Mobile Computing News

Photo: Amazon

The eBook pricing upheaval has occured at an astonishing pace. Last week Amazon removed book publishing giant MacMillan’s entire catalogue off of its website due to MacMillan demanding the right to price their bestsellers at $12.99 and $14.99 on the Amazon Kindle store. A few days later, presumably crumbling to the sheer weight of MacMillan’s catalogue, Amazon reposted the publisher’s books to its site as well as sent out an accompanying passive-aggressive statement to its readers about the decision.

When It Rains It Pours

Once the Macmillan concession occurred, Harper-Collins soon followed suit and now Hachette has become the third book publishing juggernaut to adopt the agency model for eBook pricing instead of the Amazon’s pricing.  The remaining book publishers, Simon & Shuster and Penguin, will inevitably follow suit soon.

What Went Wrong

For Amazon, clearly something went wrong. The Amazon Kindle team, long riding the wave toward eBook hegemony, has been tasked with figuring out what that is. The Internet’s collective wisdom is Apple happened.  Apple, with its iPad and iBook store and given its track record with iTunes, is the only company (other than Google) that can compete with Amazon at this type of scale and in this type of game. The rumour mill suggests Steve Jobs first suggested this pricing model to book publishing executives during negotiations in the buildup to the unveiling of the iPad. The publishers, in turn, felt this was an opportunity to either pressure Amazon into changing its pricing structure or abandon Amazon altogether. Once collective action was coordinated, it only took one publisher’s boldness to force Amazon’s hand, and then the floodgates opened.

The Big Gamble

What is clear is Amazon’s plan of achieving the success iTunes had in the music business with the Amazon Kindle store in the book publishing business is under threat. Not only is Apple intent on making eBooks its next major cash cow, it is already undermining Amazon’s strategy before the iPad is even released. Sadly, in the short term at least, the biggest loser is the consumer. A price increase of 30 to 50% for bestsellers is quite a leap. Amazon, however, has first mover’s advantage as well as an install base of millions and if Apple’s latest crapshoot fails publishers may find themselves at the whim of a very unhappy, very powerful retailing monopolist. An outcome the publishers would gladly trade back for the old days when $9.99 was the known going rate.