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Steve Jobs has made a deal with Rupert Murdoch, which may end the days of cheap e-books from Amazon.  (Source: Reuters)
Enjoy $9.99 bestsellers while you can, following the Macmillan concession, everyone wants more out of Amazon

As we predicted, the recent concession by Amazon.com in terms of electronic book pricing to “big six” publisher Macmillan opened the floodgates leading other top publishers to demand more.  

Amazon.com's electronics books have many downsides -- the potential to lose your book eventually due to compatibility, ownership concerns, and dependency on battery life of the device being used.  They also have significant upsides -- a lot of classic works are available for free, you can transport 1,000s of books in a single bag and it's much easier to locate your books.  However, the biggest advantage of all was pricing.  Whereas hardcover best sellers typically retail for $15 to $25 on Amazon.com, best-sellers have been available in e-book form for the bargain rate of $9.99.

Macmillan recently won in a battle with Amazon to raise those prices.  Amazon has agreed to raise the price of Macmillan 
New York Times bestsellers to $12.99, or in most cases, $14.99.  

Now Rupert Murdoch, the media mogul who owns HarperCollins books -- another big six publisher -- is demanding a price bump of his own.  In a conference call Tuesday, he complained, "We don't like the Amazon model of selling everything at $9.99.  They pay us the wholesale price of $14 or whatever we charge.  But I think it really devalues books and it hurts all the retailers of the hard cover books."

Murdoch commented that he was looking to renegotiate News Corp's deal with Amazon and says that Amazon has responded that it is "ready to sit down with us again."

HarperCollins Books publishes such bestselling authors as Michael Crichton and Janet Evanovich.

Besides the Macmillan concession, another factor driving up prices is new competition from Apple.  Apple recently debuted its iPad tablet computer.  While its name has been the bunt of many jokes, curiosity about the new device is high.  Apple looks to use the device to become a major competitor to Amazon and second-place Sony in the electronic books arena.  

Apple already has a deal in place with Murdoch.  He comments, "Apple, in its agreement with us, which is not been disclosed in detail, does allow for a variety of slightly higher prices."

It appears that the final blows are being struck that will ultimately spell the end of cheap e-books.  Will that hurt the format's popularity?  Or will customers stomach the changes?  That remains to be seen in coming months.



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RE: nice
By SoCalBoomer on 2/3/2010 3:02:46 PM , Rating: 2
And strangely, he was the one KEEPING DRM on iTunes until well after Amazon started selling DRM-free MP3s from all the major labels. He only got all evangelical about no-DRM after Amazon showed it could do so successfully. . .and he needed to compete.

NBC didn't come back with their tails between their legs. . .they did just fine on their own. They got what they wanted from Apple. Turns out Hulu is doing just fine without iTunes. . .

And as for hardback books - I got my last hardbacks through Amazon (sucked into a loooong series. . .sigh)

And if SteveJ wants content CHEAP, then why is he working with MaMillan to INCREASE prices?

Eeh - know thy history and know thy facts.


RE: nice
By mellomonk on 2/4/2010 10:53:45 AM , Rating: 2
Okay, I'll bite. One, Apple has no choice on the DRM on the movies on iTunes. It is in every contract. And the MPAA is extremely loath to that changing anytime soon. Music went DRM free after the experimental releases of one particular label proved successful on iTunes. Not Amazon.

Two, Steve's open letter to the record industry on DRM was released before Amazon was even in the MP3 business. Amazon was allowed to be DRM free from the beginning. It appeared at the time to be an attempt to break iTunes strangle-hold on digital music. Didn't work.

Three,NBC digital sales went to essentially zero in the short time they were off iTunes. They had some seriously over-inflated ideas of the value of their content and did not get what they wanted apon returning to iTunes save for a bit of variable pricing. There were no other major outlet for their content save for the then new Hulu. Which of course was streaming only. Hulu is awesome for viewers, but a financial disaster. Terrible add rates. As of this writing it is in the process of being revamped into a pay and/or subscription site. They look to have in converted within the year.

Four, Everybody in publishing knows that Macmillan is playing hardball with both Apple and Amazon. Do you think for a second that Steve wants to go up against the Kindle at a $5.00 disadvantage for best sellers? Funny, this past weekend Amazon got in a pissing contest with the same publisher and now is no longer in the $9.99 pricing model. Interesting. Steve had no publishing deals even days before the announcement of the iPad. He made the best deal he could at the time to be sure he had book content from the start 60 days from now.

I have no idea where you developed your views on the subject. Hopefully you read more then Daily Tech. My opinions and views come from over twenty years experience in these very content industries. Now dealing exclusively with digital content.


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