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More e-book trouble for Amazon

Two more publishers are dictating higher e-book prices, deserting Amazon's $9.99 model

KindleFollowing MacMillan's victory over Amazon, two more publishers are joining the fray. They are unhappy with Amazon's $9.99 price model for e-books and want to be able to fix higher prices.

HarperCollins copied MacMillan's move in switching to a business model in which Amazon becomes an 'agent'. That allows the publisher to fix the price of the e-book - typically $14.99 - with Amazon taking a simple cut of each sale, probably 30%.

According to HarperCollins' owner, Rupert Murdoch: “We don’t like the Amazon model of $9.99 ... We think it really devalues books and hurts all the retailers of hardcover books."

Hachette is the third big publisher to go down this route. It has sent out a memo to authors' agents that said that it is, “not looking to the agency model as a way to make more money on e-books. In fact, we make less on each e-book sale under the new model; the author will continue to be fairly compensated and our e-book agents will make money on every digital sale."

What do you notice about these three publishers? That's right: they are among the five companies who featured prominantly in the launch of the Apple iPad. Hardly a coincidence.

Three problems

This is worrying for Amazon on three counts. First, it further weakens the strangehold the online retailer has had on the book market. Second, it forces up the price of e-books, and Amazon's success has been largely based on discounting. And third, any impact these higher prices have on sales may also affect sales of the Kindle.

Unlike Amazon, the publishers aren't in the hardware business. They're free to sell their books on every platform and don't have to worry about which will become the most successful.

Amazon has invested a great deal in the close integration of its reading platform and book sales. For the Kindle, it chose a non-standard format. It's based on the Mobipocket .mobi format, but with proprietary Digital Rights Management (DRM). Kindle books can be read only on the Kindle. And with very poor support for other formats (include patchy PDF capabilities), the Kindle is really only good for reading Kindle books. Not only might poor sales of Kindle-format books hurt sales of the reader, the reverse is also true. Lock-in works fine when you're the only game in town and people can't get the books they want elsewhere.

Virtually all other current models of e-book reader, including the iPad, read the open (and fast becoming the de facto standard) ePub format. That gives customers much greater flexibility in choosing hardware and sources for their books. (How well the iPad works with books not sourced from the iBookstore is something of a question mark, though.)

In all areas of IT, we're seeing a move towards open standards and platforms. Whether Amazon's adoption of a more old-fashioned, single-source proprietary model continues to work is a moot point, but it'll be interesting to watch. Meanwhile, those of us who self-publish are free to publish our books on any and all platforms. So why should we worry?

 

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Tags: Amazon Kindle publishing e-books iPad Macmillan Hachette HarperCollins formats

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