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Apple: Collusion on E-Book Pricing or Just Tough Talks?

Posted By Juli Monroe On May 16, 2013 @ 10:37 am In Apple,ebook | 5 Comments

Th [1]e [1] New York Times [1] and Reuters [2] ran articles recently that tell opposing stories about Apple’s role in agency pricing.

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 [3]:

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.


5 Comments (Open | Close)

5 Comments To "Apple: Collusion on E-Book Pricing or Just Tough Talks?"

#1 Comment By Paul StJohn Mackintosh On May 16, 2013 @ 11:34 am

Sounds very likely, Juli. Apple naturally has a strong incentive to spin the story in its own favour, but I don’t see any way that the launch of the iPad had that much influence on a market that had already been defined by the Kindle, no matter how much Apple wants to pretend otherwise. The c.2010 iPad was absolutely a game changer for tablets, but to some extent, with the rollout of the Kindle Amazon had already defined the category – which Apple then entered and colonized with what was essentially a bigger iPhone. Interesting to speculate what iPad reception might have been like if Amazon hadn’t done much of the heavy lifting on a tablet media consumption device. And above all, I don’t think the iPad was any kind of breakthrough, *initially*, in ebook reading. But the Steve Jobs reality distortion field evidently takes a long time to dissipate.

#2 Comment By Vonda Z On May 16, 2013 @ 1:02 pm

Is it possible the the spike in Q1 was triggered by the looming threat of agency pricing? I can’t remember the exact timing of everything, but I know when I first found out that 5 of the 6 big publishers were going to shift to agency, I went and bought most of the books on my wish list before those price changes could take effect.

Also, regarding e-book pricing statistics, have you tried looking back at Bufo Calvin’s I Love My Kindle blog? I know he only covers Amazon, but he always has seemed to post very detailed pricing information on e-books, although I admit I usually only scanned those posts. Here is a link to a post back in January 2010 – but if you go through his archives, you might find more info: ( [4]).

#3 Comment By Juli Monroe On May 16, 2013 @ 1:22 pm

@Paul, interesting thought on Kindle–>iPad reception. I hadn’t thought about that.

@Vonda, I definitely thought about the threat of agency pricing as a factor, but it had been long enough that I couldn’t remember when the threat started. If you bought lots of books, though, ahead of the announcement, I’ll bet other people did too. And I” browse Calvin’s archives and see if I find something to work with. Thanks!

#4 Comment By Doug On May 16, 2013 @ 2:11 pm

Q1 of 2010 was bound to have been affected by the introduction of B&N’s NOOK (or nook, as it was called then). At about the same time, the big publishers were really “getting on board” and providing e-book versions of most of their big new titles — although some were windowing e-books for later release than the hardcovers. More and more public libraries had started to carry e-books, and were buying copies (mostly through Overdrive). Q1 has tended to be the big quarter for e-books anyway, due to e-readers having been received as presents.

#5 Comment By Denise On May 17, 2013 @ 10:11 am

Bufo Calvin runs monthly snapshots of ebook prices over at his blog, ilmk.wordpress.com

The one for April 2010 is at [5]
and for March 2010 at [6]

You can easily find them for other months at the same blog.


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URL to article: http://www.teleread.com/ebooks/apple-collusion-on-e-book-pricing-or-just-tough-talks/

URLs in this post:

[1] Th: http://www.nytimes.com/2013/05/15/technology/us-now-paints-apple-as-ringmaster-in-its-lawsuit-on-e-book-price-fixing.html?_r=1&

[2] Reuters: http://www.reuters.com/article/2013/05/15/us-apple-justice-ebooks-idUSBRE94E03620130515?feedType=RSS&feedName=technologyNews

[3] IDPF: http://idpf.org/about-us/industry-statistics

[4] : http://ilmk.wordpress.com/2010/01/page/2/

[5] : http://ilmk.wordpress.com/2010/04/01/snapshot-april-1-2010/

[6] : http://ilmk.wordpress.com/2010/03/01/snapshot-march-1-2010/

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