Amazon explains, to customers, its negotiation focus with Hachette and other publishers. Judge Cote approves Apple's settlement plan for the states' class-action suits. Is the Kindle Unlimited subscription program a factor in the negotiations?

Amazon explains to customers its concerns and focus during the ongoing negotiations with Hachette

After all that's been written lately about the continuing, apparently bitter, struggle between Amazon and Hachette, Amazon has decided to explain its own perspective on this to customers, who aren't able to pre-order books of interest from Hachette nor expect to order and be shipped quickly a bestseller from that publishing company.

Amazon's bold offer to authors (and Hachette) during the interim
  On July 9, Amazon made an offer that was favorable to the authors while talks continue.  From NPR:

' . . . On Tuesday, the retailer wrote directly to a handful of Hachette authors, asking for thoughts on a proposal that would give 100 percent of digital profits to authors while the fight continues.

  Amazon's vice president of Kindle content and independent publishing, David Naggar, wrote in a letter that the move "would motivate both Hachette and Amazon to work faster to resolve the situation."
  . . .
  . . . Hachette initially called the suggestions laid out in the letter "suicidal." After news of the letter to authors broke, Amazon sent the offer directly to Hachette, which rejected it, saying, "We believe that the best outcome for the writers we publish is a contract with Amazon that brings genuine marketing benefits and whose terms allow Hachette to continue to invest in writers, marketing, and innovation."

  Amazon, responding to the "suicidal" comment, said, "We call baloney. Hachette is part of a $10 billion global conglomerate. It wouldn't be 'suicide.' They can afford it. What they're really making clear is that they absolutely want their authors caught in the middle of this negotiation because they believe it increases their leverage. ... Our offer is sincere. They should take us up on it." '

Well, that went nowhere.  It might have given some authors pause about the situation though.

So now, Amazon's explaining, at the Kindle Forum, their side of the dispute to customers and detailing the math involved in pricing and net revenue for different scenarios.  It also answers the conjecture that Amazon has demanded 50%.
  Here, for convenience, is the full text of the public posting, bold-faced emphases mine:

' Initial post: Jul 29, 2014 1:29:59 PM PDT
The Amazon Books team says:
(AMAZON OFFICIAL)
With this update, we're providing specific information about Amazon's objectives.

A key objective is lower e-book prices. Many e-books are being released at $14.99 and even $19.99. That is unjustifiably high for an e-book. With an e-book, there's no printing, no over-printing, no need to forecast, no returns, no lost sales due to out-of-stock, no warehousing costs, no transportation costs, and there is no secondary market -- e-books cannot be resold as used books. E-books can be and should be less expensive.

It's also important to understand that e-books are highly price-elastic. This means that when the price goes up, customers buy much less.  We've quantified the price elasticity of e-books from repeated measurements across many titles. For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99.

  So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99.  Total revenue at $14.99 would be $1,499,000.  Total revenue at $9.99 is $1,738,000.

The important thing to note here is that at the lower price, total revenue increases 16%. This is good for all the parties involved:

* The customer is paying 33% less.

* The author is getting a royalty check 16% larger and being read by an audience that's 74% larger.  And that 74% increase in copies sold makes it much more likely that the title will make it onto the national bestseller lists. (Any author who's trying to get on one of the national bestseller lists should insist to their publisher that their e-book be priced at $9.99 or lower.)

* Likewise, the higher total revenue generated at $9.99 is also good for the publisher and the retailer.  At $9.99, even though the customer is paying less, the total pie is bigger and there is more to share amongst the parties.

Keep in mind that books don't just compete against books.  Books compete against mobile games, television, movies, Facebook, blogs, free news sites and more.  If we want a healthy reading culture, we have to work hard to be sure books actually are competitive against these other media types, and a big part of that is working hard to make books less expensive.

So, at $9.99, the total pie is bigger - how does Amazon propose to share that revenue pie?  We believe 35% should go to the author, 35% to the publisher and 30% to Amazon.  Is 30% reasonable?  Yes.  In fact, the 30% share of total revenue is what Hachette forced us to take in 2010 when they illegally colluded with their competitors to raise e-book prices.  We had no problem with the 30% -- we did have a big problem with the price increases.

Is it Amazon's position that all e-books should be $9.99 or less?  No, we accept that there will be legitimate reasons for a small number of specialized titles to be above $9.99.

One more note on our proposal for how the total revenue should be shared.  While we believe 35% should go to the author and 35% to Hachette, the way this would actually work is that we would send 70% of the total revenue to Hachette, and they would decide how much to share with the author.  We believe Hachette is sharing too small a portion with the author today, but ultimately that is not our call.

We hope this information on our objectives is helpful.

Thank you,

The Amazon Books Team '

Another possible stumbling block
While I haven't seen this suggested, it seems to me that another sticking point for publishers could be that Amazon probably (I don't know that this is true but I can't imagine Amazon not approaching the subject) wants the same rights to include certain books under their new Kindle Unlimited subscription plan when publishers have already given subscription rights for those books to competitors like Scribd and Oyster.

Other articles you might find interesting
  * A petition from some of the writers to Hachette
        David Gaughran is one of the supporters.  He wrote a much-admired analysis
        of the Amazon-Hachette situation.
  * In mid-July, talks began between Amazon and Simon & Schuster on
        new e-book pricing agreements.
  * Here's a NY Post article on that.
  * Apple gets court approval for a $450 million settlement over e-books price-fixing,
        and it involves lower penalties if the case is sent by an Appeals court back to Judge Cote,
        while there'd be a change or dismissal of the settlement if the appeals court comes down
        on Apple's side.

Some might be interested in this blog's History and Timeline of the e-book pricing wars.
  It includes a streamlined version of what the DoJ and Judge Cote would have seen and some insight into why she ruled as she did.

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Kindle News: 17 more states join class action suit. Excellent timeline and guide to points in DOJ and Class Action lawsuits

17 more states join class action against Big5 and Apple, with new details revealed.

paidContent's Laura Hazard Owen reports that New York, Washington D.C., and 15 other states "have joined the e-book pricing class action suit against Apple, Macmillan and Penguin, bringing the total number of states involved so far to 31 (if you include DC and Puerto Rico). "

Owens' piece is a more in-depth look than we've seen with other news-site reports,
She adds that, unlike the Department of Justice (DOJ), the states seek monetary restitution for consumers and have already reached, as we've seen earlier, a settlement with Hachette, Simon & Schuster and HarperCollins.

With that amended complaint comes new information that's been made public, though it's not clear why it was redacted from the version filed in April.  Much of that newly-public information (in the state's amended complaint) is found in the DOJ filing against Apple and the publishers, but new details include an e-mail from Steve Jobs that shows him becoming directly involved in the agency pricing negotiations "after [Apple's] Eddy Cue could not secure one of the Conspiring Publisher’s commitment directly from an executive."

We see yet another admission or confirmation that the publishers (and therefore presumably their authors) did make more money under the older, wholesale model despite many arguments made in forums by authors (who were asked by their publishers to join forum discussions) that the authors' revenue would be less under Amazon's traditional wholesaler arrangement.

' Macmillan CEO John Sargent attempted to negotiate with Apple’s Eddy Cue on a way to make agency pricing less painful for publishers (publishers actually make more money under the wholesale model, where they are paid based on a book’s retail list price, than from the agency model).

Asking Apple to help, then, by taking a reduced cut
On January 11, 2010, Sargent wrote to Apple in an e-mail, "Am thinking a possible way to ease the financial pain for the publishers and authors of moving to the agency model.  Could you take a reduced cut on hardcover first releases (where we are presently making 14.00 in revenue and would make 9.00 under your assumptions)?"
  Apple did not agree to take less than its customary 30 percent cut. '

Now, "hardcover" is mentioned there, but e-book 'suggested retail prices' were set by publishers under the traditional agreements (often set, in 2009, at $26), and Amazon, it's been explained often, usually paid about 50% of that publisher-set retail price to the publisher, EVEN when Amazon sold a bestseller e-book at $9.99, a price that made the Big5 nervous about the devaluing of their hardcover books.

  Many authors did actually believe that they'd make less when an e-book was discounted by Amazon, and I think the publishers let many of them believe and say this in forums.  There was a lot of rancor in the forums between some authors and customers as a result.

