The Macmillan and iPad Effect on the Kindle

At a time when the large publishing houses are rushing to charge Kindle customers 50% more for e-books because e-books are "cannibalizing" hard cover sales (yet they like to dismiss them as a tiny percentage of book sales), some Kindle owners -- especially new ones, for whom the $10 bestseller Kindle book price was a lead feature -- have wondered out loud if they should not have bought their Kindles.

In a current forum thread, Kindle owners are asked if they would take an offer at this point to return their Kindles to Amazon for a refund (not that this is being offered but Amazon does have a 30-day return policy).
  The resulting forum discussion is an interesting read.  Click on the link to read it.

A really interesting Listen is this week's edition of the new, weekly Len Edgerly The Reading Edge podcast, which reports on all e-readers -- this week's podcast being especially germane: Part 1 of a 2-part interview with James McQuivey, a vice president and principal analyst at Forrester Research.  It's titled "Amazon Brings a Knife to a Mud Fight."  Edgerly mentions that

' He also shares his thoughts on how Apple’s new iPad figures in to all this.

 I’ll have the second half of this interview on The Kindle Chronicles episode 81, which will be uploaded as usual on Friday, February 5.  In that portion, James will discuss what he and his teammates at Forrester are calling “The Kindle Flame,” by which they mean the next generation of Kindle that might, if it gets certain things right, set the eBook market fully ablaze as opposed to merely kindled." '

I also browsed news articles analyzing the effect of the last week on Amazon and the Kindle.  Here are excerpts from a few:

BARRONS - "Amazon's Overblown E-Book Tussle" Excerpts:

' We believe concerns over the impact of the potential change in e-book pricing and Apple's (AAPL) iPad launch have been overblown.

Even if all of the publishers move to the agency model, which is unlikely, we still expect Amazon to capture a large share of the e-book market. We also expect physical book sales, in which Amazon has a leading market position, to significantly exceed digital book sales for at least the next five years. In addition, the iPad costs two to three times more than the Kindle, and its liquid crystal display screen provides an inferior book-reading experience...
. . .
Among our takeaways is that Amazon will likely sell fewer titles at higher prices and a higher margin from publishers instituting an agency pricing model. Some publishers are likely to maintain the current wholesale pricing structure in order to capture share, which could put pressure on companies using the agency model. '

To read the full article, click the top result of the linked Google results page if you're not a subscriber yet.

PAIDCONTENT - BARCLAYS CAPITAL
- "More Than 3 Million Could Be Sold This Year: Analyst"

' ... according to updated estimates from Doug Anmuth, analyst at Barclays Capital, in light of Amazon’s Q4 results and recent accounting change. Anmuth says he estimates 3.1 million Kindles will be sold this year ((62 percent growth Y/Y)
. . .
- Increased competition from the iPad, but Kindle is significantly cheaper & will continue to appeal to somewhat of a different market given the e-Ink screen, smaller form factor, better battery life, & lower weight.

- While the recent pricing dispute with Macmillan could signal a broader shift toward an agency model of eBook distribution, we believe higher margins will partially help offset the lower volume resulting from higher eBook prices. '

(See the customer forum thread mentioned, for reactions to how they plan to deal with this this.)
  At the general Amazon Kindle discussion forums, you'll see an avalanche of reactions, which include authors from Macmillan adding their input, with the unfortunate result that too many wind up alienating customers via posts that are hostile to the customer reactions to the 50% price increase for Macmillan, and likely for Rupert Murdoch's Harper-Collins as well as Simon & Schuster, all making similar noises to Macmillan's now.

SEEKING ALPHA - Interesting Stock market results for Apple

' Apple’s (AAPL) revenues surged 32% on better-than-expected computer sales. It beat its earnings estimate by $1.60 per share. It even introduced the iPad, a new product it hopes will take market share from Amazon’s (AMZN) Kindle. After an initial rally, the stock dropped 5% below where it was before the company announced all this news. '

TUAW (The Unofficial Apple WebLog)
"HarperCollins pressuring Amazon to hike Kindle prices"

I guess the below does again explain why Steve Jobs was so cocky in announcing in that video that Amazon and Apple's iBookstore would have the same prices despite the current $5-lower Amazon pricing:

'...now HarperCollins is putting the pressure on that same site to raise eBook prices from $9.99 up to $14.99 or higher. Amazon finds itself in between a rock and an iPad -- if they don't give in to publishers' demands, they could find themselves abandoned for an exclusive Apple deal, but if they do raise prices, sales will start dropping even before the iPad appears. Jobs predicted about this much last week in an interview with Walt Mossberg, saying that publishers would run afoul of the Amazon store, and Jobs would be more than happy to pick them up in iBooks.

