Apple is negotiating with major publishers for the ability to control ebook prices in the event that a particular text becomes a bestseller or starts selling at a discount in its hardcover version, according to unnamed sources quoted in a Feb. 17 article in the New York Times. As the release date for Apple's iPad tablet PC approaches, Apple has been engaged in negotiations with a variety of content providers, including book publishers and television studios, over porting their content onto the device. Meanwhile, publishers have used the looming presence of the iPad as partial justification for their renegotiating prices with e-reader manufacturers.
As Apple gears up for the release of its iPad tablet PC within the next two
months, the company is apparently negotiating with major publishers for the
ability to sell ebooks at a reduced price depending on market circumstances.
In a Feb. 17 article, The New York
Times quoted three unnamed sources supposedly close to the negotiations
who suggested that Apple wants to the ability to lower the cost of ebooks
either selling for a reduced price in hardcover or that hit the bestseller
lists. That flexibility would represent a new twist in the rapidly evolving ebook
market, which has seen prices remain relatively static.
Under the terms of that model, ebooks that would ordinarily sell for $12.99
or $14.99 on Apple's online storefront could be downloaded instead for $9.99.
The article stated that the publishers involved in the Apple negotiations
included Simon & Schuster, the Penguin Group, Macmillan, HarperCollins
Publishers and the Hachette Book Group.
Apple's negotiations, coupled with the upcoming release of the iPad, have
begun to affect the overall e-reader industry in drastic ways. At the end of
January, Amazon conflicted with Macmillan when the latter wanted to raise the
price of popular titles such as "Wolf Hall" from $9.99 to between
$12.99 and $14.99, leading the online retailer to temporarily yank the
publisher's titles from its digital shelves. Nonetheless, other publishers soon
followed in attempting to gain a higher price point for their offerings.
Some of those publishers cited the introduction of new devices into the
marketplace as justification for the renegotiations, while others have argued
that the rise of e-readers is a disruptive influence on the larger publishing
industry, one that threatens to sink their financial model unless adjustments
are made early in the evolution of the format.
"It's important to note we are not looking to the agency model as a way
to make more money on e-books," David
Young, chairman and CEO of Hachette Book Group, wrote in a memo posted on the
media blog Mediabistro on Feb. 5.
"We're willing to accept lower
return for e-book sales as we control the value of our product-books, and content
in general. We're taking a long view on e-book pricing, and this new model
helps protect the long-term viability of the book marketplace."
Reports indicate that Apple is offering 70 percent of ebooks' consumer price
to publishers as their revenue share, in turn forcing Amazon to also negotiate
on that front. Amazon has indicated that it will acquiesce to higher price
points on publishers' books.
In addition to books, Apple is apparently negotiating with studios to port
television shows onto the iTunes store for a dollar per episode. According
to a Feb. 10 story in the Financial Times
, those negotiations have proven
successful with an unnamed number of companies. Normally, television shows
bought through iTunes cost $2 for SD and $3 for high definition.
If the iPad proves to be a popular device, it could accelerate the
popularization of tablet PCs, which have long been viewed as an emblem of niche
computing. The hope among content providers, obviously, is that a bestselling
iPad will translate into increased sales for their own products, as well.