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Apple's iBookstore taking advantage of Amazon-Hatchette feud

updated 06:36 pm EDT, Tue June 17, 2014

Pre-orders now discounted as titles disappear from Amazon listings

Exactly as predicted by critics, Amazon has begun flexing its muscle as the dominant e-book seller, and is now trying to renegotiate better deals with publishers to help its sagging bottom line. It is currently engaged in a very public fight with Hatchette, and has removed a number of best-sellers from its store as well as delayed or refused orders for other (physical) books. As with Walmart and some other outlets, Apple's iBookstore is now offering discounted pre-orders on the "missing from Amazon" books.



While Apple doesn't sell physical books as Amazon does, it can offer readers eager to peruse J.K. Rowling's latest novel or the new works from James Patterson and Douglas Preston the ability to place a pre-order for the e-book versions immediately, discounted now down to just $10. All 30 of the titles in the new iBookstore section are currently unavailable from Amazon.

Amazon has drawn considerable criticism for its recent moves, which are seen as "strong-arming" publishers of both books and DVDs (some Warner Brothers movie releases are no longer available or even listed for the same reason as the Hatchette books are missing). German publisher Bonnier is also feeling pressure from Amazon, as the retailer attempts to leverage its popularity as a seller in order to force content producers to give it cheaper wholesale prices the on goods -- ironically taking a page from Walmart's playbook, which has likewise earned that company deep resentment among some consumers.

Amazon says the removal of key titles and other harmful actions are a standard part of its tactics with vendors, saying "negotiating for acceptable terms is an essential business practice that is critical to keeping service and value high for customers in the medium and long term," though fans of the authors -- and the authors themselves -- are furious. "Bookstores, libraries, authors, and books themselves are caught in the crossfire of an economic war," said Patterson in a Facebook post. "If this is the new American way, then maybe it has to be changed -- by law, if necessary -- immediately, if not sooner."

Nina Laden, a children's book author, reprinted on her blog a copy of a letter she sent to Amazon, saying that "I have supported Amazon for as long as Amazon has existed ... I am frankly shocked and angry at what you are doing to my new book "Once Upon A Memory" which has just won the Crystal Kite Award and is published by Little Brown. You are punishing me -- the author -- because you want a deeper discount from Hachette -- this is deplorable. Your actions to raise the prices of our books, place banners touting books that "are similar but lower in price" and saying that our books will ship in 3-5 weeks when they are in stock is not only a disgusting negotiation practice, but it has made me tell my readers to shop elsewhere -- and they are and will ... I'm sorry that I've supported you in the past."

Steve Jobs, in suggesting to publishers that Apple would use the already-existing "agency model" that allows publishers to set prices, predicted that Amazon would eventually have to either raise its loss-leader prices on books and e-books or would attempt to bully publishers into selling wholesale at a lower price. In an email to HarperCollins to convince the publisher to join Apple's then-unreleased iBookstore, Jobs pointed out that publishers could set their own prices, as opposed to the way Amazon offered e-books below cost to build supremacy in book selling. HarperCollins could "keep going with Amazon at $9.99. You will make a bit more money in the short term, but in the medium term Amazon will tell you they will be paying you 70 percent of $9.99. They have shareholders too."

Apple and other publishers have said that Apple (and Barnes & Noble's) entry into the e-book market prevented Amazon from engaging in some of its more egregious "negotiating" practices, and that competition did force Amazon to agree to accept "agency model" pricing from publishers. Following the Department of Justice's lawsuit against Apple, however, Amazon appears to be feeling emboldened that it can return to a monopoly status, and use that power to extract better terms from publishers and content producers.




by MacNN Staff

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Comments

  1. climacs

    Dedicated MacNNer

    Joined: 09-06-01

    I like Amazon but I am increasingly seeing them as just another WalMart.

  1. Inkling

    Mac Enthusiast

    Joined: 07-25-06

    Good to see that they're getting more aggressive and taking on Amazon as a competitor. I'd love to see more like this.

  1. Charles Martin

    MacNN Editor

    Joined: 08-04-01

    climacs: I think that's a fair take on the situation. Certainly that's what the investors are hoping will happen ...

  1. chimaera

    Forum Regular

    Joined: 04-08-07

    This sounds bad, and I'm not a fan of Wal-mart. But ... ebooks *are* badly overpriced. There are no publication or distribution costs for ebooks, but publishers have kept prices equal or higher than a typical paperback. With digital music, the publishers eventually had to accept the .99 / .79 model, because that was what a digital song was worth.

