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HarperCollins pressuring Amazon to hike Kindle prices

The iPad is still a few months away from actual release, but it already has publishers scrambling to be in the right place when the revolution comes. First, Amazon gave in to Macmillan's bid to raise prices on their own store, and now HarperCollins is putting the pressure on that same site to raise eBook prices from $9.99 up to $14.99 or higher. Amazon finds itself in between a rock and an iPad -- if they don't give in to publishers' demands, they could find themselves abandoned for an exclusive Apple deal, but if they do raise prices, sales will start dropping even before the iPad appears. Jobs predicted about this much last week in an interview with Walt Mossberg, saying that publishers would run afoul of the Amazon store, and Jobs would be more than happy to pick them up in iBooks.

But the real question is: how much will Apple charge? Historically, Jobs has been pretty antagonistic on pricing against content providers, only recently giving in to the first price increase in the history of iTunes. At the Apple event the other week, Jobs said on stage that prices on the Kindle and the iPad for books would be "the same," so while fleeting images of the iPad showed bestsellers at around $10 (which is what Amazon charges), it's possible that Jobs would go with the $14.99 price to woo publishers over to his side.

It'll be an interesting battle -- when the iTunes music store first opened, there basically were no strong competitors in terms of other online music retailers. With the iBooks service, Jobs and the iPad are wading into already populated waters. And while Amazon is feeling the heat of the iPad even before it's on store shelves, odds are that they're not going to go down without an eventual fight.

The iPad is still a few months away from actual release, but it already has publishers scrambling to be in the right place when the...
 

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TheCastro

The problem I have with it that ebooks shouldn't cost as much as a physical book. What exactly are publishers "publishing" with an ebook. There's no paper, printing, transportation, distribution, or other traditional costs associated with the ebooks.

Realistically Apple will help independent writers sell more books.and maybe even spur some writers that feel like they've been screwed to strike out on their own if sales are large enough in the ebook markets.

February 04 2010 at 7:29 PM Report abuse rate up rate down Reply
2 replies to TheCastro's comment
Bruce Ryan

In my experience of text-book publishing, a publisher pays the following development costs.
- author(s)
- peer reviewer
- copy-editor
- page-layout and illustration staff
- copyright fees (for photos and/or text)
- proofreader
- project manager (that's me)
- support staff (sales, admin, IT support, etc)
These costs will arise no matter whether the book is printed or e-published. True, e-books don't have printing, distribution and warehouse costs. But they do have costs of sale if Amazon, Apple, etc, take a cut, which they must do to stay in this business. (Similarly, bookstores buy from publishers at less than the cover price, so they can pay for their buildings, staff, etc.)

Also publishers might need to pay for e-book production systems to be set up, or for 'conversion-houses' to convert existing books into e-books. (Obviously, it's much easier to start off knowing that a book will be published in multiple formats.)

All of this has to be paid for out of whatever a customer pays for the book.

Further, if a book has a total market of, say, 10,000 copies, all of which are printed, the unit print cost will be a certain amount. If half of these copies were sold as e-books, the unit cost for the remaining 5,000 printed books will increase because the printer's fixed costs (e.g. press and binding line set-up, paper delivery and book despatch) for a print-run are fixed, and so averaged out over fewer items.

If an e-book edition eats into the print-book's sales, the publisher's margin (out of which all the development and distribution costs are paid) decreases and so the publisher has to recoup some of that from the e-book sales.

So it's not unlikely that e-books should be around the price of their printed equivalents.

To put it simply, e-books don't have printing and warehousing costs. But these are replaced by other costs.

February 04 2010 at 8:54 PM Report abuse rate up rate down Reply
TheCastro

I wasn't talking about the rip off artists involved in textbooks. My professors in college that helped write textbooks never let us buy them stating the overpricing. Two were economics professors.

I was talking about normal novels.

February 04 2010 at 10:26 PM Report abuse rate up rate down Reply
bobm

Amazon is crying foul because they want to look like they are getting hurt by this. They aren't, nobody is forcing Amazon to carry the ebooks, if they are offended by the price they can just refuse to carry the book and see how that works out.

I think Amazon is more evil than Apple (even though I have a Kindle) and when they were trying to do the 70/30 deal with the newspapers where they got 70% and unlimited rights to the data it just confirmed that they are ruthless and not at all concerned about getting the industry to move to epaper. If they were smart they would have done a 30/70 cut deal last year and they wouldn't be so scared now.

Of course some of this may be Apple getting back at Amazon for the Music wars a couple years back.

I too like 9.99 and have only purchased one book above that (from Amazon), sadly I'm still paying 20+ bucks for tech books from Manning (in pdf), I hope they drop to 14.99, I'll buy more in that case.


February 04 2010 at 6:09 PM Report abuse rate up rate down Reply
BigB

I think 10-15 bucks is way to expensive for ebooks when i can go to the grocery store, and get top sellers in soft cover for 8 bucks.