. . . At the Apple event the other week, Jobs said on stage that prices on the Kindle and the iPad for books would be "the same," so while fleeting images of the iPad showed bestsellers at around $10 (which is what Amazon charges), it's possible that Jobs would go with the $14.99 price to woo publishers over to his side. '

[ Methodology: In asking the publishers to raise the prices, as he did, Jobs wouldn't care how few he sold, only the margin for each.  In Apple's case the focus is on the hardware. ]

THEWRAP - "Amazon Slow to Restore Macmillan Titles"

' . . . It's now been four days since Amazon said it would reluctantly “capitulate” to Macmillan, and though the publisher's books began to trickle back onto the site Tuesday, many titles were still unavailable for hardcover purchase directly through Amazon’s store.

Whether Amazon was being passive-aggressive or just lazy isn't clear. But Amazon's snit with Macmillan is just only the tip of the iceberg: Not only has Apple said its iBooks store will charge $14.99, but News Corp. chief Rupert Murdoch said on Tuesday's call with investors that he doesn't like HarperCollins' deal with Amazon -- and may challenge the bookseller's discount pricing, too.
. . .
Apple intends to price e-books at $14.99, essentially siding with book publishers in the hopes that they’ll cut deals with the iPad for exclusive releases, putting a dent into the Kindle’s market dominance. ("Publishers will actually withhold their books from Amazon," Steve Jobs told the Wall Street Journal, "because they are not happy with the price.")

But will Apple’s Kindle-killer strategy work?

That question could ultimately depend on e-book customers. There’s already a small movement organized by Kindle enthusiasts to boycott any e-book that is priced over $9.99.

“I think Amazon has quite successfully burned the $9.99 price point into the brains of digital readers,” said Jason Boog, editor of mediabistro.com’s book industry blog, GalleyCat. “If people are actively organizing boycotts against a certain price point, for better or for worse, Amazon has already won the price war.”

Boog predicts publishers “will be forced to offer a bare-bones $9.99 eBook edition for most books, and then build fancier ‘enhanced’ e-books for tablet computers and sell for a premium price... '

The next week should be interesting. Below are ways to Share this post if you'd like others to see it.
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Murdoch wants more money for Kindle-WSJ

Well, Robert Murdoch wants more money for all his other news deliveries too, in general.
See the earlier article about Murdoch "rebuffing" the Amazon Kindle business model.  He said that Amazon wouldn't be getting his content, while others pointed out Amazon already had the Wall Street Journal content and books by Harper Collins.  If he didn't already know that (seems so), he may have gotten even more perturbed that this was a done deal in his case.  The sudden 50% increase in the Kindle pricing of the Wall Street Journal was made about 2.5 weeks later.  No other increases have been seen on the other Kindle newspaper offerings.

The Amazon Kindle Community forum response is something less than delight (with numerous reports of WSJ cancellations) over the WSJ price increase from $9.99/mo. to $14.99/mo. and one can wonder if Murdoch won't see a net loss on this.  He had bristled over the idea of the 30% or so said to be alloted to publishers while probably assuming that Amazon got the balance.
  As mentioned here in an entry posted on May 10

"According to a reliable source in the know, The New Yorker's Kindle split is divided 33% New Yorker, 33% Amazon, and 33% wireless carrier."

At Washington Post's paidcontent.org, Staci D. Kramer wrote, on May 6:

' Murdoch put it simply ...“We will not be ceding our content rights to the fine people who created the Kindle.  We will control the prices for our content and we will control our relationships with our customers.

' Any device maker or website which doesn't meet these basic criteria on content will not be doing business long-term with News Corporation.”

' Take this one of two ways: News Corp. will keep pushing other possibilities until Amazon (NSDQ: AMZN) backs down on its controls (good luck with that) or News Corp. will opt for a device it either owns or at least controls and can use in a proprietary way. '

But then, WP's paidcontent.org added:

' (The perils of writing live about Murdoch.  In further comments, he brushed off the idea of News Corp. investing in a device, saying the company may invest in something experimentally: “We're not appliance makers.”  A spokesperson later explained that the decision about how News Corp will handle this literally hasn't been made yet.
' But in nearly the same breath, Murdoch bragged about 360,000 downloads of the free WSJ iPhone app over the past three weeks; that would be from the App Store operated by Apple (NSDQ: AAPL) with the same lack of control for News Corp.  It's as contradictory as offering the content-rich app for free and complaining about how the online business model has to change.

'   Then again, he promised that as soon as the technology is there, readers will be asked to pay “handsomely” for access. (It will be fascinating to see how many “free” readers pony up—and how much the WSJ charges.) '

  On May 11, Kramer wrote

' And, in today's reality, DJ [Dow Jones] is looking at any and every way to get more people to pay directly for access to the WSJ in a variety of forms, while encouraging current subscribers to pay even more by expanding offerings... '

For the WSJ-disenchanted who still want a good paper for financial news and analysis, try the Financial Times subscription, at $9.99, as they get an average of almost 5 stars from a good number of Amazon customer reviews.  The WSJ never did better than 3 stars in customer satisfaction.  The 14-day free trial applies to this also. 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.

Send to Kindle

(Older posts have older Kindle model info. For latest models, see CURRENT KINDLES page. )
If interested, you can also follow my add'l blog-related news at Facebook and Twitter
Questions & feedback are welcome in the Comment areas (tho' spam is deleted). Thanks!