Friday, January 29, 2010

Playing Chicken: Publishers, Apple, and Amazon

My post this morning raised the key question that I thought had been ignored in the first round of coverage on the iPad as e-reader: why would people pay $14.99 for an e-book in Apple's iBooks store when they can get the same title for Kindle at $9.99?  But in fact the trusty Walt Mossberg of the WSJ asked that very question of Steve Jobs at the iPad launch event--the video is now posted at All Things Digital (I found it via E-Book Newser). 

Jobs's answer has huge implications--though it's open to different interpretations. He says "the pricing will be the same." Mossberg asks, "the price will be $9.99?" Jobs: "The prices will be the same...Publishers are actually going to pull their books from Amazon because they're not happy." 

I take Jobs to mean that the prices won't be $9.99, because the higher price is what publishers have been desperately concerned to establish in the Apple deal. But obviously a $14.99 price for e-books can't be sustained if Amazon is going to keep selling the same title for less. For publishers not to undercut Apple, they would in fact have to withdraw their titles from the Kindle store. That would be a real throwdown--especially because right now, publishers are making more money on Kindle e-book sales than Amazon is. (But let's not forget that Amazon is still making loadsamoney on selling the Kindle device itself.)  It would be a significant threat to Amazon's Kindle business, and one has to wonder whether Amazon will retaliate, as they have done at other times, against publishers' print-book business. For both sides, print books are still a much larger business than e-books, so there's plenty to lose. It may be an interesting game of chicken. 


Myrna Foster said...

Thank you for sharing that video and your take on the pricing. It looked to me like Jobs wasn't comfortable discussing the price difference or the competition with Amazon in general. I don't own an e-reader, but the price difference between books is a significant factor that won't go away just because he wants it to.

Peter Ginna said...

I am *sure* Jobs wasn't comfortable discussing pricing. It's a really tricky question. There were some interesting presentations on how consumers feel about prices at Digital Book World. They indicate to me that price is a big factor--one of the biggest-- for e-book buyers, but readers are not necessarily wedded to the $9.99 price. Publishers seem to be hoping that with Apple's help we can nudge the market price of e-books upwards. Plan B, or A sub 1 for some houses, if we can't make people pay more than $9.99, we will treat the e-book like other cheap editions, namely paperbacks, and publish it later than the hardcover.

Anonymous said...


If book readers are anything like Netflix customers, then waiting for a book to come out will go under the radar. Book buyers will just buy what is available. $9.99 is a lot of money for a DRM'd book.

For the Netflix thingy: