Thursday, March 25, 2010

Kindle and Tablets / E-book Pricing Wars

Kindles and tablet computers will co-exist, for many reasons.  At least this is what most columnists are saying this week, who have experienced e-Ink screens and know by experience how easy those are on most eyes (compared to LCD screens) with more long-session, sequential reading as in books (vs web-surfing w/lots of eye relief).

  Besides reading the various colummns today, I noticed Amazon's new? Kindle at beach ad.  And it's a good one, highlighting the small-form and how easy it is to read in direct sunlight.  Others enjoy reading their iPods or iPhones under the covers at night which don't, like e-Ink books, need external clip-on lights that can upset those next to them.

CrunchGear's Matt Burns asks: "Kindle Apps for Tablet Computers: Is it the king of ereaders?

  Unlike the Kindle for PC and Kindle for Mac, both of which are bare-bones in their Beta state, the new Kindle App for Tablets takes styling cues from Apple’s iBooks, he says.  And he adds:
' This is huge.  No longer can the iPad claim dominance on the color ebook world.  The upcoming Kindle tablet program will be able to run on presumably any PC tablet and still sync to the other Kindle apps, mobile or otherwise.  Knock “color ebook reader” off of the iPad’s list of Pros. The tablet race just got a bit more interesting.

  Content is king in the world of ebook readers and Apple should know that more than any company. The App Store, with its tens of thousands of apps, is one of the main reasons the iPad is guaranteed to be a success.
  The same thinking will drive the Kindle Apps for Tablet Computers program.  Consumers have been buying books from the Kindle Store since its launch in 2007 and Amazon keeps making those books more accessible by releasing Kindle apps for different platforms.

  Consumers own this content and expect to be able to access it no matter what device they are using because of Amazon’s precedent.  Now they can read their books not only on the Kindle itself, but also a BlackBerry, iPhone, PC, Mac, and soon nearly any tablet PC. '
  Now here's the thing -- though he doesn't say it explicitly in this article, others have pointed it out.

  While, as he says, Kindle books can be read on the Kindle, the Blackberry, iPhone, iPod, PC, Mac, and soon any tablet computer AND sync'd between them --
  iBooks won't be readable on anything but the iPad, though I imagine they have to be making a corresponding app to read iBooks on the iPhone and iPod (optimized for the smaller size) and certainly eventually on a Mac computer.

  Apple's a hardware company first though, while Amazon's a book and other-content company first.  It's hard to imagine iBooks available for Blackberry or PC's, as Apple's main focus would be on selling iPads, iPods and iPhones (and, secondarily, data plans with AT&T and others) rather than e-books with all the hassles with publishers.

  Amazon's customer service for the Kindle is noted not only for its flexibility with respect to exchanges for any hardware/software kinks, it has the same standards for its Kindle books.  Will Apple?

  Unlike with Barnes and Noble's nook, you can return a Kindle book for a refund within 7 days if the formatting is sub-par or if there are missing pages or tables of contents without links.  Not so with the Nook -- its e-books are not returnable.
  If unsatisfied with. or not liking, a Kindle itself within 30 days of it being shipped you, you can return it (undamaged) in its box for a full refund.
  With the nook, it's 15 days.  What's the policy with the Sony?  What will be the policy with the various expensive tablets, including Apple's?  Amazon's been very secure in these areas.

Mann brings up another scenario.  He feels the availability of the Amazon Kindle app for Tablets "doesn't mean that it will ever hit the iPad.  Technically it’s up to Apple whether this app will run on the iPad and Apple’s track record doesn’t make its future look all that promising."

  He points out that iBooks will be a key feature of the iPad, just as Safari and iTunes are to its iPhone/iPod, but Apple has not approved the Firefox Mobile or Opera web browsers for them.  I think Amazon may have cleared it with Apple since its Kindle apps ARE on the iPhone/iPod.

