them with the $9.99 eBook price and all the publishers said, NO. Or only one agreed and the other 4 said no.
Apple would have then only had one publisher to put on that slide for the iPad announcement. Not very good. Apple probably wanted as many names as possible for the rollout and the only way was agreeing to their prices. Not what we want, but what can we do? Don’t buy the expensive eBooks.
What I would also point out is that ebooks were severely undercutting real books. The royalties were far less, as you can see above. The losers were authors and publishers, while Amazon made out like a bandit.
If you look at what Apple did with digital music, music label royalties were NOT undercut by Apple’s digital pricing. If anything, they were making more per song, the difference being that Apple sold lots of singles, instead of albums, so overall sales were down, but royalty per sale was up.
What Amazon did in books is completely different than what Apple did in music. In fact, what Amazon did in books, is what alot of people had hoped Apple would do in music, ie cut out the Middlebronfman, and be its own label. The difference I assume is that people were hoping that artists would get more, the label would be out, and Apple would lower overall prices even further. As you can see, Amazon just replaced all the other middlemen, and kept all the profits.
The Pad is going to change the publishing business, which puts out a physical product. What’s to stop individual authors from publishing on the Pad without bothering about paper books which mean losing out to the publishing business, in much the same way as individual software creators can publish on Apple’s iTunes store?? As for newspapers, why not move to distribution on iTunes, instead of having to pay for the WSJ, for example, on a monthly subscription? The Pad is the leading edge of “Change that you can believe in”. The paperless home is on the way.
Considering how much Amazon takes from each sale (around 60%) it makes sense for the publishers to increase prices, the publishers are getting gypped. I am for lower prices but only when it is warranted. The only way that the publishers would give in to Apple is if Apple let them control prices. Apple is betting a lot on the e-reader aspect of the iPad to drive sales so they had to.
@ankh
We need to arrange some diapers, maybe a pacifier as well for you. You sound like a GenX crybaby, wanting everything free or then just rip it off. Get off your mothers tit for awhile.
What I don’t understand is why digital media continues to be more expensive that physical media. Movies and TV Shows on iTunes are all more expensive than their DVD/Blu-Ray counterparts, not to mention how they offer less content, lower quality, preclude resales, and limit me to what I view them on. This is going to happen with eBooks. The publishers are just DROOLING over this. Remember that “demo” video of how the publishing industry foresees digital books on tablets? I distinctly recall a comment in the video about how you can keep your digital notes after your license “expires”! So if you have a textbook that you want to keep for reference, you have to keep re-paying for it. It’s insane!
I’d rather be with Rupert than agin him:
Sarah Palin was a smart hire for Fox News Channel, judging by the ratings for her debut on “The O’Reilly Factor” on Tuesday. The former Alaska governor’s first appearance as an analyst drew 3.954 million viewers — more than everything else on other cable new shows combined in the 8 p.m. hour. CNN’s “Campbell Brown” placed second with 999,000 total viewers, MSNBC’s “Countdown with Keith Olbermann” placed third with 906,000 total viewers and HLN’s “Nancy Grace” brought up the rear with 704,000. Compared to host Bill O’Reilly’s ratings the night before, the Palin push was worth a 22 percent rise in ratings.
http://www.nypost.com/p/pagesix/sarah_gangbusters_start_WG13HFC7Qcpq1RXlfLHuKI
Fox News had its best January in the history of the network, and was the only cable news network to grow year-to-year. Fox News Channel also had the top 13 programs on cable news in total viewers for the fifth month in a row, and the top 13 programs in the A25-54 demographic for the first time in more than five years. FNC grew in double digits in both total viewers and the A25-54 demographic from January 2009. In prime time, it was up 22% in total viewers and 51% in the demo. CNN was down 34% and 37% and MSNBC down 26% and 38%. In total day, FNC was up 16% and 28%. CNN was down 34% and 41% and MSNBC down 28% and 39%.
http://macedoniaonline.eu/content/view/12225/55/
Rupert Murdoch: Without Me, Your iPad Is ‘Merely An Empty Vessel’
http://www.businessinsider.com/rupert-murdoch-without-me-your-ipad-is-worthless-2010-2
Why do we care about this???
Let the publishers charge whatever they want. Apple shouldn’t be involved in it at all, they’re just the bookstore. As long as they get their cut they’re good.
If publishers charge too much, we’ll let them know about it.
See what the new liver has done to him, it’s made him stupid! Put me back in and I’ll return Jobs to his old self and being a maverick that lowers prices in the marketplace, not raise them.
The key thing about this is that Amazon was operating its electronic book store by selling books at a loss. Basically, Amazon was taking profits from sales of physical merchandise and subsidizing below-cost purchases of digital merchandise.
Apple doesn’t sell anything at a loss, not even iPod socks.
Selling at a loss also isn’t a long term strategy–it is something a company with high profits in one area does to crowd out competitors in another market, with the hope that ones the competitors are crowded out it will then be able to jack up prices and set those prices on a monopoly basis.
Personally I think that ebooks are crap; if a book isn’t worth keeping then it isn’t worth buying retail in the first place. (Of course, my house actually has a library so I might be a bit biased…)
“Selling Kindles at a loss…”, “[$9.99] price hurts retailers..” – DUUUH! That’s Amazon’s DNA and how it wiped out local mom and pop book stores, riding in red ink for years funded by Wall St. until it became *One store to rule them all*. The race to the bottom can only work for so long under ideal circumstances. Apple never devalues itself, its products, or its customers. Add to that principle the ability to consistently innovate, and that’s how a company maintain long term success.
@MacMan “Do you all really want to pay $15 instead of $10 for books?”
Do you buy hard covers or wait for the paperbacks?
Big Books want to charge you $15 when the hard cover is released and will lower the price to $10 when the paperback is released and less when the printed book hits the discount shelf.
When eBooks follow the same price path as the printed books, more eBokks will be released.