Tag Archives: iBookstore

Amazon is discounting ebooks, whenever it’s allowed to, unlike Apple

Some really silly journalism covering the ebook marketplace today. It starts with this really bad, no good article in the New York Times by David Streitfeld. The headline gets off to a completely wrong start — “Little Sign of predicted E-Book Price War” — and it goes down hill from there, as Streitfeld asserts there was going to be a “ferocious price war over ebooks.” Who was ever saying that? Of course, it was the made-up nightmare scenario that publishers were screaming about after they got sued for illegally conspiring to raise ebook prices. Streitfeld never explains that and actively seeks to mislead the reader, writing those expectations were “fueled by Amazon.” It’s a bad set-up that only gets worse.

Next, he asserts that prices have “selectively fallen but not as broadly or as drastically as anticipated.” No data, not a shred, is offered to back up this bold assertion, not even the usual misleading average price of all best-sellers publishers have sometimes cited in the past (an average which included all the sales of 99 cent independently published ebooks). Even a brief look at Amazon’s prices compared with the high price leader, Apple, makes it pretty obvious that a ton of discounting is occurring. It is limited because two of the big six publishers are still banning discounts and another, Penguin, just settled and is not yet allowing discounts, either. But on ebooks where Amazon can discount, it is doing so to the tune of 15% or more.

Compare, for example, ebook prices of the New York Times fiction best-seller list on Amazon and Apple. On four of the top 10, both carry the ebooks at $12.99. And, no surprise, in all four cases the publishers are still banning all discounting. Another older book is priced at $9.99 on both and, again, discounting is banned. On the other five, Amazon is discounting every single one, with the average price $10.93 versus $12.19 for Apple. It’s the same if you go deeper down the list or look at non-fiction.

The biggest laugh-out-loud line comes next:

“The $10 floor that publishers fought so hard to maintain for popular new novels is largely intact.”

See the old switcheroo there? Publishers hated the $10 price — the whole point of their illegal, price fixing scheme was to kill the $10 price. They weren’t trying to maintain a $10 floor — they were trying to push the “floor” up to at least $13 to $15. And that effort has failed. Amazon itself wasn’t trying to get below $10 for best sellers. In fact, even before the illegal price fixing, Amazon often priced best sellers between $11 and $12, just like it’s doing now. Jeff Bezos was going around back in 2009 and saying he intended to make a profit on ebooks as a stand alone business. And that’s right back where Amazon is pricing. Not to mention that we still don’t have a true free market for ebooks as even publishers forced to allow some price cutting retain the ability to limit the amount of overall discounting. Also left out of this narrative is the massive growth of independently published ebooks at prices well below $10. The price fixing conspiracy certainly fed the growth of this part of the market and gave Bezos plenty of cheap offerings for Amazon customers looking for bargains. That wasn’t true back when the Kindle first started.

Streitfeld then picks the one book on the best seller list that’s discounted the least by Amazon as his example. Prices of the other discountable titles are all cut by more. Lame. My favorite example, if we’re going to cherry pick, is JK Rowling’s new novel, A Casual Vacancy, which the publisher was selling for $18 as an ebook, now cut to $12.74 by Amazon.

Then come a couple of wacky theories to explain the lack of discounting, which obviously have to be pretty wacky since they are meant to explain a non-existent phenomenon. It’s the slow down in ebook buying growth rates. It’s the demise of Borders (a true WTF). It’s Amazon holding back. Blah, blah, blah.

I love the next bit where Streitfeld cites an ebook market forecast from two years ago as “typically ebullient.” It’s James McQuivey calling for $2.8 billion of ebook sales in 2015. Crazy? Insane? Hmm, maybe right on. Ebook sales last year hit $2.1 billion and up some 34 percent this year, according to Streitfeld, thus reaching — wait for it — $2.8 billion.

The finish is, of course, the most wrong: “this might be as cheap as ebooks will ever be.” That’s pretty unlikely given that Penguin is about to allow discounting again and Macmillan is being prosecuted in court for its recalcitrance.

A second, slightly better piece from Laura Hazard Owen needs a few corrections, too. She buys into the data-free assertion that prices haven’t fallen and the headline is off-base. But she’s correct to point out that not all ebooks were sold at $9.99 before the wave of price fixing in 2010 — though I’m pretty sure she has previously gone along with publishers assertions that Amazon cut everything to $9.99 in the bad, old days (I’ll have to double-check). And she explains that Amazon’s ability to discount now is still limited, as I explained above.

Ironically, it’s the element of competition that she seems to get wrong. Apple isn’t discounting to match Amazon. It’s sticking with high prices. So whereas when Amazon was the only major player, it used $9.99 as a kind of promotional advertising, a psychological sweet spot, now it has a simpler task of undercutting the actual prices of the competition. No need for psychology, there’s a whole ebook marketplace consumers can see. And in the new market where Apple likes to sell for at least $13 when it can, a discount to $11 looks pretty enticing.

But Owen doesn’t get it as she writes: ” These retailers have all shown themselves willing to match Amazon’s price drops on ebooks. The prices aren’t always exactly the same across stores, but they are at least close enough that there is little incentive to switch retailers if you’re already using a platform you like.”