I most likely wont be buying any ebooks from anywhere.

February 04 2010 at 5:16 PM Report abuse rate up rate down Reply
mplaisance

I can't see how some always want to blame Apple for raising prices. Fist point remember Apple has and still fights with the record labels to keep prices down and mostly because Apple has such a huge influence (they are the best selling store of digital music by far). But this time Apple is approaching eBooks differently. Amazon to some degree as of now have a monopoly on digital books so the publishers can bend to Amazons rules plus Amazon wants to sell kindles so making digital book prices attractive is worth it. So now Apple comes along(competition to Amazon) with a killer product and iTunes eBook store to go along with it. A very similar model to Amazons Kindle/Amazon Bookstore, and the book publishers see the competition as well so now they have leverage they once did not have against Amazon. It's simple business. As far as consumers, competition will keep prices fair and in the long run we will see better content also in digital books and readers again driven by competition. So I say BRING ON THE COMPETITION APPLE!!!

February 04 2010 at 12:50 PM Report abuse rate up rate down Reply
Dirk

I own a kindle and buy more books than I did before. I will buy an iPad but using it for reading books is unlikely, the kindle's e-ink is perfect for daylight reading.

There's no way I will buy DRMed e-books that aren't discounted in comparison to the physical version.

Color pictures, videos, animated diagrams etc. won't change that.

February 04 2010 at 10:06 AM Report abuse rate up rate down Reply
Andy

This is the same argument as buying music on iTunes. The publishers want to charge more than people are willing to pay. People will either agree that it is fair to charge as much or more for an e-product with low manufacturing and distribution costs versus a physical copy, or they will stay away and ebooks will fail. The publishers argue about "hurting the value" of their product, but really is this any more different than buying a physical book with a $30 cover price for $8.99 in walmart? I smell price gouging and dare I say collusion!

February 04 2010 at 10:03 AM Report abuse rate up rate down Reply
SIP

Amazon is far from the consumer's friend it is made out to be, and Apple isn't really pushing up prices. In the long-term, Apple's involvement will actually reduce prices of ebooks.

The best explanation of Amazon's pricing policies I've read is here:

http://www.antipope.org/charlie/blog-static/2010/01/amazon-macmillan-an-outsiders.html

February 04 2010 at 10:01 AM Report abuse rate up rate down Reply
robertwilliams21

What I don't understand is this fear that if Amazon raises their prices to $14.99 that they're going to start losing business to Apple. Serious readers and people who have already seen the benefits of an e-ink reading device are not going to start snatching up iPads and killing their eyes using iBooks. And people who would use an iPad (or any LCD device) for reading likely aren't aware of or don't care about the superiority of e-ink either, so that's a sale that Amazon wouldn't have gotten anyway. I think Amazon is going to be just fine in the end.

February 04 2010 at 9:47 AM Report abuse rate up rate down Reply
Matt Jones

The publishers are idiots - why should an ebook of a bestseller cost *more* than a dead-tree copy? Are the publishing industries going to try the "raise the price of your product, then whinge about how the lost sales are caused by piracy" tactic that the music and movie folks love?

February 04 2010 at 9:31 AM Report abuse rate up rate down Reply
1 reply to Matt Jones's comment
tuaw,com

The suggested retail price of the e-edition is not going to be higher than the suggested retail price of the print edition of the day -- instead it will evolve with the print edition (higher while hardcovers are the only edition, lower when softcover and pocket editions come out). However, the publishing business is notoriously low-margin, and the players understandably want to improve that.

(That said, the authors still tend to get the short straw: E-sales, foreign sales, etc. usually provide unfairly low royalties, and sometimes no royalties at all.)

February 04 2010 at 9:56 AM Report abuse rate up rate down Reply
heathsnow

This sounds like the 'convenience fee' I get charged for paying some bills online. If publisher aren't carefully many people will go the piracy route. The books should be priced so that I don't need to worry about picking the occasional bad book.

I wonder how much money textbook publisher will make from ebooks. When I was in college, everything that could be pirated...WAS pirated. College students are poor.

Time will tell.

February 04 2010 at 9:31 AM Report abuse rate up rate down Reply
2 replies to heathsnow's comment
Kevin

One way to combat piracy with e-textbooks is to bundle the price of the textbook (or just the chapters you need) into the fees for the class. You'll get a code that allows you to download the book to as many devices as you want. You could give the code to others and pirate it all you like, but if you want credit for the course, you'll have to pay the license fee.

February 04 2010 at 9:44 AM Report abuse rate up rate down Reply
heathsnow

@doelcm

That's a really good idea. It becomes problematic when you factor in physical textbooks, buying discounted used textbooks, etc. That could certainly be figured out in the future though. It seems I could rarely buy a used textbook anyways because there's a new version out every year (with VERY minor updates).

February 04 2010 at 3:04 PM Report abuse rate up rate down Reply
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