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Amazon Reluctantly Agrees to Higher eBook Pricing
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I'm one of those who thinks ebooks are way too expensive at the moment but I can sorta see where publishers are going with this.
Recently we've had a lot of noise about ebooks not being released at the same time as their paper equivalents. Presumably that's becauase the publisher is earning more money on a hardback than they do on a cheaper priced ebook even with the corresponding reduction in costs. If they want to go with price parity as the cost of launching the ebook version day and date with the printed one then so be it, we know the cost will come down over time (hence the variable pricing) so we'll see how it goes.
Ultimately, you get the feeling that the ebook market and those that feed it are really still trying to find a way that will appeal to consumers AND publishers. It'll change over the next few months as they get real data on what people are willing to spend and they start to understand the market more. That'll apply double when Apple brings out iBooks for the iPhone, iPod Touch, OS X and Windows (they're surely going to, iTunes 10 to include the iBookStore?) and the market suddenly goes from a few million to a hundred million or more virtually overnight.
What IS going to be very interesting, and something I'm waiting for with baited breath, is how they treat, uh, for lack of a better description indpendent authors. Books that appeal to a relatively small market but that could easily make money in a digital format.
Recently we've had a lot of noise about ebooks not being released at the same time as their paper equivalents. Presumably that's becauase the publisher is earning more money on a hardback than they do on a cheaper priced ebook even with the corresponding reduction in costs. If they want to go with price parity as the cost of launching the ebook version day and date with the printed one then so be it, we know the cost will come down over time (hence the variable pricing) so we'll see how it goes.
Ultimately, you get the feeling that the ebook market and those that feed it are really still trying to find a way that will appeal to consumers AND publishers. It'll change over the next few months as they get real data on what people are willing to spend and they start to understand the market more. That'll apply double when Apple brings out iBooks for the iPhone, iPod Touch, OS X and Windows (they're surely going to, iTunes 10 to include the iBookStore?) and the market suddenly goes from a few million to a hundred million or more virtually overnight.
What IS going to be very interesting, and something I'm waiting for with baited breath, is how they treat, uh, for lack of a better description indpendent authors. Books that appeal to a relatively small market but that could easily make money in a digital format.
There is no incentive to buy an ebook that costs the same, or indeed, more than the print version. Another case of a company taking a lend of customers, using the narrow focus of review generation rather than capturing market share. This will lead to greater piracy, and greater book sales where someone really wants the title on offer. Kind of narrows the profit margin really 
Own goal by the publishers, Amazon, and shamefully, by Apple. Corporate suits ruin ideals, and about time Steve Jobs fought for the customers who made Apple what it is, rather than the shareholders who care little about the products on offer beyond their dividends!
Own goal by the publishers, Amazon, and shamefully, by Apple. Corporate suits ruin ideals, and about time Steve Jobs fought for the customers who made Apple what it is, rather than the shareholders who care little about the products on offer beyond their dividends!
I guess it makes sense for publishers to be able to set their own prices rather than them being dictated by Amazon. Not great news for consumers though.
Also they'll need to be careful, as some of this sounds like it's getting a little close to price fixing, which is illegal.
Also they'll need to be careful, as some of this sounds like it's getting a little close to price fixing, which is illegal.
Thank you. At least someone lives in reality. McMillan stated books from $14.99 high end $5.99 low end. With the content book publishers, newspapers, and magazine publishers will have in 5-6 months people will pay $14.99. Gaurentee it. Come on, an extra $5-8 to save a tree? Don't underestimate the appeal of this device's target consumer (yes there is one).
My brother in law was over yesterday. He is in his early 60's was a publisher of a small town paper for decades now retired, and had despised digital media. He is a rabid Baseball (Cleveland) fan.
So, what did I do yesterday when he asked about this "new thing from Apple'? Well, I showed him the MLB app demo. Even in it's rough form after the demo he was racing with thoughts of sitting in his reclyner with the device surfing MLB games. He then wanted to see the NYT app, and the book store. This went on for an hour.
Until yesterday this was a person who hated to even open an email. I think he is going to buy a Wi-Fi 32g.
Final comment: I present the "target consumer."
Books are different than music
Jobs explained why: he thought a variable pricing model for music wouldn't sell as well as pricing all tracks uniformly at $0.99. He felt that way because most CDs sell for near the same price, but you can't say that for books, which have a wider range of pricing.
Even if Jobs was right then (and I think he probably was), it doesn't make him right now. Consumers of eBooks are already accustomed to paying $9.99; they're not going to be too happy when the price jumps to the same price or greater than the hardcover price.
If you've been following Apple's earning reports, then you know that they make a slight profit on the iTunes Store, not that they break-even.
