Amazon Losing Cold War With Publishers

I think there’s been a certain expectation that the emergence of Apple’s iPad would herald the beginnings of a cross-platform e-Reader war in the vein of the great PC vs. Mac battles of the last several decades or, if you’re especially nerdy, similar to the wars waged between competing video game consoles. Instead, the imminent release of the Apple tablet has stimulated a showdown between Amazon and several of the nation’s most influential publishers that is finally coming to a head. What does this e-Reader Cold War mean for your book-buying habits?
It could mean a lot, as it turns out. The major publishers have signed deals with Apple that say, in essence, that they’re allowed to price their eBook offerings however they like on the iBookstore, provided they don’t allow another retailer (read: Amazon) access to that same content for a lower price. Amazon seems to have backed off their insistence on the $9.99 price point, but want to lock publishers into a three-year contract if they’re going to insist on releasing most of their new titles at $12.99 and above. Publishers are reluctant to do that.
Amazon is not without recourse in this situation. In addition to holding over 90 percent of the eBook market share in their grasp, they’re also a major player in the print world, with some estimates pegging their print sales at something like 19% of the market, including new and used book sales. If they’re sufficiently provoked by the publishers, they could push through a repeat of the stand-off strategy they used against the publisher Macmillan, by removing the “Buy” buttons on the print and digital versions of these delinquent publishers. It would be a blow to Amazon’s reputation as a bookseller and their customers’ ability to purchase the books they want, but they seem confident the lost revenue would make any publisher buckle.
I suppose one’s outlook on this situation depends heavily on where you’re standing. For Amazon, raising the prices of eBooks is a blatant attempt to hold back the switch from print to digital versions, a trend that would slow the sales of their Kindle. For publishers, the whole process is frightening and fraught with danger, and the increase in eBook prices is a comforting hedge for when they have to report to stockholders. Apple, meanwhile, is happy to stand on the sidelines and play the good guy, as it automatically raises their standing in this nascent market in which they’ve just entered.
As a frequent consumer of eBooks, my reflex is to stand in Amazon’s corner. The $9.99 price point represents a value you never really see in other areas of the economy these days. For the same price as a movie ticket on a Saturday night, you get hours of entertainment and intellectual stimulation. Buying a book at $12.99 isn’t much worse, true, but it raises the price of a book just out of “impulse buy” territory into something I’m more inclined to budget. I definitely see Amazon’s logic.
Having said that, it seems clear to me that Amazon has little recourse in this situation but to back down. By the end of the year, Apple will have expanded the potential market for eBook buyers by several orders of magnitude, and Google is still lurking out in the shadows somewhere. Amazon’s ability to bully publishers into submission is still there, but it’s going to wane fairly rapidly. They may soon find themselves not only outmatched but with a sullied reputation.
As customers, we can still vote with our wallets. So if you’d rather not pay $14.99 for books, just have some patience and wait until they drop to a price that seems more reasonable. It’s not much, but what else can we do?


That’s a very thoughtful piece – nice to see amidst all the “Kindle Killer” frenzy.
Personally, I suspect that Amazon are much more interested in selling Kindle books than they are in selling Kindle readers. Releasing an App for the iPad (to go along with all the other ones they’ve already put out) doesn’t look like a protectionist measure.
At the moment, and again this is just my opinion, the publishers look like the playground bullies rather than Amazon. In the long term, I cannot imagine that customers will tolerate artificially inflated prices for a digital product which costs a fraction of the production cost of the traditional paper version.
Owners of e-book readers will tend to read a lot of books. They are the target market for both the publishing houses and book retailers. If they do decide to vote with their wallets then they could wield a fair bit of influence.