If anyone was wondering why Amazon is charging more for e-books than paperbacks...

[oilyfan]

I know it is a bit of old news but I was wondering so I looked into it:

It is a bit of a long article but very interesting in that it details the behind the scenes machinations that went into Apple entering the e-book market and how the publishers loved the fact that Apple took on Amazon.

Yesterday, the US Department of Justice sued Apple and six publishers, alleging that they had conspired to fix prices. It all centres around the switch from a wholesale model of selling e-books from the publishers to retailers (such as Amazon) to using the agency model of selling books that Apple and the publishers agreed to adopt in early 2010. Some of the publishers have already settled with the DOJ, but other publishers and Apple have vowed to fight the allegations.

To persuade one of the publishers to stay with the others and sign, Jobs sent an email to an executive of the parent company, saying they had two choices (i) accept the status quo (“Keep going with Amazon at $9.99″) or (ii) continue with a losing policy of delaying the release of electronic versions of new titles (“Hold back your books from Amazon”). “According to Jobs, the Apple deal offered the publishers a superior alternative path to the higher retail e-book prices they sought: “Throw in with Apple and see if we can all make a go of this to create a real mainstream e-books market at $12.99 and $14.99.”"

Within four months of signing the agreement, “Macmillan presented Amazon a choice: adopt the agency mode or lose the ability to sell e-book versions of new hardcover titles for the first seven months of their release.” Amazon rejected it and briefly stopped selling all Macmillan books. But when it realised that all five publishers would sooner or later give them the same ultimatum, Amazon backed down.

http://www.macstories.net/stories/un...se-publishers/

[Mazrim]

Amazon has a disclaimer underneath the price of every e-book on the book page saying "This price was set by the publisher".

My kindle is basically only for reading old/cheap books now, since I refuse to spend $15 on a digital book.

[BloodFetish]

What? Apple accused of collusion and price fixing?

I hope they get the book thrown at them!

[mykalberta]

Wow, that is dirty shat. This is the slippery slope when you try to be greedy and control every income stream on a device instead of creating a great device and not worrying about what is put on it.

No only does Apple ensure they wont be undersold by anyone, they also take 30% of every book sale through their own website.

I dont get how the publishers profit from this other than ensure the retail price is higher than 9.99. Apple profited by taking 30% off the top where Amazon purchased the book at the price set by the retailer but sold it at a loss.

[CaramonLS]

Originally Posted by mykalberta

Wow, that is dirty shat. This is the slippery slope when you try to be greedy and control every income stream on a device instead of creating a great device and not worrying about what is put on it.

No only does Apple ensure they wont be undersold by anyone, they also take 30% of every book sale through their own website.

I dont get how the publishers profit from this other than ensure the retail price is higher than 9.99. Apple profited by taking 30% off the top where Amazon purchased the book at the price set by the retailer but sold it at a loss.

The publishers used to select the recommended price and sell books to retailers @ around 50% as per the article. Retailers could sell @ whatever they wanted.

Now they get to set the recommended price as the retail price and get 70% of that whenever a sale is made.

[cDnStealth]

I thought I'd check this out so I looked at the price of a new book I picked up last week at Chapters. Sure enough, the Kindle version is $6.00 more expensive than the paperback on Amazon.com. I've always thought that digital copies of things should cost much less than a physical copy. They don't have to print it, ship it or store it.

[Ashartus]

Originally Posted by cDnStealth

I thought I'd check this out so I looked at the price of a new book I picked up last week at Chapters. Sure enough, the Kindle version is $6.00 more expensive than the paperback on Amazon.com. I've always thought that digital copies of things should cost much less than a physical copy. They don't have to print it, ship it or store it.

From what I've read, the costs associated with the "physical" book (paper, printing, transport, storage) are around $2 or so for a paperback and $3-$4 for a hardcover, so I'd like to see ebooks that much less than the hard copies. A lot of them are priced reasonably, but there are definitely a lot of ebooks that are priced too high IMO. I don't mind paying $9.99 for a book that is out in paperback, but I see some around $15.99 even after the paperback has been released.

I've been following a lot of the developments in the ebook industry, and basically concluded that the "big 6" publishers, Apple and Amazon are all pretty much evil, while authors and readers get the shaft.