That’s the chuckler in her piece. Prices are not that close. And there’s less platform lock in than ever — it’s easy to switch around. Amazon offers free ereading software for almost any platform including the iPad, iPhone and Mac. Ironically, it seems to be the higher-priced competition that’s having the biggest impact on Amazon’s pricing, creating a price umbrella that has eased the pressure to price at $9.99.

A Casual Vacancy, a serious rip off?

There’s a bit of a surprise in store for you if you go to buy the electronic book version of the new J.K. Rowling novel, “A Casual Vacancy.” Despite it’s best-seller status, the ebook’s price is not $9.99 or $12.99 or even the high-end of best-sellers brought to you by the price fixing cabal of $14.99. Nope. At Amazon’s Kindle store it’s $17.99. And it’s the same price at the Google Play store, at Barnes & Noble and at iTunes.

How could this be? After all, the Justice Department smashed the price fixers and three of the big publishers, including Hachette, which sells the new J.K. tome, agreed to settle all charges and allow discounting to resume. The answer, it seems, is that “A Casual Vacancy” hit at just the wrong time.

Under the settlement, Hachette almost immediately had to cancel its contract with Apple’s iBooks store, the one that would have automatically priced the ebook lower while banning any discounting. But it didn’t have to renegotiate its contracts with others ebook sellers at the same pace. Laura Hazard Owens at PaidContent says it could be 60 days or so before new deals must be in place with other retailers. Once the deals are done, Amazon will be allowed to discount again. The giant online book seller already has a new deal with HarperCollins, for example, so ebook versions of Mitch Albom’s “The Time Keeper” are only $9.99 on the Kindle. But until all the deals are done, only Apple has price flexibility and it has little interest in discounting when all its competitors must sell at the high, Hachette-dictated price.

Some have gone so far as to argue that the high price shows consumers will be hurt by the DOJ price fixing settlement (see some of the comments on the PaidContent piece linked above). But when the only ebook retailer given price flexibility is the one that was among the accused price fixers and the one that hates to discount, it doesn’t prove much of anything.

Still, JK’s ebook is selling. It’s number 2 among paid ebook best sellers at the Kindle store as of right now. For a book with such high expectations, it’s hard to say if that’s actually a success or a disappointment. But assuming discounting resumes shortly, many folks may be holding off until the $9.99 version arrives. And while they wait, they’ve got plenty of time on their hands to ding the book with one-star reviews, it looks like.

UPDATE: On October 13, I checked again and the publisher on its own has cut the ebook price to $14.99. That may be because the book was slipping down the ebook best seller list at the original price. Then, at the end of December, with discounting back in Amazon’s control, the ebook price was down to $12.74.

History will show journalists missed the big Amazon story today: ebook discounting is back

There were a gazillion Amazon headlines today across virtually every news site, tech blog and twitter feed I follow but almost none had the truly important news development about Amazon today. While everyone was gorging on the announcement of upgraded “Kindle Fire” tablet computers, U.S. federal judge Denise Cote in New York approved a controversial settlement to the massive ebook price fixing scandal.

The settlement requires three of the biggest book publishers in the world to soon terminate their so-called agency pricing arrangements over ebooks and allow Amazon and others to resume discounting ebooks. Two other major publisher and Apple were bitterly opposing the settlement. But the judge went with the Justice Department and major consumer groups. The law seemed pretty clearly on the side of the government and the settling publishers, as I wrote last month.

This will very soon benefit tens of millions of ebook buyers. And the long-term benefits of a slightly cheaper, slightly fancier tablet? Less so.

Update: Making my point further, the New York Times buried the story inside the business section and it’s not given prominent play on their web site, either. But their blog post about the ruling is the number one most emailed story right now. And, wow, the second-day coverage in the paper is embarrassingly bad, too. The Times story in print, link unseen, aside from various spokespersons, quotes a long-time publishing industry consultant, the head of the Author’s Guild and a publishing industry lawyer. The Wall Street Journal is no better, quoting the same lawyer and the AUthor’s Guild. Come on, people. You can do better.

 

What Steve Jobs actually said about iBooks market share

There’s been a bit of controversy about what Steve Jobs said yesterday (video here) in regard to the market share of the new iBookstore. To recall, Apple opened a new front in the electronic book wars when it introduced iBooks alongside the iPad two months ago. iBooks, sold in a proprietary DRM-locked format only at Apple’s iBookstore, can be read only on iPads right now with an app for iPhones and iPod Touches coming soon. Here’s what Jobs’ said yesterday in San Francisco:

I’ve got a few stats today for you. In the first 65 days, users have downloaded over 5 million books and that is about two and  half books per iPad which is terrific. The other interesting thing is the five of the six biggest publishers in the US who have their books on the iBookstore tell us that the share of ebooks now that are going through the iBookstore now is about 22 percent. So iBooks market share now of ebooks from five of these six major publishers is up to 22 percent in just about 8 weeks. And, as we ship more iPads, that number is just going to keep going up and up and up and we’re really thrilled with it.

So, Jobs did properly limit his description of iBooks “market share” as being just about US sales of ebooks by the five big publishers participating in Apple’s offering. With one biggie opting out so far (Random House) and no global sales included, the 22% figure obviously wildly overstates Apple’s real market share in ebooks.

So why were some people confused? I’d say it’s all Apple’s fault. First for not streaming Jobs’ keynote live to everybody and, second, for including the slide pictured at the top of this post which simply says “Share of total eBook sales.” That’s not accurate.