  If not, there are various tablets coming out very soon, at least two of them far more capable than the iPad, which was intentionally somewhat crippled to keep its WiFi-only model priced low enough (no USB port, no multi-tasking, no SD slots, no webcam, no flash support -- no Hulu or ESPN video then).  The other models will have these and cost no more, or will cost less.  It wouldn't be good for Apple if Amazon books were available on other tablets but not the iPad.

As you'll have seen in earlier articles here, Apple has pushed for higher pricing via publishers setting selling-price rather than wholesale price, with Amazon/Apple to be acting as 'agencies' under the Apple plan.  Five of the six large publishers dove in, eager to get the guaranteed pricing, as Apple insisted in their agreements that no other bookstores would be allowed to sell at lower prices than theirs.

  Then Apple turned around and attempted (apparently successfully) to insert language into their own Agency plan with publishers, that would let Apple sell "hottest" titles at $9.99.  Note that "hottest" is synonymous, in the business, with the New York Times Bestsellers.

  Publishers (not Random House) who bought the Agency plan (and are trying to foist it on Amazon) HAD been getting $12.50 from Amazon on a $25 List-Price book, sold by Amazon for $9.99 (as loss-leaders), with the traditional wholesaler plan.

  Now, on books that sell for $9.95 at Apple, Jobs has publishers in a predicament because they would get only 70% of that $9.95 price -- or $7.00 rather than the $12.50 they would have gotten from Amazon under the traditional arrangement as opposed to Steve Job's "Agency" agreement.   How does $12.50 look against $7.00?

  Jobs might have negotiated a deal whereby the publishers who allow this would still get 70% of their desired pricing of $15 -- or $10.50, which would mean Apple would take a loss there (is this likely?) while the Publishers would get $2.00 less per sale than they would have with Amazon under the most favorable scenario for the publisher.

Now, again, who is setting the price?

UPDATE - Confirmation that Random House is Smarter on this
Random House is still not signed onto the Agency idea for the reasons cited in the linked article and wants to consult with stockholders and authors first:

  1. The agency model "lets the company take preset commissions on sales."
  2. "Apple would have the publishers put the price-tags as paid by customers, something which doesn’t seem to be [a] lucrative proposition to Random House executives."

The above speculations are due to AppAdvice's Alexander Vaughn "revealing" iPad iBooks pricing for the NY Times Bestsellers, in that he was at a preview of the iPad Bookstore and has a picture of the pricing shown at the presentation.  He does say it was a "not-so-NDA-complying preview."

  He reports that of the 32 e-books featured in the NYT's bestseller's section, 27 of them, including the entire top 10 are priced at $9.99.

Again, this means that Apple would pay the publishers $7 of the $10 OR if they applied the 30% to the publishers' WANTED selling price ($15), then they'd pay the publishers $10.50, losing money on each book.  Is that likely?

Amazon would be making $3 on each NYT bestseller instead of losing $3.50 on each, using the 'Agency' plan Macmillan and others have been negotiating.

Gizmodo's Matt Buchanan writes about the "Supposedly Leaked" pricing and points out that the highest priced e-book of the 32 bestsellers mentioned is Poor Little Bitch Girl by Jackie Collins, going for $12.99 - but the Kindle counterpart is only $8.83.

So, who is (not) matching whom?  I think some are missing that Macmillan's new agreement with Amazon was to start April 1, not now (though people have noticed e-book pricing inching up).  So it's difficult to determine who is setting the price and matching whom in April.  And it would be very time-consuming to monitor and regulate between all the bookstores.  This is what the large publishers have bought into though, while attempting to set fixed higher pricing to be the same at all stores (per Apple).

Authorlink discusses the new IDPF survey and points to a few articles on the explosion of e-books.  One is TBIResearch's headline by Rory Maher that Here's Why Amazon Will Win The eBook War: Kindle Already Has 90% eBook Market Share.  Read his article to see all the implications if Amazon continues to lead after the next half-year.