    I'd like to see Amazon force ebook prices down to $5 or less, around half the cost of a physical book. Then somehow not become the only player in town.

  1. Charles Martin

    MacNN Editor

    Joined: 08-04-01

    chimaera: I don't think you've bought a new hardback or paperback book in a while.

    Putting aside -- for the moment -- that the value of a book should be determined by the quality of the content rather than have a "one price for any book" concept, a typical hardback new release sells for around $35 retail (bestsellers often discounted to $20-ish). A typical soft back book (at least the ones I have handy to check) sell for around $20 when new. The small "pocket paperbacks" might sell for $11-15, but are printed and distributed in low numbers these days.

    Looking at the prices of e-books -- which again I think should vary somewhat based on quality -- the typical price appears to me to be around $10-15, for exactly the same content as can be bought for as much as $35.

    Given that the author, editor, publisher and distributor all need to make a living -- and you appear to feel that the iBookstore costs less to run than a bookstore, which would be a very flawed assumption -- I'd have said that $10-15 "feels about right" to me as a fair price for a high-quality, new e-book from an author I'm likely to enjoy. Good books have been known to shift societies and topple governments, something I don't think any $20 CD (or $10-15 digital album) can claim ...

    While it can certainly be argued that some books aren't worth but say $5 -- some even less than that -- it occurs to me that $10-15 appears to be about what people are willing to pay these days for a good quality unit of entertainment, be it an album, a movie or an e-book. Of these, I'd say the e-book is easily the best value of the three, all qualities being equal.

    A common myth is that e-books don't have printing costs. If a book only exists as an e-book exclusively, that's true -- but the best-selling and sought-after authors (well, the publishers really) certainly do have the traditional costs associated with printing and distributing physical books, as well as the costs of electronic distribution (a fair chunk of the $10-15 you pay Apple or Amazon for an e-book goes to them, paying for the enormous convenience of the distribution infrastructure they have built, which simply put ain't cheap). This is exactly akin to the wholesale/retail models books have always had -- the only thing that's really been "cut out" in the e-book revolution is physical distribution -- but this reduction has spurred so many new books onto the market that much of the "money saved" by not printing/physically distributing them is clawed back by the need for additional advertising to stand out from the pack. Net savings is probably near zero -- I have not noticed any of even the biggest publishers suddenly making huge profits compared to the profits they made under the old model ...

  1. chimaera

    Forum Regular

    Joined: 04-08-07

    I actually haven't bought a new book recently, so I just checked Amazon. Sci-fi and fantasy section, paperback picks, skimmed the first two pages.

    Prices range $7-$15 per book, with a majority falling in the $8-$12 range. That sounds a lot like the generic ebook price range. Amazon's kindle prices (with DRM) were erratic. Some much less, but a large number (most?) were only slightly lower than their paper price.

    With a physical book, you have author, publisher, distribution expense, bookstore. With an ebook, you have author, bookstore. The author must be paid, but the expense chain has been cut in half. So yes, I do believe an ebook store must cost less to run than physical publishing + physical distribution + maintaining a physical store front. About half as much, since there are half the stages.

  1. dronkert

    Fresh-Faced Recruit

    Joined: 06-07-07

    Bit of a hatchet job on spelling Hachette ;)

  1. Flying Meat

    Dedicated MacNNer

    Joined: 01-25-07

    chimaera, your model is flawed nearly every way you look at it. Publishing and distribution is still an issue, even with ebooks. I'd guess it would be rare that an author knows the legal side of contracting with various stores, and I doubt that any of the stores are going to want to contract with every individual author.
    Authors may or may not understand the technology enough to provide a finished visually appealing product to the stores. That is part of what publishers do.

    Comparing Amazon ebook prices to Amazon traditional book products is not going to work either, as Amazon already drives down pricing by selling at below cost, and subsidizing that price from other revenue streams. That is a point this particular article makes. Amazon is now attempting to put even more pressure on the publishers to sell their clients' products at even lower rates, so Amazon can recoup/stop loosing money on ebooks.

  1. Charles Martin

    MacNN Editor

    Joined: 08-04-01

    In addition to agreeing with Flying Meat I'll just add that saints preserve us from the day where authors are allowed to print their stuff directly as e-books with no proofreading, no editing, and no analysis by an unbiased editor who has the guts to tell the author what needs to be cut, changed or improved! The day the "chain" of ebook creation is just author-to-bookstore is the day people stop reading books because they're all awful. Even masterpieces need revising, polishing, and most of all EDITING.

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