[cDnStealth]

Originally Posted by Ashartus

From what I've read, the costs associated with the "physical" book (paper, printing, transport, storage) are around $2 or so for a paperback and $3-$4 for a hardcover, so I'd like to see ebooks that much less than the hard copies. A lot of them are priced reasonably, but there are definitely a lot of ebooks that are priced too high IMO. I don't mind paying $9.99 for a book that is out in paperback, but I see some around $15.99 even after the paperback has been released.

I've been following a lot of the developments in the ebook industry, and basically concluded that the "big 6" publishers, Apple and Amazon are all pretty much evil, while authors and readers get the shaft.

Which makes sense to me. I am probably strange in that I still love having the "physical" book. They have to offer something to get me to switch so charging more than a paper copy isn't going to do that.

[oilyfan]

I believe the publishers wanted to do this because they want to continue selling books through the traditional channels, the bricks and mortal stores such as Barnes and Noble and Chapters. Amazon pricing e-books at $9.99 was undercutting the bricks and mortar stores prices.

[Coys1882]

I wonder how long until ebook piracy becomes an issue. I wonder what % of people are reading legit copies of books on their e-readers.

[Ashartus]

Originally Posted by oilyfan

I believe the publishers wanted to do this because they want to continue selling books through the traditional channels, the bricks and mortal stores such as Barnes and Noble and Chapters. Amazon pricing e-books at $9.99 was undercutting the bricks and mortar stores prices.

Specifically Amazon was selling best-selling new releases at $9.99 or less, even though they were losing money on them, in order to get people to buy Kindles. This was eating into the sales of hardcover bestsellers, which is where the publishers make most of their money. Amazon was also well on the way to getting a near-monopoly on ebooks using a proprietary format that basically would lock readers into Amazon for the long-term (since switching to a different device like a Kobo or Sony in the future would render an existing ebook library purchased from Amazon unreadable without illegally removing DRM and converting the format) and the publishers were scared about one company with a history of very aggressive business practices basically having a monopoly on book sales. Their response was to collude with Apple to set up the current pricing scheme.

[octothorp]

I think the ideal distribution platform for ebooks is something like Steam has for videogames: prices can be set by the publisher with suggestions from the vendor; prices are generally consistant with prices on other channels (except for those crazy sales); there's no push for exclusivity to any vendor or platform; DRM is effective but not painful; loading the same product on multiple devices is relatively straightforward; the model makes sense for big publishers and indie-publishers alike.

The Apple solution isn't perfect, but it's a lot closer to that Steam ideal than Amazon is. But of course, Apple shouldn't be colluding with publishers to fix a set price. I have no problem with the idea that the creator of the content sets a price, and the vendor agrees to sell for that price, taking an agreed-to commission. I think it could set some really exciting precedents that allow for small/indie publishers to adopt an ebook-only model that would allow them to compete more easily with big publishers.

[Fire]

Originally Posted by Coys1882

I wonder how long until ebook piracy becomes an issue. I wonder what % of people are reading legit copies of books on their e-readers.

I'm pretty sure it is a big issue already but this will just make it a lot worse.

[Ashartus]

Originally Posted by octothorp

The Apple solution isn't perfect, but it's a lot closer to that Steam ideal than Amazon is. But of course, Apple shouldn't be colluding with publishers to fix a set price. I have no problem with the idea that the creator of the content sets a price, and the vendor agrees to sell for that price, taking an agreed-to commission. I think it could set some really exciting precedents that allow for small/indie publishers to adopt an ebook-only model that would allow them to compete more easily with big publishers.

The big problem with Apple is that they use proprietary DRM preventing books from the Apple store from being read on any non-Apple device. Amazon has the same problem, though their DRM is pretty easily removed (tools for removing Apple DRM aren't as readily available, mainly because not enough people buy books from Apple to make it worthwhile).

I prefer the model used by Kobo, Sony, Books on Board, Fictionwise, and pretty much every other major seller, who use the same format and same DRM, so books purchased from them can be used on basically any ereader or tablet except a Kindle. Even better is DRM-free books that some publishers are moving to (notably Baen and TOR) where you can buy the book and have it in either the standard EPub format or in Mobi format (readable by Kindles) and put it on whatever device you want.