Publisher e-mail
Then a publisher, Owens points out, emailed the parent company's CEO Jan. 21, 2010 that

' [Apple's Eddy Cue] … was eloquent on why they would be a great partner, that price could and would be experimented with as Apple want [sic] to drive high revenues; that this would be for a one year term; that one major publisher (clearly RH) was out and that ne [sic] need the five majors in but maybe four. He said that he was sure he would close on two today and two tomorrow... '

Steve Jobs's e-mail
Jobs stepped in and wrote to a resistant executive at one of the "Conspiring Publishers," outlining the choices the publisher had, the only semi-attractive one being

' Throw in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99. '

As we saw, the Big5 e-books actually came to sell between $12.99 and $19.99.

E-mails to Barnes & Noble - who became quite active in all this
After the Big5 and Apple agreed on the Agency model and pricing, the amended class action complaint, Owens explains (bold-facing mine):

'...says the five publishers “worked together to force” Random House to adopt it as well.

  On March 4, 2010, in an exchange also identified in the DOJ’s filing, Penguin CEO David Shanks sent Barnes & Noble’s then-CEO Steve Riggio an e-mail reading in part,
  “Random House has chosen to stay on their current model and will allow retailers to sell at whatever price they wish…I would hope that [Barnes & Noble] would be equally brutal to Publishers who have thrown in with your competition with obvious disdain for your welfare…I hope you make Random House hurt like Amazon is doing to people who are looking out for the overall welfare of the publishing industry.” '

While this is one CEO (of one of the two publishing companies that have not settled) writing to Barnes and Noble, it's an indication of an atmosphere of concern stated often (within the complaint) that the "conspiring publishers" needed more publishers to stay together on all this to get Amazon to agree to the Agency model and its higher, non-competitive pricing.

B&N's management did decide not to feature Random House in any future advertising, the complaint says.  And most who follow this pricing war know that Apple refused Random House books a place in their iBookStore.  Random House is said to be the largest U.S publisher of novels.  Neither Apple nor B&N are "Gas 'N' Groceries on Route 19" stores taking defensive measures against giant Amazon.  But that latter is Authors Guild President Scott Turow's most recent fantasy.  I feel bad for the authors who are represented by this guy whose forte seems to be a mixture of fantasy and bad melodrama, when he refers to Amazon as the 'Darth Vader of publishing.'

And, as I said in late April, Turow even refers to Apple as "a minor player in the realm of books" (the minor road-store that could, in one day, successfully encourage a jacking-up of e-book prices an average 50% (to $20 at the high-end), nation-wide, on new books, and even deny Random House space for its e-books because RH would not cooperate on the Agency model.  Yep, Apple's just a small store hoping to get its size 3 foot in the publishing door.

The Club
When discussing what I'd deem normal book business practices of 'windowing' or staggering different releases of a book, if not done in lock-step, the publishers "referenced themselves in one email as ‘the Club!’"  That was in connection with windowing discussions, and, as Owen says, not agency pricing discussions with Apple.  But a club seldom calls itself that over one small facet of whatever brings them together as co-members, but the label does tend to speak to group focus of some type, in this case having to do with e-book pricing.

Downloads linked at the paidContent story:
The states’ amended complaint (5/11/12)
The states’ original complaint (4/11/12)
The Department of Justice’s complaint (4/11/12)

I've left out a lot of detail and a table of how Apple calculated its e-book prices in publisher contracts, but you can read the full details at paidContent's story.


ALSO: EXCELLENT "DOJ LAWSUIT UPDATE" by "Dear Author"

MANY interesting points are made in this piece that explains what is happening here, Mr. Jones, step-by step.  Fascinating read, because I remember hearing about all this as it was happening and then it all tended to fade and blend together, but she [Jane] lays it all out, in no-nonsense manner.
  I'll just quote the opening paragraph from her huge list of info-points with explanations of what some of the actions described indicate.

'  Collectively the Big 6 account for approximately 60% of all revenue generated from print titles sold in the U.S. and 85% of all revenue generated from the sale of NYT Bestsellers.
  In 2009, the publishers’ market share broke down as follows:  Random House (17.5%), Penguin (11.3%), Hachette (10%), HarperCollins (9.8%), Simon & Schuster (9.1%), and  Macmillan (5.4%) '

So, if you're interested in what is essentially a detective story with all the pieces starting to come together, go to Dear Author for the step-by-step guide.


