10 Feb Apple vs. Amazon
Apple is poised to revolutionize the ebook market. Or destroy it!
As predicted, Apple seems to be going after the ebook market with their release of the iPad. In doing such, they’re obviously starting to cut deals with the publishers to get content for their ebook section of the iTunes store. Next thing you know, there are all manner of issues.
I won’t go into the details for a few reasons. First, because it’s out there in cyberspace, but a scant Google search away. Second, because I just don’t think I understand it.
Here’s the gist. MacMillan publishing suddenly told Amazon that they want to pull their content from the online superstore unless they can set their own prices. Amazon had locked most publishers into a $9.99 price for best sellers and most other content, which is, after all, pretty dang fair! After all, once the ebook’s bits have been laid out, then only cost to get them to the reader is the bandwidth. Other than that, it’s all profit. No print, paper, binding, distribution, shipping necessary.
Well, I guess MacMillan got a better offer from Apple and wanted the same deal with Amazon and used strong-arm tactics to get it. Amazon caved pretty quickly, and now the other publishers are joining in.
First of all, I blame Apple. This is ridiculous to use such strategies in the marketplace. Essentially, they told the publishers that they would pay more, give the publishers more rope with which to hang themselves (more on that in a bit), and all they would have to do is allow Apple to sell their ebooks.
Second, I blame Amazon. They caved to Herr Jobs way too quickly. After all, the iPad isn’t even out yet. It could flop, or at least flop as an e-reader. And besides, when people think books, they most likely think Amazon way before they think Apple. And what the heck is their decision supposed to do anyway? If I were looking at two places to buy an ebook, Apple and Amazon, and Apple was selling the book for $15 and Amazon was selling it for $10, it doesn’t take an economist to figure out which one I’d buy. As well, is MacMillan willing to lose their Amazon partnership for selling their dead-tree books just to get a few more dollars for the electronic versions? I am fairly certain that Apple isn’t going to take on the distribution and shipping of actual ink-and-paper books, just to get the ebooks.
So here’s the conundrum. I am sure that Apple’s ebooks will have some sort of DRM on them… FairPlay or some such. Amazon’s content for Kindle has DRM all over it. So, I guess Amazon got scared that iPad owners would not only not buy a Kindle, but would also abandon any Kindles that they already own. I guess that’s possible. But what if Amazon started selling DRM-free versions of ebooks that could go on any device? Suddenly, their $10 lower price would look just as good to iPad owners as it would to Kindle owners. And don’t tell me it can’t be done. Amazon went that route with music, and O’Reilly sells electronic versions of their books not only DRM-free, but frequently (not frequently enough, in my opinion) in multiple versions. It’s as if O’Reilly is screaming, “please, read our books on whatever platform you want to!” And I do! How awesome is that? Buy a book and get it in mobi, epub, and PDF formats!
In the end, I’m really scratching my head over this one. Is the very threat (and, at this point,only the threat) of the iPad so severe that Amazon totally balked on a rapidly-growing segment of their sales? And why on God’s green Earth would publishers feel that higher prices are better? Did they ever take an economics class? I mean, I slept my way through Econ, but one thing I do remember is that as prices rise, sales drop. And in a recessed economy, the threshold where people decide not to buy something is far lower.
Heck, just today I saw an article which showed the results of a poll. A full 70% of responders said they would purchase books at $10 or cheaper, but only 6% said they would pay more than $10. That’s easy math, people. If you’re going to cut your customers to less than 10% of their former numbers by raising your prices, then you’d better be increasing your profits tenfold, or you’re losing out. Does a price increase from $10 to $15 seem like it would increase the publishers’ profits by a factor of 10? I doubt it.
So where does this leave us? Are we destined to keep destroying trees to get our reading? Or will publishers see the light that e-publishing is a dirt-cheap way of getting books out to the masses, maximizing profit and multiplying customers? Let me know your thoughts in the comments below.
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