Apple: Collusion on E-Book Pricing or Just Tough Talks?
May 16, 2013 | 10:37 am
By Juli Monroe
In the Times story, the Justice Department paints a picture of Apple as the ringleader of agency pricing. In the Reuters story, Apple insists that it just had tough talks with the publishers about the future of e-books and pricing.
Apple had an interesting claim in the Reuters article that had me hunting down some history. Here’s their claim:
It [Apple] says that e-book demand “exploded” with Apple’s iPad launch, and the average retail price of an e-book dropped to $7.34 from $7.97.
I can’t find reliable e-book pricing figures from that period in 2010. If anyone can point me in that direction, I’d appreciate it because it would allow me to complete this analysis.
However, I could find some sales figures, and they tell a different story, if you look at some other e-book history that happened around the same time. Here’s a graph from IDPF:
Note that e-book sales kind of plugged along, with an increase at the end of 2006 and a rate that stayed fairly stable through 2007. Sales started to rise in 2008 and really shot up in 2009. I think we can safely credit the brand-new Kindle with much of that increase.
Then we see a huge spike in Q1 of 2010. Apple would have us believe that the reason was the launch of the iPad. And it’s true that the iPad was announced in January of 2010, but pre-orders didn’t start until March, and the first devices were on retail sale in April. So, I don’t think we can credit the iPad with the Q1 2010 increase. However, the Kindle had successful 2009 Christmas sales, and I’m betting the early 2010 spike had more to do with new Kindle owners than the iPad announcement.
Note the slight dip in Q2 of 2010. If the iPad had been responsible for an explosion in e-book demand, I would have expected to see a huge spike in that quarter, which didn’t happen.
Note the next spike in Q3 of 2010, however. What happened in that quarter? Amazon released Kindle for Android and iOS, allowing people to read Amazon books on virtually all their devices.
Amazon also started the 70 percent royalty program for self-published Kindle books in 2010, and I imagine that had something to do with the spike as well. $2.99 e-books were a huge draw for readers.
So, here we have another case of “lies, damned lies and statistics.” Apple is using statistics to “prove” one scenario. I think I’ve come up with a pretty good case for another. I’ll be interested to see the results of the trial next month.
Anyone want to deconstruct my stats to show yet another scenario? I’m quite sure it can be done.