Earlier and related:
TIMELINE:  Ebook Pricing Wars - what DOJ would have seen.

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Current Kindle Models for reference, plus free-ebook search links (non-Big5)

US: Kindle Fire  7" tablet - $199 Kindle NoTouch ("Kindle") - $79/$109 Kindle Touch, WiFi - $99/$139 Kindle Touch, 3G/WiFi - $149/$189 Kindle Keybd 3G - $189, Free, slow web Kindle DX - $379, Free, slow web

UK: Kindle Basic, NoTouch - £89 Kindle Touch WiFi, UK - £109 Kindle Touch 3G/WiFi, UK - £169 Kindle Keyboard 3G, UK - £149   Keybd: w/ Free, slow 3G WEB

OTHER International Kindle NoTouch Basic - $109 Kindle Touch WiFi - $139 Kindle Touch 3G/WiFi - $189 Kindle Keybd 3G - $189   Keybd: w/ Free, slow 3G WEB

Check often: Temporarily-free recently published Kindle books
  Guide to finding Free Kindle books and Sources.  Top 100 free bestsellers.  Liked-books under $1
UK-Only: recently published free books, bestsellers, or £5 Max ones
    Also, UK customers should see the UK store's Top 100 free bestsellers.

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Kindle News: Federal judge refuses to toss out class action lawsuit on e-book pricing, citing damaging Apple statements. 56-page ruling download.

U.S. District Court Judge Denise Cote refuses to toss out a nationwide class action lawsuit against Big5 and Apple filed in August 2011.

Associated Press's Larry Neumesiter reports that, in her written ruling, District Court Judge Cote cited Steve Jobs's statements, one that was video'd in answer to Walt Mossberg of WSJ at the initial iPad launch event ("the prices will be the same"), and one that was made to biographer Walter Isaacson about what Steve Jobs had told the large publishers named in the lawsuit ("the customer pays a little more, but that's what you want anyway").

The argument for dismissing the class action lawsuit was that Apple and the publishers named were just improving the efficiencies of distribution, but the judge rejected that, saying,
  "It has everything to do with coordinating a horizontal agreement among publishers to raise prices, and eliminating horizontal price competition among Apple's competitors at the retail level."

  AP's Neumeister adds that Apple had said last year that the charge that it had conspired with the major book publishers to raise the prices of e-books was not true and that it had instead (as Neumeister's explains their position) 'fostered innovation and competition by introducing its iBookstore in 2010 and said customers had benefited from e-books that are more interactive and engaging.'

  Neumeister's AP report states that
  'The judge wrote that Apple had a "strong incentive" to encourage publishers to agree together on the rules for e-book sales so that its iBookstore did not face stiff competition' and that 'With the fortuitous entry of Apple into the market for e-books, and the decision by Apple to join the price-fixing conspiracy, that horizontal conspiracy became a potent weapon for engineering a fundamental shift in an entire industry," the judge said.'

The ruling means that the class action can proceed to trial.

The Department of Justice settlements
  As we saw earlier, the U.S. Department of Justice had reached a settlement with Hachette, HarperCollins and Simon & Schuster.  The AP report on the district court judge's ruling says that the federal government is proceeding with its 'lawsuit against Apple and Holtzbrinck Publishers, doing business as Macmillan, and The Penguin Publishing Co. Ltd., doing business as Penguin Group.'  The settlement reached with the other 3 publishers is expected to help them avoid the class action lawsuit.

WSJ article on Judge Cote's ruling
The Wall Street Journal's "Cheat Sheet" article by Saul Griffith today described the ruling as a "damning indictment of collusive practices between Apple and five major U.S. book publishers," and Griffith quotes the judge further:

"In short, Apple did not try to earn money off of eBooks by competing with other retailers in an open market; rather, Apple 'accomplished this goal by [helping] the suppliers to collude, rather than to compete independently.' "

WSJ's Griffith adds, in his article titled, "Outlook Turns Gloomy as Judge Slams Apple in E-Book Case" ['Gloomy' was changed from 'not good'] :

' The proceedings probably ignored Apple's more substantive (and hidden) agenda – to thwart the growing popularity of Amazon’s (NASDAQ:AMZN) Kindle tablet by depriving the company of the opportunity to sell low-priced e-book content through the legacy ‘wholesale’ book selling model it created and dominated, controlling over 90 percent of e-book sales before Apple jumped into the game. '

Apple Insider's Mikey Campbell quotes Steve Perman, lead counsel and managing partner of Hagens Berman, the law firm handling the class action suit:

  "We thought that Judge Cote’s ruling was spot on, especially when she noted that we’ve gone above and beyond in illustrating the legitimacy of our case ... We are eager to push forward with the case.”


