Written by Literature, Technology

EBook Readers And In-Fighting

What are we to make over the weekend’s bit of fun over at Amazon.com?
In brief, Amazon likes to charge a single price for its ebooks on the Kindle – $9.99. Macmillan, one of the biggest publishers in the US and the world, fundamentally disagrees with that philosophy.
While it’s a clear and simple proposition for Amazon’s customers, it’s Amazon who is largely calling the shots. Yet the products they’re selling belong to the publishers and authors.
A few things to note about this largely American scrap. US books are generally higher priced than they are in the UK. That said, if you’ve bought a Kindle in the UK, you’re buying from the US Amazon store, so this does affect you.
For example, Stephen King’s most recent novel, has a US list price of $35 and currently retails on Amazon for $20.47 (£12.82 at current conversion rates, compared with a current UK price of £11.99). But the Kindle price is $14.09.
King is published by Scribner in US, a Macmillan subsidiary. And Macmillan “won” this brief sortie.
There’s a lot of discussion about what a fair price is to charge for an ebook. Many would point out that there are little to no distribution and transportation costs. Shops aren’t required to keep stock, and inventory can be essentially infinite. In the above example, the saving is significant, but not massive. King’s novel runs to nearly 900 pages, so surely the production costs must be immense.
But in reality, most physical media that we buy is actually pretty cheap to produce. Aside from sumptuously put together boxsets, the average CD, DVD or book costs mere pence to manufacture – assuming that you’ve got some kind of significant production run. That includes hardback books.
Whereas once albums were largely priced at a level that was largely kept the same year after year, we’ve been used for some time now, to buying catalogue material at generally knock down prices. Wander into your local HMV or scour the pages of Amazon, and any album more than a year or so old will be discounted from its original price quite heavily. Even the biggest selling artists’ most recent works will eventually be just a few pounds in a sale.
The same is true of DVDs which might initially retail for around £14, before coming down in price a few months later, and then reaching a lower price again a few months after that. By the time the film has been screened on terrestrial TV it’ll be under a fiver on DVD.
In the book world, variable pricing has been around since Penguin started printing paperbacks. Broadly, we’ve reached a stage where a hardback is published at a premium price, and roughly a year later, the paperback comes out. Mixed into this ecology are trade paperbacks sometimes sitting between the two, club editions, and the ending of the Net Book Agreement meaning that a popular hardback such as Dan Brown’s recent novel, can be discounted massively depending on what retailers – especially online ones like Amazon and supermarkets – are prepared to do.
The belief is that this scrap has been prompted by Apple’s ebook offering – last week’s iPad launch. It’s notable that Apple is letting publishers set their own prices as happens in the App store currently, with Apple taking 30% off the top.
The curious thing is that Amazon and Apple are currently in a reversal of their previous positions with music. In setting up the iTunes store, Apple managed to persuade all the record labels to charge a single price – 79c initially – for a single track.
Labels weren’t happy with this but played along with it, and have reaped the rewards to an extent. Amazon, in launching its own mp3 store, allowed labels to adopt variable pricing – perhaps putting a premium on newer releases and discounting catalogue.
The record labels have managed to put pressure on Apple to change their postition and today, a single track can be charged at a range of different prices dictated by the record label.
It’s almost as though it’s in the best interests of whoever’s first to market to have fixed pricing – presenting a strong proposition for consumers – only for second players to come in and demand alternatives.
But variable pricing has got to be the correct way? If Macmillan set their prices too high, then consumers will simply not purchase their offerings. And it’s surely not in a publisher’s interests to agree to a pricing route that undercuts their main source of income (sales of physical product vastly outweighs sales of ebooks and will do for quite some time).
Against the backdrop of all of this is the “Open” or “Closed” system debate. The iPad is a closed developmental environment – unless Apple approves your application, you can’t run it on an iPad. More pertinent to ebooks is the fact that you’ll only be able to buy iBooks through Apple’s own iBookstore. The same is true for the Kindle which only lets you directly purchase from Amazon’s own store.
Both the iPad and Kindle will accept ePub files, which can be bought from third parties, but it’s clear that like the video games world, closed ecosystems are at the forefront. And that’s probably not a good thing.
And having been mulling over this whole topic for the last few days, Bill Thompson neatly wraps it up over at the BBC.