Let me get this straight. The Amazon Kindle allowed consumers to purchase books for, lets say… $10. And they were selling, and the publishers had to take that price point because it was selling, and very well. Maybe they didn’t make as much, I hear it was a 30/70 split with Amazon taking the 70. Not a bad amount of loot. But, in comes Apple with the iPad and a big bat called the history of iPhone + iTunes and you get an uptick in the price because Apple says they will sell books for upwards of $15? How does that work?
In the history of business, competitors do not follow a competitor in raising the price. But, when it comes to organizations that have a lock on the production and distribution system such as Books… there are six large publishers. Penguin, HaperCollins, Simon and Schuster, Hachette, MacMillan, and McGraw-Hill. Now, three of them according to Gizmodo have dumped Amazon as the de facto delivering agent of eBooks because of Apple suggesting they can sell through iBooks at a price of $15. For those who didn’t see that uptick in price, you are now going to be paying 50% more for each book.
So, HarperCollins leaves, MacMillan exits, and now Hachette. This sounds more like conspiracy than competition. I understand that books are important, perhaps a little less important in physical form than they were back when movable type was first introduced, but come on. How can supplier power be this great that the consumer is left completely impotent other than not purchasing at all. As Gizmodo’s Matt Buchanan put it; “The $9.99 ebook? poof.”
When Amazon folded like a deck-chair, millions of readers around the world let out a groan that could be heard on Pluto. Imagine, the front end provider of all things electronic book related, the single source for a real electronic bookstore for the next 30-90 days or at all for some people who refused to make the switch to Apple. Folded. Like. A. Deck. Chair. Perhaps on the Titanic, but still. The iPad will not pull that many away from the Amazon storefront, but Amazon could have used some capital to continue to innovate to remain competitive. Jobs obviously saw a hole in the market and jumped in. Unless Amazon moves quick, they will lose more and more market share. Now, Sony is also thinking about moving into the market. Knowing Sony though, you’ll have to purchase each book on a triangular shaped proprietary chip that can only be read in Kanji. Well, Erock Schonfeld of TechCrunch writes “Why Amazon Cannot Afford to Lose the eBook Wars to Apple” which talks about the issues, but here is the big problem. While bending over backwards to appease the publishers, the consumer is going to bend over backwards to obtain books. And if no one has noticed, books are expensive. It is why I wrote about supporting your local Library and not horde your books in home book shelves. Frankly, it is outrageous that textbooks devalue from consumer to consumer only on the buyback side. I once had to pay more for a book than the person before me. I know this because I have the receipt for the book from the previous owner who left it in the book as a sort of “HA! Look how we are getting ripped off!” I paid $10 more, and when I tried to return the book at the end of the semester, I was only going to get 30% of the purchase price. Thank you B&N. In a nutshell, Amazon has already lost to the publisher, and the consumer has been shown to have absolutely no power in the short term, they certainly can’t rely on Apple to defend consumers since they opened up this “competition” and Amazon basically handed publishers the collective wallet of Kindle owners.
Again, I’ve never really seen competition increase prices for an item like I am witnessing here with ebooks, an infinite resource mind you. We aren’t talking about land, or oil, we’re talking about bits of data no more real than the Tooth Fairy. Well, unless it is The Rock.