The 56-page ruling in PDF format, available for download
Marketwatch points us to the 56-page ruling, available as part of a set of documents at hbsslaw.com.


Simple Timeline of events upon which the lawsuits are based
TIMELINE: Ebook Pricing Wars - what DOJ would have seen - March 12, 2012 Below are ways to Share this post if you'd like others to see it.
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"Have publishers already lost the war over agency pricing?"

Are publishers who raised e-book pricing the past year losing the ebook-pricing war?   I'd like to think so.

 The blog article's subject title is from the headline on the article by Philip Jones at Futurebook.net commenting on the higher-priced e-books not appearing very much in Amazon's topmost besteller lists (UK).

  Actually, he's commenting on The Guardian's article by Sam Jordison on "EU anger over ebook deal suggests hard times ahead for publishers."

  Describing again (1) the circumstances leading to the use of Apple's "Agency Plan" by the Big5 (and now Big6) publishers, which raised e-book prices by 30-50% average, this last year, and (2) the raids by the European Commission on publishing houses in the UK to investigate possible anti-trust violations, seizing not only paperwork but also "smart phones and laptops from senior executives," the Guardian's Jordison sides with the publishers against what he describes as a monopolist Amazon against angelic publishers who are just trying "to get a good deal for everyone."

  They do, however, have the sense to see a valid point in the complaint "The only reality we readers know is that we want to buy the book but can't."

  They continue, nevertheless, "But the fact that customers have a distorted view of how much ebooks should cost is hardly the publishers' fault.  Especially since a new breed of "self-published" authors are starting to sell millions of the things at $0.99 or less on Amazon – which casts an interesting light on the recent declarations about ebooks outselling paper books."

  Imagine that!  But then, new technology has been a problem through the ages for those wedded to older technology and unwilling to adjust to it.

Futurebook's article
Philip Jones thinks that Sam Jordison is an advocate of publishers setting of bookseller prices "but he is concerned that publishers may lose the battle legally, and that they have already lost the battle in the hearts of the consumers."  

Yes, and Jordison might do a bit more wondering about why that is so, and it's not just about pricing.  It also says a lot about what publishers think of their reading customers.  I've seen publisher statements (and reprinted them) that anyone well-off enough to buy an e-reader can afford the high book prices.  (Thanks to Joe Besser for the correction.)

 In marking books up by almost 50% when new, and also OVER the price of their paper back copies too often, they display a real disdain for e-book customers who are expected to spend almost as much OR MORE on a product that cannot be resold, and in most cases still cannot be lent to anyone.

  This goes against the traditional attitude toward books.  The publishers prohibit, for the most part, lending as is normal with paper books, and prohibit entirely re-selling the books.  Yet they price them higher than paperback books, and often only a few dollars less than a hardcover.  And now they're targeting libraries, with e-books to be disabled after x number of loans.  And the latter is with publishers willing to lend e-books at all to public libraries.  Macmillian and Simon & Schuster won't.  Jones points out:

'... publishers such as Hachette, Harper, Penguin, and Simon & Schuster, should be getting their titles into the Kindle charts, even at higher prices.  But I just checked the hourly Kindle chart, and there are no agency priced books in the top 20.  The highest placed title is David Nicholls' One Day (Hodder/Hachette), which also happens to be the fourth most expensive Kindle Edition in the current top 50.

Furthermore, and this is even more worrying.  The average price of paid-for books in Amazon's Kindle top 50 chart today is £1.79.  It is little wonder Guardian commentators [people commenting on the article] think e-books should cost less than agency publishers are making them available: they do.

Read some of the reviews appended to those self-published titles in the Kindle chart, and we could be forgiven for thinking that price has superceded quality in the minds of Kindle users.  This is not just worrying it is tragic.  Agency publishers have a limited period of time to prove Amazon wrong by getting their titles up the Kindle bestseller chart, before the OFT rules one way or another. The concern must be that by then, the war may already have been lost. '

His numbers are from the Amazon UK Kindle store, but in the U.S. the UK site's Kindle book pricing is not displayed except in the Bestseller listings.

