Why the iPad is i-BAD for Consumers

When Apple announced their new iPad Internet Tablet last week, one of the major features was their new e-Book reader and iBook store.  This was pretty exciting for me.  I am a huge fan of e-Books, and this is one of the nicest looking e-Book readers I have seen.  The interface is simply fantastic, and the bookstore is already stocked with a supply from several major publishers.  Sounds great, right?

Well, maybe not so much.  At least not for you and I.  One of the biggest problems I have had with e-Books has been the price of the books.  With no printing or distribution costs, you would expect the price of the books to be rock bottom, as in under $5.00.  This has not happened, though, mainly because the publishers cling to an antiquated pricing scheme, which focuses on the paper and ink version of the book.  To be honest, until publishers truly embrace the e-Book format and recognize it as a realistic alternative, if not replacement, for the pen and ink books, then this will not significantly chance.  Nonetheless, Amazon has done a fantastic job of negotiating lower and lower prices with the publishers, even offering significant incentives to publishers who offer lower priced books.  As a result, Amazon has been able to keep their Kindle e-Book prices below $10 for most books, including new releases.  Faced with the market dominance of Amazon’s Kindle, other e-Book stores quickly followed suit, with Barnes and Noble, Sony, and others soon lowering their prices to match or even beat Amazon’s.

This was all great news for consumers.  As 2009 turned to 2010, there were several fantastic e-Book readers available, with the promise of up to a dozen more by the end of the year, as well as several fantastic bookstores, and a price war which featured an apparent race to the bottom in terms of e-Book pricing.  2010 was shaping up to be the year of the e-Book.

Sadly, that all came to a screeching halt last week when Apple unveiled its iPad and iBook Store.  While Apple has not officially unveiled their iBook Store pricing scheme, it is rumored to raise the e-Book price ceiling to $15 per book or more.  One might expect Apple to feel the backlash from consumers as a result of this higher pricing scheme, but that has hardly been the base.  Instead, the backlash came almost immediately from publishers as MacMillan and Harper Collins demanded to renegotiate their pricing schemes with Amazon and raise the prices of e-Books to more closely match Apple’s pricing scheme.  Sadly, Amazon had no choice but to relent, effectively ending the downward trend of e-Book pricing.  The end of the $9.99 e-Book is nigh.  Can the end of Amazon’s market dominance be far behind?  Write in and let us know what you think.

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  1. #1 by James on February 6, 2010 - 7:28 pm

    Might be worth doing some research. Publishers actually run some of the narrowest profit margins going around.

    The significant costs in publishing a book are _not_ shipping, ink, paper and printing. It’s paying for the editors, proofreaders, typesetting, designer & author. For an ebook there is the additional cost of having a quality ebook conversion done.

    These all do make a significant difference to the final published book. I’ve read some poorly edited books and it does detract from the story. Likewise I read an ebook where the time hadn’t been spent on formatting and it actually made it very difficult to follow, even confusing at times.

    Given that ebook sales are still very very low, it’s understandable that the publisher would like to price it such that they recover the conversion costs.

    Have a listen to what some of the authors are saying. Amazon’s promoting a kneejerk reaction among the tech blogs based on price, but it’s far from the truth.

  2. #2 by dgoldring on February 8, 2010 - 11:41 pm

    James, those are all good arguments, and I have heard the publishers make those arguments since ebooks came on the scene. They are also the same arguments (basically) that the music industry made.

    As a consumer, they just don’t hold any water for me. When I buy a book, I buy a tangible object which I can do whatever I want with. When I buy an ebook (at least under Amazon’s model) I am essentially leasing the right to read the book. I cannot loan it to other people. I cannot sell it at a garage sale, and they even reserve teh right to limit the number of times I can read or download it.

    The best idea I have heard came from Ellen over at Ilium Software. Charge a nominal fee per book (under $5, and closer to 1 or 2.) In exchange, you get the book for a week or 10 days. Basically, you rent it. Just like renting videos from iTunes, it would automatically be removed when your time expires.

  3. #3 by cgavula on February 9, 2010 - 5:49 pm

    The problem is that the music market wasn’t and isn’t the same as the book/ebook market. The margins are lower, for one, in the book market, the volumes are much lower, and there are a number of other differences that simply may make the $9.99 price a poor choice for a standard pricepoint. Just because it’s lower doesn’t always mean it’s better for the consumer. Having said that – I think that if they are going to adopt a higher “new book” price, they should also drop the price when a book is out for a while/mass market publication happens/etc. That currently doesn’t happen with eBook pricing – it generally holds fixed.

    What’s interesting in this case is that Apple is basically siding with what the publishers want and are standing against the lower, fixed pricepoint. The funny part is that Amazon did that with music and forced Apple to renegotiate with the record companies into more liberal arrangements where they were no longer sticking to the old $0.99/$9.99 pricing model. Kind of ironic, don’t you think? And – as a side note – online music sales have dropped since that happened and the newer $1.29 (and higher) pricing has appeared.

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