Jobs explained why: he thought a variable pricing model for music wouldn't sell as well as pricing all tracks uniformly at $0.99. He felt that way because most CDs sell for near the same price, but you can't say that for books, which have a wider range of pricing.
Even if Jobs was right then (and I think he probably was), it doesn't make him right now. Consumers of eBooks are already accustomed to paying $9.99; they're not going to be too happy when the price jumps to the same price or greater than the hardcover price.
If you've been following Apple's earning reports, then you know that they make a slight profit on the iTunes Store, not that they break-even.
The iTunes Store DOES make a slight profit
Not to be argumentative, but I got this Peter Oppenheimer quote straight from the link you posted to the transcript from last month's conference call:
"Regarding the App Store and the iTunes stores, we are running those a bit over break even and that hasnt changed."
Not to be argumentative, but I got this Peter Oppenheimer quote straight from the link you posted to the transcript from last month's conference call:
"Regarding the App Store and the iTunes stores, we are running those a bit over break even and that hasnt changed."
Monopolies in the United States aren't bad, they are the pinnacle of success for any company. It's only a problem if you illegally use your monopoly power (i.e. Microsoft). Otherwise monopolies are fine.
While everybody's concern over the pricing of ebooks at up to 15 dollars may very well be valid, I've bought very few books in my lifetime that were cheaper than that.
The vast majority of the books that I buy are 20 dollar paperbacks and 30-40 dollar hardcovers. Given the choice between those prices and a 15 dollar ebook, the ebook starts to look a lot more appealing to me.
Of course, it still remains to be seen whether I would go for reading ebooks. I tend to be mildly old-fashioned and hate reading ebooks on my laptop or iphone. But that, rather than the price structure will be my stumbling block when it comes to ebooks. Outside of the world of the heavily discounted NYT Bestsellers list and the like, the prices seem more than fair to me.
caveat: I wouldn't be entirely surprised if the Canadian book market was considerably more expensive than the American.
Furthermore, if I'm buying an ebook it will be primarily because I want an ebook. A lower price need and ought not be part of my reasoning.
The vast majority of the books that I buy are 20 dollar paperbacks and 30-40 dollar hardcovers. Given the choice between those prices and a 15 dollar ebook, the ebook starts to look a lot more appealing to me.
Of course, it still remains to be seen whether I would go for reading ebooks. I tend to be mildly old-fashioned and hate reading ebooks on my laptop or iphone. But that, rather than the price structure will be my stumbling block when it comes to ebooks. Outside of the world of the heavily discounted NYT Bestsellers list and the like, the prices seem more than fair to me.
caveat: I wouldn't be entirely surprised if the Canadian book market was considerably more expensive than the American.
Furthermore, if I'm buying an ebook it will be primarily because I want an ebook. A lower price need and ought not be part of my reasoning.
Apple said three things in that call: iTunes set a record that quarter, for competitive reasons they don't disclose details about the iTunes store, and that the iTunes store runs "a bit over break even". You can interpret "a bit over break even" anyway you like, but turning a profit of about $250 million per quarter probably qualifies as "a bit over break even" to Apple.
"A bit over break even" != "not making any profit".
Like I said, they make the vast majority of revenue from hardware, but the idea they make no money on the iTunes store is untrue.
It's in colour, can play videos within the book, and you can read it in the dark.
Looks like a better reading experience to me.
I think what's bothering a lot of people is that even though there are no physical production costs and the first sale doctrine doesn't apply (e.g. you can't resell it on eBay, Amazon Marketplace et al), the prices remain very close to the hard copies which give you those extra rights and a tangible item. It comes across as a bit of a ripoff.
Still, it's similar with music I suppose. If it's the same price as the iTunes album then it's better to own the CD, so that you have something tangible to enjoy and eventually resell if you want to (deleting any iTunes rip of it in the process of course). Yet the iTunes store does great still, so I'm sure iBooks will. I guess we're pretty much paying for convenience and more people are willing to do that than those who aren't.
Edit: I may be wrong on the First Sale doctrine, see below.
The publishers have been hit hard the past few years with the Wallmart attitude of constantly pushing prices down for a better value even when inflation is going up. It has been a while since I bought a hard cover new release, but as I recall it cost me closer to $30 than $16. If the price has come down that much then it has come at a cost, and has helped to push printing to China and Mexico and the electronic production to India. $10-16 for a book sounds pretty good to me if it will help to save jobs here in the US, and if you prefer physical media for other reasons you can still buy it for now. As long as there is a market for it the publishers will produce it.
