Amazon slashes e-book prices

The online retailer has publishers up the creek without a paddle.

By Jonathan Berr Apr 12, 2012 2:36PM
Amazon.com (AMZN) is slashing e-book prices just as publishers are facing a federal probe into price fixing, a move that is great news for voracious readers, though it places the content creators in a tough spot.

As The New York Times pointed out, Amazon plans to cut prices of some electronic best-sellers from $14.99 to $9.99. The Justice Department and 16 state attorneys general on Wednesday claimed that the late Apple (APPL) CEO Steve Jobs conspired with executives in the publishing industry to fix e-book prices. According to media reports, the scheme was allegedly hatched in response to a move by Amazon in 2009 and was effective a year later with the launch of the iPad to charge $9.99 for e-books. The irony is striking.

"Apple proudly described the price-fixing plan -- which gave the iPad maker a guaranteed 30% commission on each e-book it sold through its online marketplace -- as an 'aikido move,' referring to the Japanese martial art," according to the Los Angeles Times.

Apple, which has more cash than the federal government, can settle this case quickly without breaking a sweat. The publishers, however, are not so lucky. Last year, sales of e-books surpassed those of printed books for the first time, according to Amazon.com. That trend continues. According to the Association of American Publishers, sales of adult e-books topped $99 million in January, an increase of 49.4% from a year earlier. That's the biggest gain in the category. Children's and young adult e-book sales and religious e-book sales both posted triple-digit gains.

Executives at News Corp.'s (NWS) Random House; CBS' (CBS) Simon & Schuster Inc.; 
Hachette Book Group, part of the European conglomerate Hachette Livre; Macmillan, which is controlled by the German company Holtzbrinck; and Penguin Group, owned by the U.K.'s Pearson, have to be sweating bullets. If they complain about Amazon's price cuts, government lawyers could use that information to bolster the case that they were in cahoots to fix prices. The best they can do is grumble that they can't support their businesses under Amazon's pricing structure, a similar argument that the music industry raised about Apple's iTunes site charging 99 cents a song.

Eventually, Apple agreed to a tiered pricing structure whereby current hit songs cost more than obscure oldies. The music industry seems content with that arrangement, which took years to create. Amazon, though, is under no immediate pressure to establish a similar arrangement with the book publishers. Industry executives allegedly thought that by working together with Apple they would counter Amazon's growing clout. Unfortunately, that foolish decision has made Amazon even more powerful and will wind up costing publishers big money.

Jonathan Berr does not own shares of the companies listed here.






 

 
49Comments
Apr 12, 2012 3:56PM
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I refuse to pay nearly the same price for an ebook that i would for a print version. Ebooks save the cost of paper, packing, shipping.  No need to stock or inventory. No such thing as unsold copies to handle and put on sale. And no store to staff and pay overhead for.
Apr 12, 2012 3:34PM
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Publishers were only needed because of the cost of printing hundreds of thousands of copies of a book, not to mention to costs of distribution.  Thanks to the internet, this is no longer required.  Hence, publishers accomplish nothing in the e-book world except drive up prices for everyone else.
Apr 12, 2012 4:05PM
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I don't understand why e-books cost about the same as the physical books.  It seems to me there is not near the same amount of labor to make the e-books.
Apr 13, 2012 11:58AM
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Good, the price of eBooks is ridiculous.  There's little to no manufacturing costs and what there is, is a one time deal to 'e' it.  Then there's no shipping/retail/warehousing distribution costs either just bandwidth and the cost of someone to post it up in an online catalog.  There is NO REASON ebooks should be even close to their physical counterparts in price and yet I even see eBooks more than the paper versions in some cases.  eBooks shouldn't cost any more than 5 bucks in my opinion.
Apr 12, 2012 4:40PM
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I still think at $ 9.99 it's still pricey for an electronic file that they dont have to print, ship, distribute......

But I still enjoy my Kindle and won't stop buying e-books.

