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Amazon wants three-year Kindle deals to squeeze Apple

updated 08:15 am EDT, Thu March 18, 2010

Amazon, Apple demanding best e-book prices

Amazon has escalated the growing feud between itself and Apple by issuing ultimatums to e-book publishers, inside stories from the industry claimed on Thursday. The online retailer has allegedly been pressing major publishers to sign three-year contracts that not only guarantee Kindle books for the period but would prevent them from offering a better price to Apple or any other e-bookseller. These publishers could use the agency model and set their own prices, the NYT noted, but only if Amazon was given equal or better treatment.

At the same time, Amazon is said to be using its 90 percent market share of US e-books as a club against smaller publishers. Here, Amazon has not only tried to insist on buying books wholesale, which would let it set the price as it has in the past, but has supposedly threatened to pull publishers' books off of the Kindle store altogether if they don't agree.

Both large and small publishers are said to be opposing the measures, at least partly due to the potential for sales on the iBookstore and the iPad. Three sources for the story said that larger publishers didn't want to sign contracts and lock themselves into long-term deals in an evolving market. Smaller firms, meanwhile, have been talking to Apple and have been told that they must use the agency model elsewhere and get no deal more favorable than the 70 percent revenue cut they will have on the iBookstore.

The request puts the small publishers at a crossroads where they may have to choose between either Amazon or Apple, as it's unlikely Amazon will bend to accommodate Apple's business model for publishers that don't have significant clout. Some may opt for the existing arrangement due to market share and would potentially give Amazon an edge by letting it claim a lower absolute price.

However, Apple is likely to be counting on its willingness to charge a higher $13 to $15 for most new books as an incentive to all publishers, which like Macmillan have been frustrated with Amazon price caps that prevented them from selling books above $10. In a more overt bid to court less mainstream publishers, Apple has posted a job listing for an Independent Publisher Account Manager that would negotiate and promote books.

By Electronista Staff
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  1. Bobfozz

    Fresh-Faced Recruit

    Joined: Jul 2008


    I'm in the book business...

    I don't think Amazon's bullying tactics will work. Yes, there are times when Apple can be a bully too, but Amazon is acting like Microsoft used to do. Times are changing faster now than they were in the 90s.

    Bezos is a little bully who wants all the toys. Won't work Jeffie.

  1. facebook_John

    Via Facebook

    Joined: Mar 2010


    Apple and Amazon have a basic flaw in plan...

    ...although it's the publisher that are driving the problem.

    I don't think I'm alone in this: I won't pay more for an electronic book than I would for a physical one; I won't pay as much for an electronic book as I would for a physical one. In almost every respect an e-book is a less valuable product than a physical book and until prices reflect this neither company will get my money for them. $15, $13, even $10 is a ridiculous price for an e-book when I can buy a paperback novel for $8 or less. At $5 I would consider e-books. At $3 I'd buy them like candy.

  1. Peter Bonte

    Fresh-Faced Recruit

    Joined: Aug 2001


    not physical books

    How i read it Amazon only wants to have an equally low price for the digital copy, i can't imagine that they would force the publishers to ask the same price for the digital and physical version. Amazon wants to be ready when books get caught up in the almost inevitable price war on the iPad.

    Apple didn't set a price for Apps and it didn't drive prices up, they are hoping for the same effect on ebooks. Low priced books on the Kindle and iBooks will help sell iPads.

  1. bobolicious

    Dedicated MacNNer

    Joined: Aug 2002


    Libraries & esoterics

    I am increasingly using libraries & this may be a fertile field with expiring downloadable ebooks ?

    I also often need titles that are relatively uncommon/expensive & I hope publishing costs for these may actually come down significantly with production & distribution economies?

  1. PRoth

    Fresh-Faced Recruit

    Joined: Aug 2008


    Tangent: Piracy

    As an aside, related to ebook prices regardless who sells them or the devices they'll be read on, it's probably a good idea for publishers and distributors alike to look at the music and movie industry lessons learned on digital formats. I agree with facebook_John. Anything over $10 or $8 for an ebook seems like frontier bilking of consumers. The inevitable consequence is piracy... let's face it.

