Apple’s new e-book prices to be closer than expected to Amazon’s old ones?

image164[1] Apple’s agency-model e-book prices appealed to publishers by being several dollars higher than Amazon’s, enabling them to break out of the $9.99 trap and giving them the confidence to stand up to Amazon and insist on revamping Amazon’s own pricing scheme.

But now the New York Times is reporting that Apple’s iBooks prices may be closer to Amazon’s for the books that count. Citing anonymous sources privy to the discussions between Apple and the major publishing houses, the Times says Apple wants to reserve to itself the right to discount the e-book versions of bestsellers and lower-than-average-priced hardcovers, perhaps even as low as Amazon’s $9.99.

Given that Amazon itself by and large only discounted bestsellers to $9.99, selling e-books of midlist hardcovers for several dollars more, Apple’s pricing scheme is beginning to sound a lot more like Amazon’s in disguise—and unlike Amazon’s old scheme, Apple will still be able to earn revenue on these titles thanks to its agency pricing model.

Does this mean that Apple might be able to offer some bestsellers at $9.99 while Amazon is locked into selling them at the pricing Macmillan and others assign them? Or will Amazon require price parity as part of its negotiations?

Meet the new e-book store, same as the old e-book store?

6 Comments on Apple’s new e-book prices to be closer than expected to Amazon’s old ones?

  1. You know what would be a new e-book store? The author, the publisher and the distributor each get an equal profit share on top of the basic cost of producing a PDF file. Since author royalties on new hardcovers are somewhere in the range of $1-2 per book, let’s call it $6 profit and another $2 for the team who pushes the “print to PDF” button. $8. I’d buy that. Still more expensive than a paperback version that’ll outlast it, but okay.

    You know what I won’t pay for, ever? A $20-$30 digital file rental that I can’t share or print. Which at the moment is the only thing I am offered on my iPhone (via the stores in Stanza)

    There’s this new thing – scanners. Publishers should look in to them. Al lot of people have them. Turns out people are using them to get books in a useful digital format. And before renting me some overpriced DRM, publishers should also review the fate of every digital music subscription service, ever.

    Book publishers, please, I beg you – sell me a useful file in a useful format at a reasonable price. Or face the same agonizing suicide we’ve had to watch the music conglomerates commit. Please?

  2. Richard Askenase // February 18, 2010 at 7:51 am //

    I love this. The publishers pushed Amazon to the agency model, and may now allow sale prices closer to $9.99 and make LESS money. And guess what- if they don’t keep the prices low they won’t sell many books, as price resistance is quite high. So they’ll be forced to keep prices closer to $9.99. And AMAZON WINS AGAIN!!!

    You see why these publishing houses are moving rapidly towards extinction. I’ll send them the names of a few good BK attorneys in New York.

  3. Amazon’s contracts prohibit publishers from offering a lower price to any other bookseller than offered to Amazon. So if publishers offer a $9.99 book to Apple, they’ll have to offer it to Amazon as well.

    Amazon gave in so quickly and easily to publishers because this is a win situation for Amazon. Amazon will no longer need to take a loss on ebooks under the agency model. And under the agency model, it is the publisher who sets the price so if Apple sets a price at $9.99, if the agency model is working, it really is the publisher who is setting the price — thereby undervaluing its own work.

    Publisher logic is sorely lacking.

  4. “at least three people with knowledge of the discussions”? Smells like rapid back-pedaling by major publishers and/or Apple as reaction to 12.99/14.99 has been strongly negative…

  5. Daniel Alexander // February 18, 2010 at 11:03 am //

    Hahaha.. There’s one born every minute. I’d love to see those idiotic publishers and authors come crawling back to Amazon 😛

  6. One note that might be of interest here, a glimpse into the modern MBA/CEO’s way of thinking: recently Warner’s music division announced its latest results, including sales at Apple’s iTunes music store. This was the first I’ve seen to come since the labels strong-armed Apple into allowing ‘flexible’, or rather higher, prices for tracks.

    The results show that tracks from Warner’s sold at higher prices, and they sold more tracks, but the rate of growth definitely slowed. This, the executives claimed, was a victory. And indeed, even if they had sold slightly fewer tracks but at a higher price, Warner’s returns could have shown growth.

    I wonder if trying to maintain near-hardback prices for ebook editions might be planned as a transitional phase, to mollify bookstore owners in the short term. Maybe the publishers plan on dropping it. Maybe they even plan on dropping DRM later on, as the music labels did, in exchange for higher retail prices.

    So maybe the roller coaster in store for us will be:

    – Amazon pays part of the cover price to give us readers a break (and in hopes of establishing a monopoly)
    – Apple comes in, publishers grin, prices go up (with 2 incompatible DRM schemes)
    – ebook sales fall off, lower prices = best sellers, and prices go back down (now without Amazon needing to subsidize our purchases; still with DRM tower of Babel)
    – special, DRM-free ebooks are offered, at higher prices. We pay more for the convenience of portability and a greater lifespan of readability for the files.

    – asotir

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