Apple’s “iPad has already started to change the landscape of digital publishing: After a few days of a public battle, Amazon was forced to capitulate to a new deal with Macmillan, one of the six largest publishers; on Friday, Hachette started to make noise too,” Andrea Belz reports for E-Commerce Times.
“An excellent summary on The New York Times describes how previously, Amazon set the prices — typically a default of US$9.99 for new releases and best sellers,” Belz reports. “Because the cost to Amazon is typically $12.50-$17.50, this scheme lost money for the e-tailer but promoted the sales of the Kindle reader.”
“In the new world order, the publisher will set the consumer price and the online retailer will simply be the agent, taking a 30 percent commission; online book sellers will move to acting as an intellectual’s eBay Books sold electronically will generally cost $12.99-$14.99,” Belz reports. “
“Unfortunately for Amazon, management discovered that you cannot simply take a page (so to speak) from the Apple playbook and apply it to any industry,” Belz reports. “Amazon basically copied the Apple iTunes model — a fixed, low item price for the content that promotes the sales of the hardware — and then discovered that Apple changed the rules. How did this happen?”
Unlike the musicians, “writers and their agents/publishers do not have an opportunity equivalent to the high-margin live performances; the entire margin has to be generated with the content sales,” Belz reports. “Since Apple’s deal lets publishers attempt to preserve content, it may be as simple as my grandmother’s saying: ‘To make money, you have to let other people make money.'”
Belz writes, “This is where the strategy gets interesting. Apple starts to exploit the ‘iEcosystem’ that it has already created to promote hardware and software. Then it takes out Amazon and other competitors to dominate e-book distribution. At that point, Apple can return to the publishers with a new deal.”
Full article here.
MacDailyNews Take: “Amazon’s Kindle hardware, which wasn’t much to speak of in the first place, is dead… If Jeff Bezos isn’t sweating…” MacDailyNews Take, during live coverage of Jobs’ iPad unveiling, January 26, 2010