Apple Pushing to Control Ebook Prices, Says Report

 
 
By Nicholas Kolakowski  |  Posted 2010-02-18
 
 
 

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.


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