Random House Fears E-Book Price War on iPad
When the iPad was announced, Apple CEO Steve Jobs mentioned five major book publishers that were ready to offer e-books for the iBooks app. What was remarkable about the list was not which companies were on it, but which one was absent, namely Random House, the largest book publisher in the world.
Now the Financial Times is offering an explanation why Random House is reluctant to join iBooks: The company is worried about an upcoming iPad price war.
The move seems to have merit at first considering the iPad has already started a price war with Amazon , and clues point to more struggles ahead. But the move doesn't necessarily make sense when considering that Random House already does business on the Kindle, which sells e-books at prices lower than publishers would like.
The five publishers signed up to offer e-books on iBooks are Penguin, HarperCollins, Simon & Schuster, Macmillan and Hachette Book Group. These companies have used their relationship with Apple to force Amazon to change their pricing policies, so it seems strange that Random House wouldn't sign up with Apple for the same reason. If anything Apple has helped these other publishers more than hurt them in the price war so far.
However, there are several reasons why a relationship with Apple may not be all that necessary for Random House. First of all, there will be significant competition on the iPad from other e-book reader apps. In fact, Amazon already has a Kindle app ready for the iPad which will sell Random House e-books. That along with other e-reader applications likely mean Random House will have a significant presence on the iPad even if the company doesn't sell through iBooks.
Random House may also be expecting more price fluctuations to come from directly from Apple. The iPad maker helped its five publishing partners to force Amazon to sell bestsellers at $13 to $15 instead of the standard $10. But it turns out Apple also had provisions written into the agreements with publishers to still sell books at $10. It may be that Random House expects more pushback from publishers on deals like this and wants to wait until a more stable pricing pattern is established.