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
Apple reset the new world order
Kindle will only survive if the cost really comes down and it can be used for reference. An iPad is all well and good but flicking back and forth between a text book and pages (or whatever text app you may use) is going to become old fast. You need to be able to look at something whilst you type/write out stuff. e-ink has it’s advantages and if they can get the price for the hardware right they may have a market to supplement the iPad or indeed a laptop.
iCal this line:
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.”
mark my words oh my droogies, Apple doesn’t need to go back with a “new deal” (code for price increase), except perhaps to lower their margin, sweetening the deal for the content source even further.
And they all dance in unison to some hip-hop fascist beat.
IF the cost to Amazon is 12.50-17.50, I think you better plan on paying more for books.
Thanks Apple.
When I saw, “begun to change,” I was hoping widescreen and a webcam were added! Yawn!
Apple’s new world, or DUH!
Amazon needs to get out of the hardware buisness, and work to make the kindle app a must have
Belz’s analysis is totally wrong, which is understandable since he’s a tech journalist and knows nothing of book publishing. Amazon was not following Apple’s fixed music pricing with its $9.99 price, but was rather following the long tradition of the freedom a book store has to set the prices for its books. Publishers would never dare attempt to enforce prices on bookstores, which can establish whatever price it wants. I’ve worked in bookstores, and know that publishers typically sell books to bookstores for half to two-thirds the suggested retail price. From there a bookstore has the freedom to set its own actual price for a book, which is the reason it can have sales and the like.
As a bookseller Amazon has been using the same model. It gets books from major publishers and can set whatever price it wants in the marketplace. The difference now is that the major publishers are trying to *force* Amazon to sell books at *their* own set pricing, which is something new to book publishing. The book publishers are trying, in effect, to take away Amazon’s right to set its own pricing on goods that it sells.
This is the exact opposite of what tech journalists like Belz and MDN are trying to tell us: rather than Amazon “forcing” a $9.99 price on publishers, the exact opposite is happening now: the publishers are trying to force a bookseller–in this case Amazon–from setting its own prices in the marketplace. This is anti-competitive, and Amazon shouldn’t be forced to change its rightful practices in this way.
You know, if I cannot run more than one app at the same time, and if I cannot use it to make a video call on Skype, then the iPad is just not for me. I’ll just stick with the 4.0 pound 13.3 inch MacBookPro.
There are many more large publishers of books than there are music labels, and there are no publishers’ associations with the unifying power of the RIAA.
Therefore, by ceding pricing control to the publishers, Apple has set in motion a very competitive structure for the ebook marketplace. Over time this will bring the prices down closer to the publishers costs, which are much lower than for physical books.
And bringing the consumer prices down as low as possible is of course Apple’s goal, to sell more iPads.
The restless consumer strikes again…
We the morons want “everything” ( little minds…) now!… and we mean everything…
Amazon screw publishers and authors to promote their POS Kindle. That sums up the value of that POS Kindle. Goodbye Kindle, hello iPad & iBooks!
@theloniousMac;
Get over yourself, you’re not that clever.
iPad, electronic books, whatever, are consumer items sold to- Get ready for it!- Consumers!
No one is holding a gun to your head, no government agency is forcing you to buy anything, so if you don’t like the pricing of a product, DON’T BUY IT.
Man, you’re quite the drama queen.
“online book sellers will move to acting as an intellectual’s eBay Books sold electronically will generally cost $12.99-$14.99,” Belz reports. “
Are we missing a period? I hope the iBooks are better proofread.
Publishers, like music labels, are useless when artists don’t need a mediator to their audience. All these middlemen will go the way of the dodo.
@Bryan J
And your point relevant to the story is?
Many soft-covered versions of the eBooks can be purchased for 1 penny plus shipping on Amazon, plus u don’t lose $500 if u drop them!
“iPad has already begun to change digital publishing landscape”
And portrait, too.
“The writing is on the wall for libraries: they’re dead and will begin closing their doors en masse in the coming years.”
You could not be more wrong. My local library is thriving.
• Free public computers & computer education classes
• Community meeting rooms, elderly & children’s programs
• Web site access to the whole regional system;
I search entire system from the web: order books, paperbacks,
music CDs, DVDs, Movies, video tapes, audio tapes online,
and am notified by text, email or phone when they arrive at my
local library.
• Web links to databases, legal libraries, periodical databases
• The digital age makes more and more resources available to more and more people, even from home. Even suburban and rural libraries have much more affordable access to a richer library experience for people. We are in a golden age for libraries.
Libraries are still a haven for research and a suitable environment – There is No Substitution for a Library
“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”
Actually, they took a page from Amazon’s past, sell content at a loss to gain market share. In the long run once you become the market leader, the profit will come.
It didn’t work this time, damm Apple!
You have to love that some people blame Apple for an e-book price increase. In the end, Apple and Amazon are businesses. When Amazon CHOOSES to lose money on e-books, consumers should realize that it can’t last forever. Apple simply forced better margins for itself because it is a business, consumers misunderstand this. Example, if a product at the supermarket is on sale, even 2 months in a row, as a loss leader, don’t expect your grocer to keep doing it without going out of business. Consumers whine about prices, but they fail to understand that while they are spending all their money, BUSINESS is about generating money, and companies must do what they need to.
Libraries will always be around until a certain portion of the population can get the same experience from home. Remember, some people do research and work – others flap their jibs all day on forums like this while goofin’ off.
Libraries are just like the internet – the masses don’t utilize it to its full potential, but it’s a necessary outlet.
“Libraries are just like the internet – the masses don’t utilize it to its full potential, but it’s a necessary outlet.”
Paid for by taxing all, for the use of the few.
SB. Pay to enter (for those over 18). If you use it, pay for it. Maybe a yearly pass.