The Motley Fool on Apple's $15 e-book price plan / Free Kindles?

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A couple of days ago, they posted a column by analyst Rick Munarriz, titled Don't Put Up With a 50% Price Hike."

Some choice excerpts (they don't mince words at that site):

' The e-book revolution is about to be tested. Now that Amazon.com (Nasdaq: AMZN) has apparently caved to one publisher's request for higher selling prices, the days of $9.99 digital best-sellers may be numbered.

Apple (Nasdaq: AAPL) has to be loving this.   It's the one that has been feeding publishers with dreams of pushing e-books for $12.99 to $14.99 a pop when its iPad comes out in a few weeks.

It's a brilliant move on Apple's part.  No one is going to pay at least $500 for an e-book device.  If the iPad succeeds it will be because it's a jack-of-all-leisure-trades...

Apple's new pricing, though, is a dagger to dedicated e-book readers.  Publishers will make sure that its digital reads are priced identically across platforms, and that means that it will be harder for Amazon, Sony (NYSE: SNE), and Barnes & Noble (NYSE: BKS) to market their gadgets...Buying a digital book for slightly less than a physical hardcover won't be a difficult economic decision.

The thinner the pricing disparity, the less likely that consumers will make the switch.  Bibliophiles aren't dumb.  I hear they're well read.  They will also be quick to realize that digital books can't be resold, swapped, or shared like physical reads.  This will make it even harder to justify the higher prices.

Next of Kindle
Amazon can fight back. It can reach out to newspaper companies and offer highly subsidized -- perhaps even newspaper-branded -- Kindles for folks committing to long-term digital subscriptions. [See 2nd article below.]
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Ultimately, consumers will rebel.  They won't pay $14.99 unless ALL publishers play along.  Even then, there are the free public domain or nearly free indie author works put out through the store.
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This doesn't mean that Apple will get away with this tricky feat.

If the digital migration of music and video taught us anything it's that CDs and DVDs got cheaper and still sold fewer copies.  Physical book prices will gravitate lower and sales will begin to shrink.  If $9.99 is the magical price point for books -- as it was digital albums -- the marketplace will make it happen. If not, say hello to the playing field leveler's little friend: Piracy.

Consumers always have the last laugh

There is no law that states that publishers need to sell digital books at the same thin margins as their leafy reads.  However, $15 for an e-book is going to be harder to swallow than a bowl of poi.
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Publishers should be embracing $8-$10 price points for digital books for many of the same reasons (lack of reselling, swapping, or permanent sharing) that will drum up incremental sales.  It's also hard to deny the huge costs savings of not having to print, ship, and gobble back returns on physical books.

If the publishers don't get it now, readers will let them know.

However, the move to inch prices higher after Amazon has already sold millions of Kindles isn't right.  Folks will rebel.  Apple may laugh now.  Real world superstores Borders (NYSE: BGP) and even Nook daddy Barnes & Noble may be chuckling on the sidelines.

But it won't end that way: Amazon -- and more importantly e-book readers -- will have the last laugh here. '

FREE KINDLE WITH AMAZON PRIME BEING CONSIDERED??
The TechCrunch article by Michael Arrington of CrunchPad infamy has been reposted by what seems hundreds of blogs and tweeters.  The article is based on information from "A reliable source " that Amazon "wants to give a free Kindle to every Amazon Prime subscriber," once they "work out how to do it without losing money."

Yes that could be an obstacle.  One clue is that in the earlier trial, in which they gave heavy Amazon buyers a chance to buy the Kindle but KEEP it for a full refund if they didn't like it, they chose what some called "best customers" and in that case it included having bought many books from Amazon, showing an interest in reading.

The article explains:

' Amazon Prime is a subscription product that gives customers free two day shipping on everything they buy from Amazon. The current fee is $79/year.  

These are Amazon’s very best customers – the ones who tend to make multiple purchases per month.  And they are also likely to buy multiple books per month on their Kindle devices.  If those users buy enough books, and Amazon gets the production costs of the Kindle down enough, Amazon can get Kindles into “millions” of people’s hands without losing their shirt.  At least when the goal is to break even or better over the course of a couple of years, the expected lifetime of a Kindle. '

My first thought a few days ago was what a good idea it might be to leak this, as many might join Prime right away and I wasn't sure I wanted to contribute to that.  After a couple of days, I felt it is probably worse to not even mention the possibility, so here it is.  On the Amazon forums, customers are saying they'd love to have another Kindle for the spouse, family, etc.  In that case they'd be sharing e-books on one account often, so that's probably not the ideal situation for Amazon, for almost giving away the device.

As for the Prime membership feature, "Up to four household members may share this membership."  The normal free-trial period is one-month but they sometimes offer a longer trial to those who buy a lot.  Other aspects of it are explained under the Amazon Prime FAQ there.  But I would not get one just because an unnamed source said that eventually a free Amazon Kindle might come with it.  The plan makes sense for heavier buyers who want their products right away.  It would not be ideal for people who buy only e-books from Amazon :-).

 Still, if they can swing this somehow, it'd be nice, though I guess some large publishers and competitors wouldn't agree. Below are ways to Share this post if you'd like others to see it.
-- The Send to Kindle button works well only on Firefox currently.

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