Actually, there ARE e-reader customers who give cost a very high weight in the economy we're in today.  Many are also finding quality writing although they may have to dig deep and wide, but when they find it, word of mouth is a huge factor in online book sales.

  The online community is important for those not wanting to wade through it all, and there is actually a way to find quality writing without depending on large publishing houses and publicity machines, to the extent that some writers discovered by price-conscious readers have been offered contracts by large publishing houses; an important trend now is seen in authors who are hesitating to go with the contracts offered, as it may be more beneficial for them to continue to 'self-publish' because the large publishers have not had a reputation for paying the authors/creators what they are due.

  For the Amazon UK customers' rather raw feelings on all this (and publishers should really pay more attention to what is said), see the Agency pricing thread on their Kindle forums.  It's similar to what is seen on the U.S. forums but UK customers are even more angry about it because the increases by the Big5 publishers have been quite outrageous in the UK where general e-book pricing had been lower than it had been Amazon US's Kindlestore.

BESTSELLER E-BOOK listings for UK and US stores
  Here is the current Bestseller listing (paid and free) for Amazon UK,
  and here's the current Bestseller listing for for Amazon US.



Kindle 3's   (UK: Kindle 3's),   DX Graphite

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  Guide to finding Free Kindle books and Sources.  Top 100 free bestsellers.
UK-Only: recently published non-classics, bestsellers, or highest-rated ones
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Amazon pricing some Penguin hardcovers at ~$10 during pricing battle

Venture Beat reports that Amazon is hanging tough with the last of the Big 5 publishers bent on the Apple Agency model, which allows the large publishers their heart's desire to set higher pricing for bestselling e-books and uniform pricing for the customers at all e-bookstores, even if this nets the publishers less than they would have received for the lower-priced e-books under the earlier traditional wholesaler arrangement.  Their focus is not to allow their newer e-books to be "devalued" in that they feel the $9.99 pricing lowers the perceived value of books in general.

  While the other 4 in the Big 5 group have completed agreements with Amazon, it seems Penguin and Amazon are currently at an impasse in the negotiations on ebook pricing and availability.  Neither company is commenting on this.  Venture Beat's Anthony Ha writes:

' Details of the agreements haven’t yet been disclosed, but Penguin has refused to sign on.  It was the lone holdout.  As a result, Amazon had to stop selling the publisher’s e-books as of April 1.  The retailer appears to be retaliating, as first reported by The Wall Street Journal — not by removing books, but by dramatically lowering the prices on hardcovers.  Amazon is taking the loss of revenue, but the [Wall Street] Journal says publishers hate those price cuts, because they lower the value of the book in the eye of the consumer.

  For example, the hardcover of Roger Lowenstein’s The End of Wall Street” has a full price of $27.95, and Barnes & Noble’s website is selling it for $15.37.  On Amazon, it’s $9.99.  Or there’s Annie Lamott’s Imperfect Birds — $25.95 full price, $18.68 on Barnes and Noble, $9.99 on Amazon. '

So, if you're interested in getting any Penguin or Penguin Riverhead (Annie Lamott et al) hardcover books at the lower prices, now's the time.
  Be aware that only a few of their hardcovers are priced as low as $9.99 though.

Again, here are links to hardcovers for just Penguin and Penguin Riverhead.

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See the ongoing Guide to finding Free or Low-Cost Kindle books and Sources
  Check often: Latest free non-classics, shortcut http://bit.ly/latestfreenonclassics.) Below are ways to Share this post if you'd like others to see it.
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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 ARTICLE ON IMPACT OF THE KINDLE APP FOR TABLETS
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.

ARE THE E-BOOKS READABLE ON OTHER DEVICES?
  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.

THE FOCUS OF THE COMPANIES
  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.

CONTINUING E-BOOK PRICING WARS
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."

"LEAK" ABOUT APPLE iBOOKSTORE PRICING ON NY TIMES BEING $9.99
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?

IN THE MEANTIME
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).

WHY THE E-BOOK EXPLOSION
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.

---

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