Yeh you go ahead and read a book in the dark on an LCD screen, tell me how your eyes feel after an hour. Next, take your iPad outside for a read in the sun. There is a reason for the development of eInk.
It's more than troubling, it's illegal
There's no secondary market for music, movies, books, or apps purchased from the iTunes Store. Why? If I paid for them, I should be able to sell them if I don't want them any longer, just as if I had an actual CD, DVD, or book.
What happens when textbooks hit the iBook Store? Does Apple really think that students are going to sit back, get charged $50 or $75 per textbook, and not sell them to some other student when they're done with the course?
If Apple wants to put DRM on movies, I don't like it, but that's their right. But when their DRM affects my right of first purchase, they've gone too far.
Mark my words: someone will file a class action suit against Apple and Amazon to allow purchased digital content to be resold. I'm really surprised that it hasn't happened already with the success of digital music and applications.
There's no secondary market for music, movies, books, or apps purchased from the iTunes Store. Why? If I paid for them, I should be able to sell them if I don't want them any longer, just as if I had an actual CD, DVD, or book.
What happens when textbooks hit the iBook Store? Does Apple really think that students are going to sit back, get charged $50 or $75 per textbook, and not sell them to some other student when they're done with the course?
If Apple wants to put DRM on movies, I don't like it, but that's their right. But when their DRM affects my right of first purchase, they've gone too far.
Mark my words: someone will file a class action suit against Apple and Amazon to allow purchased digital content to be resold. I'm really surprised that it hasn't happened already with the success of digital music and applications.
Amazons e-books for the Kindle are not in the standard ePub format. They use their own AZW-format (with DRM). The Kindle does not support ePub.
I buy quite a few books (admittedly mostly used/second hand) but most sellers discount new books 20-40%. While it may say $27 on the cover, people are not accustomed to paying that because of the deep discounts at BN/Walmart/Borders/Costco/Amazon etc.
Music took off at 9.99 because it was priced 30-50% less than the price at most stores (12-14.99 on sale, 18.99 regular price) and music is typically enjoyed more than once. Most books are bought, consumed once and given away, sold or tucked away on a shelf.
$15 bucks (which is at most 5-10% off a store sale price) is a total deal breaker for me...except in cases where I can annotate the digital copy (research).
Music took off at 9.99 because it was priced 30-50% less than the price at most stores (12-14.99 on sale, 18.99 regular price) and music is typically enjoyed more than once. Most books are bought, consumed once and given away, sold or tucked away on a shelf.
$15 bucks (which is at most 5-10% off a store sale price) is a total deal breaker for me...except in cases where I can annotate the digital copy (research).
But the first sale doctrine DOES apply
There's a case on point: Timothy S. Vernor v. Autodesk Inc., in which a reseller was sued for reselling software. The judge ruled against Autodesk. We are allowed under copyright law to resell digital assets.
There's a case on point: Timothy S. Vernor v. Autodesk Inc., in which a reseller was sued for reselling software. The judge ruled against Autodesk. We are allowed under copyright law to resell digital assets.
These are strong points of course.
While it's true that there are no physical production costs, there are still some costs associated with physical delivery. Surely they are less than the energy cost of transporting and storing thousands of books, but they still do exist.
And I can fully understand the desire to maintain the first sale doctrine. It's not an issue to me, but I know that there are people who consider it very important, both from a practical and an ideological standpoint.
My confusion just stems from the fact that in my experience, buying the sorts of books I read in the Canadian market, it seems that the ebook version will be significantly cheaper to make up for its shortcomings. This seems to be the case to me except in the cases of heavily discounted works, which rarely interest me. An even better looking situation is the two year old, rather obscure book. If I drive to every book store in the city I might find one hardcover copy at full price. Or I might find a copy in the ibook store at 5 bucks.
Ultimately, in my opinion an ebook is a different sort of product than a physical book. It comes with its own set of advantages and disadvantages. I think that if you're buying an ebook, you're buying it because you want an ebook. It doesn't necessarily need to be considered a 'lesser form of book lacking in tangibility.'
Of course it's highly unlikely that I'd be buying an ebook anyway. But that has nothing to do with pricing.
Edit: For example, if I were to decide that I really enjoyed reading books with the ipad, I could easily see myself paying the same or higher price for digital versions of the pulpy fantasy/sci-fi stuff I like to read. My ability to save my precious shelf space for classics, rare volumes, stuff for school, favourite childhood books, and things like that would be worth a premium to me. As it is, my small apartment is overflowing with books and that situation is unlikely to change any time soon.
As a side note, has the entire world forgotten that up until a few short years ago Apple sold a personal computer called the ibook? I can't be the only one who thinks of a shiny white room filled with shiny white computers when I say that word....