It appears that all of the speculation about the $9.99 e-book somehow surviving can be put to rest now as a third publisher has decided to have a little chat with Amazon over its pricing for the Kindle.
First it was Macmillan that told Amazon the pricing was going to have to come to an end. Then Rupert Murdoch told investors in an earning call that his HarperCollins division was also going to say good-bye to the $9.99 e-book. Now you can add Hachette as coming out as a fan of the agency pricing model.
The agency pricing model is a system where by publishers set the prices their books are to be sold at, and the retailer collects 30 percent of the price. It is similar to what Apple has done with iPhone and iPod Touch developers, and now have also announced it will do with the new iBook store for the forthcoming iPad. In other words, Steve Jobs single handily brought about the death of the $9.99 e-book with a single keynote speech.
Publishers had not been quiet about their dislike of Amazon’s desire to keep the e-books in the $9.99 price range, but in several cases it was the retailer taking a loss on some books to keep customers coming back. The publishers were wholesaling the books to Amazon for as much as $14.00, but the giant e-tailer kept on selling them at $9.99 to appease customers and spur more consumers to adopt its Kindle device.
At the iPad announcement, Steve Jobs said that the iBook store would allow publishers to set their own prices as they saw fit, with the company taking only a percentage of the sale. It wasn’t too surprising that Apple was able to sign on so many big publishers to an unproven device with agreements like that in place.
It was, however, the beginning of the end for Amazon as by the very next day representatives of Macmillan were in Seattle to discuss the pricing of the books with them. Although Amazon put up a fight and pulled the publisher’s books from its stores, Macmillan fought back by running ads for new books saying how they would be available everywhere except for Amazon. The company relented, and Macmillan is now back in the main Amazon site, but not yet in the Kindle store as of this writing.
The reason that publishers are so upset with the pricing, even though it was Amazon’s loss of revenue and not their’s, was summed up by Rupert Murdoch. The CEO of News Corp. told Reuters, “I think it really devalues books and it hurts all the retailers of the hard cover books.” Be that as it may, the NPD Group released the results of a research study that showed that 93 percent of e-reader owners really liked their devices, but there was no word on how tied that opinion was to the price they paid for books.
Publishers constantly complain about how “new media” is killing “old media”, but at the first chance they get to raise prices by a significant amount, they jump all over it. The New York Times ran an article a few weeks ago about how publishers who gave away the first books in a series saw sales of subsequent e-books jump. While we aren’t saying that publishers should just give books away, the lower the cost is, the less resistance there will be by consumers to try a book series. Raising the price from $9.99 to $14.99 for each book in say a four book series like the insanely popular Twilight saga, and you may not find yourself selling quite as many copies.
There is also the argument about how much less an e-book costs the publishers in printing, raw materials, labor and transportation expenses, not to mention they only need to produce one copy of the book, and you have to wonder why they all feel the need to raise the prices. Apparently volume sales are a lost concept on publishers.
No matter what arguments you present, it appears that the $9.99 e-book will be but a footnote in publishing history, the question now is if the prices hikes will also relegate e-readers themselves to the same fate.
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