E-Book Wars: Other Publishers Likely to Raise Prices
Now that prices for e-books published by Macmillan sold on Amazon.com for the Kindle e-reader appear set to rise by a few dollars in March, the question on many consumer's minds is will other big book publishers follow suit?
The answer, according to analysts, is yes.
Other major publishing houses besides Macmillan, including Penguin, Harper Collins and Simon & Schuster, will likely raise their price for new e-books sold through Amazon for the Kindle.
With Amazon giving this "green light to higher prices, every publisher will eagerly do the same," said James McQuivey, an analyst with the tech analysis firm Forrester.
Over the weekend, after a public disagreement , Amazon said it would "capitulate" to Macmillan's demands that its new e-book releases sell for $12.99 to $14.99, instead of Amazon's standard $9.99, a price many book publishers have complained is too low.
The elephant in the room
The catalyst for this pricing dispute is the imminent arrival of Apple's iPad, which will hit shelves in March. Though the iPad is not a dedicated e-book reader like Amazon's Kindle or Barnes & Noble's Nook, Apple expects to make quite a splash in the e-reader market with its latest product.
Apple has indicated that e-book prices in the new iBook store for the iPad will be in the higher price range as requested by publishers. This deal could be an indication that bookmakers will have more say over e-book pricing as the market matures and expands, analysts say.
"Initially, I think Amazon had the idea to discount e-books over paper books and they were able to strong-arm the publishing industry into the standard $9.99 price," said Yair Reiner, senior analyst for applied technology with Oppenheimer, an investment firm. "When [the Kindle] was for all intents and purposes the only game in town, Amazon was able to impose this type of discipline."
Though consumers have yet to purchase or read an e-book on the iPad, the new device has already had an impact.
"My sense here is that the cat is out of the bag and essentially that in a few months publishers will be able to determine their [e-book] prices not just on the iPad and the Kindle but also on other devices as well," Reiner said in a telephone interview.
Macmillan said in a statement that it will not financially benefit from higher e-book prices, and that the pricing model will actually help Amazon while ensuring the future "viability and stability of the digital book market."
"The interesting problem with this spat is that Amazon doesn’t make money when it sells books at $9.99," said Forrester's McQuivey. "In the long run, it’s in their interest to see prices go up, but they certainly don’t want to be left with the blame when the prices rise."
More options for readers
McQuivey told TechNewsDaily that this development is good for Apple because "it doesn't want to be the bad guy in having higher prices than everyone else . . . So if Amazon ends up raising prices, it will help soften the blow of the iPad’s higher book prices."
Given that e-book prices will end up being similar for both the Kindle and the iPad, Reiner said that "ultimately consumers will pick the hardware based on which hardware they think is more interesting and from a price and performance standpoint that suits their needs. People who just want an e-reader will stick with the Kindle, and those who want more of a multimedia device will probably elect to buy the iPad ."
An interesting twist on the emerging e-reader wars will be the potential creation of a Kindle app for the iPad. Reiner pointed out that such an app already exists for Apple's iPhone, and the company has said the iPad is capable of running iPhone apps.