Authorlink also points to the main article about the e-book explosion by Mark Coker, CEO of Smashwords, an already very influential e-book publisher, who sums things up with:
' Why are consumers going ga ga over ebooks?  Back in October, I blogged some of the reasons in my Huffington Post piece, Why Ebooks are Hot and Getting Hotter.  I listed several reasons, such as the proliferation of exciting new e-reading devices; screen reading rivaling paper; content selection; free ebooks as the gateway drug; lower prices; and great selection.

If we boil it all down to what really matters, it's about customer experience.  People who try ebooks are loving ebooks. '
And what many have left out of their predictions is the very real difference between reading books (not web images and short articles) on an e-Ink screen and on a larger LCD screen.

Then there is the $259 price for the 6" Kindle with which you can download a book immediately from almost anywhere with no web-data charge vs the $500 price for the iPad which will not have that downloadable-from-anywhere feature unless you pay $630 for the tablet plus a monthly fee for web data.

  But it's not an either/or. Many Kindle owners plan to buy the iPad also (or another tablet) for fast, colorful, portable web-browsing and fast email.

See the ongoing Guide to finding Free or Low-Cost Kindle books and Sources
Also, a page of links that confine searches to mid-range priced e-books. Below are ways to Share this post if you'd like others to see it.
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  1. Very interesting article.
    I was recently exposed to the Kindle. A friend has both the old and the new Kindle 2. I did not like the fact that you need light to read it.
    After the exposure to the Kindle I found out that I could get an App to read the Kindle books on my iPod-Touch.
    I have read about 8 book so far.
    Don't have problems with reading an LCD screen as some people report to have. I look at a computer screen more than 8 hours a day.
    Great to read at 4am without bothering my wife.

    I don't understand all the fuzz about the price of the books, at Amazon, Apple or Barnes-Noble.
    I REFUSE TO PAY MORE THAN $10 for a book.
    People, people, people, it is up to us to control the price !!! If we refuse to pay more than 9.99, then what are they going to do with the overpriced books that don't move out of their shelves???
    Remember; We the People, for the People, ...
    By the way I have that on my iPod-Touch also.

    Resently downloaded "Kindle for PC" to my Motion Computing LE1700.

  2. Koch Family,
    People's eyes are different. A visit to any Kidnle forum anywhere will show that most people find the (larger) LCD screens much harder on the eys for books than the Kindle screen (obviously true only in daylight or by a lamp).

    You're seeing only a little at a time with an iPod touch. If you read a book on a 10" LCD screen for a book (as opposed to web browser) you'll tend to note the difference between that and your iPod after 1/2 hour. Most can read on the Kindle for hours at a time w/no eye strain, but not so with larger LCD screen where more light is coming at your eyes (even when brightness is dimmed).

    Others won't have a problem but they've been in the minority on the forums where people gather to trade experiences (most of them good) and to help one another when there are questions about using Kindles.

    Re the book pricing wars -- I agree with you, but the bulk of people DO want to read the bestsellers as they used to for $10 and, like you, will not pay above $10 for those but they don't like the new 30% to 50% higher pricing and it's certainly their right to talk about it as well as not buying them.

    Some people just put a premium on being able to read an e-book for a decent price and not have to wait until the publishers decide to pay attention. These times are hardly conducive to such open fixing of higher prices so that people can no longer look for sales anywhere, come April 1, on those bestsellers unless Apple decides it will charge the lower price and then all others can 'follow' their pricing.

    It's the publishers who will suffer more when they notice they're not getting additional hardcover buyers as they think they will, nor e-book buyers at that price, and it's worth talking about and discussing.

    But your advice is good for the patient. And, really, publishers should also hear (and pay attention to) what buying customers are thinking.

    Yah, I like the Kindle for PC too and will like it even better when they finally add the usual Kindle search routines and annotation-creating as they're planning to.

    Thanks for the feedback!


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