Apr 12, 2012 4:21PM
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Looks like there may have been another side to Steve Jobs that they aren't talking about.  Seems a bit greedy to me.

 

Apr 12, 2012 8:37PM
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You can buy a used paper book, but not a used e-book.  That's why they should be cheaper.
Apr 12, 2012 7:37PM
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Authors need to bypass publishers and Amazon and Apple and offer there "artistic" works on their own site or sites specifically designed for direct publishing. Google could kill in this space. Authors could sell books for 1.99 USD and still make more than they do now. Google, where is the You Tube for authors!

Talented editors should freelance or offer their services on line to budding authors, upload your work to an experienced editor for a share of the sales, and off you go!

Apr 12, 2012 3:38PM
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Now, if only we can get the public library system into the 21st century, providing multiple copies of all new releases, and in adequate quantities.
Apr 13, 2012 7:27AM
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Yes, I understand we are paying for the intellectual property and agree when a book first comes out it should go at a higher price for the hardback and eBook version, but when I can buy through Amazon a used copy of the paperback for 1 penny plus 3.99 in postage I shouldn't have to pay 14.99 for an eBook.
Apr 12, 2012 9:13PM
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E-book are just over priced, from a consumer stand point, they should never be more than what a paper back costs.  No paper, no warehouse in the traditional sense.
Apr 12, 2012 5:06PM
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Price fixing needs to be dealt with here.  We should not pay as much for an ebook as we do a printed book.  One other issue they need to address is placing DRMs on the book so they cant be tranferred to a different format, such as from pdf to epub.  If I pay for a book I should be able to make a permanent disc copy and concert it to whatever format or whatever device I choose.  I'm not paying money to give away my information and booklist to the cloud.  Apple, Amazon, and the publishers have shown nothing but greed in this matter.  The sad thing is it is the authors that get the sort end of the profits for their own book.
Apr 12, 2012 10:07PM
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Baen Publishing has been publishing thier books in 7 different non-DRM'd formats since 1999 all of them costing between $4.00 - $6.00 individially and monthly bundles of 4+ books for $10-$18.  No re-download limits and access to read them online as well as over 100 ebooks available for FREE from some of their most popular authors. According to Baen itself, its authors make more money on a $4.00 ebook that on the $25.00 hardback version.  So for publishers whining about costs I say BS.

 

Apr 12, 2012 2:56PM
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They can charge whatever they want. How much do they pay for them is the question.
Apr 12, 2012 4:08PM
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I hope the Gov. takes Apple and the publishing houses (more apple) to the cleaners and we E readers that have paid the price get a refund.!!!

 

Did Apple really need that mark up to make extras money as if they don't have enough..GREEDY

Apr 12, 2012 7:30PM
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The issue for the publishers is that they made a 30% pact with the devil in the hope of increasing their profit and have now been caught out. The writers don't get any more or less because the book is electronic or paper -- that deal has already been made by the time it's published.
Apr 12, 2012 7:04PM
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Amazon has a forum under their kindle section, almost everyone that writes in it says the same thing that your all saying here. Why do e-books cost so much, when it is costing so little to publish them. We used to think it was Amazons fault, but it turned out it was the publishers that were fixing pricing.
Apr 12, 2012 5:13PM
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I hope Barnes and Noble follows Amazon's lead.  I imagine they will have to in order to stay competitive.
Apr 13, 2012 9:26AM
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I still don't understand why an eBook costs as much or more than a print copy. Since the publishers aren't spending the money to m****duce them on paper, it stands to reason that they would be cheaper. And DRM places way too many restrictions on what you can do with it once you've bought/rented it. I understand that the writers want to get paid, and I support that wholeheartedly. But, the total cost of an eBook is considerably cheaper for both the author and the publisher.
Apr 12, 2012 5:45PM
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I received a Kindle for Christmas 2010 and since that time, I have  purchased 285 E-books frm Amazon.  Any chance for a rebate??

Amazon gives great service and Iappreciate the price slashing!

 

Claudean Champagne

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