  1. JulesLt

    Fresh-Faced Recruit

    Joined: Jul 2005


    Production economics

    I can see how ebooks cut the distribution and retail costs, but with production costs the vast majority is not physically printing the book, but in authoring, editing, proof-reading, type-setting and marketing.

    If you spend 3 months writing a book for a technical or academic audience of 500 people, that's always going to be an expensive thing to do. Considering the $5 price idea, that's $1500. Even if you completely self-published and received 100% of the sales price, that's still $500 a month.

    There are plenty of areas where the maximum global audience for something is less than 1000 people - and that's why books for those audiences cost vastly more that the printing costs.

    Now for cheap e-books you could probably ditch cover design (although it still has a place in terms of drawing readers in on the Amazon site). Ditto type-setting (although this isn't quite there yet, it's acceptable to most people who read e-books).

    If $5 makes sense - if the margin times sales is higher - then that is what will happen, but I think we need to be realistic about what cheap means. It means mass sales, it means at least trebling your audience.

    (The key question there is whether it's cost that is holding your audience back, or lack of interest).

  1. charlituna

    Fresh-Faced Recruit

    Joined: Sep 2009


    waiting for the lawsuit

    seriously, someone is going to file one against Amazon for antitrust etc. It might not stick but it is going to happen. if not anti-trust then something by the smaller publishers.

    on the actual issue, I can see where Amazon is coming from. They don't want publishers that might have been 'profitable' to them to just jump ship altogether or jerk them around by offering the same book to someone else for a lower price. So they demand equal or better knowing that equal is what they will get.

  1. testudo

    Forum Regular

    Joined: Aug 2001


    Re: basic flaw

    Love that argument. "Make them really cheap and I'll buy a lot!" Except it doesn't take into account costs or profit. Not to mention it assumes the next crappy Dan Brown "thriller" is worth the same amount as a well-written and thoughtful novel. And various non-fictions have various values as well.

  1. Inkling

    Junior Member

    Joined: Jul 2006


    Amazon's bullying may backfire


    If this report is true, then their bullying could very well backfire. Authors and publishers don't even have to yank their ebooks off Amazon. They can simply let them drift there and concentrate on increasing their sales at the iBookstore, particularly those who have fans that follow their advice. And the Kindle v. iPad competition will matter less if Apple (like Amazon) brings out versions of their iBooks application for iPhones, Macs and PCs. If they don't buy a dedicated reader, customers will be able to choose where they buy.

    Keep in mind that price isn't the only issue in this dispute. There's also the right of authors not to be bullied, threatened, or forced to market their book in an inferior format such as Amazon's Mobibook. There's a lot more to a book than its price. Ebook standards are about where the web was with HTML 1.0, with little evidence that Amazon wants to improve that situation.

    Also, keep in mind the burden that these intrusive, niggling contracts impose on authors who'd rather be writing. Make the kind of contractual obligations that Amazon is insisting one, and a writer will put himself at legal risk if he doesn't spend scarce time policing the pricing and distribution of his books. At $300/hour for a lawyer in this field, any modest income a writer might make could disappear quickly in a legal dispute with Amazon's in-house lawyers.

    In short, those who read shouldn't hold their purse strings so tightly they forget those who labor long hours writing the books they read. Authors deserve their support in this dispute with Amazon and (if it develops) with Apple.

  1. testudo

    Forum Regular

    Joined: Aug 2001


    Re: I'm in the book business


    They're acting NOTHING like MS used to do. If they were, they'd insist the publishers gave them a better deal, only offered their books on the Kindle, insisted that any advertising also include advertising the Kindle, and not allow any of them to even mention any other reader.

    At worst what they are trying to do is use their current market presence to try to make deals before Apple starts really throwing around their $40 billion and basically buy the market away from everyone else.


    And how is this different than Jobs? He wants all the toys, he wants them on his devices, but only if he approves them. And the only reason Apple isn't right now trying to bully the publishers into pricing is because there's actually a competitor out there who they have to fight off first.

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