Apple

E-Book Price Increase May Stir Readers’ Passions

11 August 2014

From The New York Times – in 2010:

In the battle over the pricing of electronic books, publishers appear to have won the first round. The price of many new releases and best sellers is about to go up, to as much as $14.99 from $9.99.

But there may be an insurgency waiting to pounce: e-book buyers.

Over the last year, the most voracious readers of e-books have shown a reflexive hostility to prices higher than the $9.99 set by Amazon.com and other online retailers for popular titles.

When digital editions have cost more, or have been delayed until after the release of hardcover versions, these raucous readers have organized impromptu boycotts and gone to the Web sites of Amazon and Barnes & Noble to leave one-star ratings and negative comments for those books and their authors.

“This book has been on the shelves for three weeks and is already in the remainder bins,” wrote Wayne Fogel of The Villages, Fla., when he left a one-star review of Catherine Coulter’s book “KnockOut” on Amazon. “$14.82 for the Kindle version is unbelievable. Some listings Amazon should refuse when the authors are trying to rip off Amazon’s customers.”

The angry commenters on Amazon and online message boards could just be a vocal minority. But now, with e-books scheduled to cost $12.99 to $14.99 under new deals that publishers negotiated with Apple and Amazon, a broader swath of customers may resist the new pricing. The higher prices will go into effect within the next few months.

. . . .

“I just don’t want to be extorted,” said Joshua Levitsky, a computer technician and Kindle owner in New York. “I want to pay what it’s worth. If it costs them nothing to print the paper book, which I can’t believe, then they should be the same price. But I just don’t see how it can be the same price.”

. . . .

Authors have been taken aback by some of the vehemence of the reader protests.

“The sense of entitlement of the American consumer is absolutely astonishing,” said Douglas Preston, whose novel “Impact” reached as high as No. 4 on The New York Times’s hardcover fiction best-seller list earlier this month. “It’s the Wal-Mart mentality, which in my view is very unhealthy for our country. It’s this notion of not wanting to pay the real price of something.”

Amazon commenters attacked Mr. Preston after his publisher delayed the e-book version of his novel by four months to protect hardcover sales. Mr. Preston said he was not sure whether the protests were denting his sales. But, he said, “It gives me pause when I get 50 e-mails saying ‘I’m never buying one of your books ever again. I’m moving on, you greedy, greedy author.”‘

. . . .

“Entertainment and media companies keep forgetting that consumers have a choice. They can decide not to buy the book at all,” said David Pakman, a venture capitalist and former chief executive of the digital music store eMusic. “They can play a video game, use an iPod Touch.” He added: “If you don’t get the price tag right and make it convenient, they just go elsewhere.”

Link to the rest at The New York Times and thanks to Felix for the tip.

This 2010 pricing uproar was, of course, the result of an illegal conspiracy between Apple and every big publisher except Random House. Its purpose was to force Amazon to increase ebook prices.

PG doesn’t remember that a group of Big Publishing authors bought an ad in The New York Times to defend the high prices in 2010, however. But the Stockholm Syndrome relationship between Big Publishing and its authors was certainly much in evidence back then.

Making Sense of Amazon-Hachette

11 August 2014

From Medium.com:

The only thing that has exceeded the volume of the comments surrounding the ongoing Hachette-Amazon book retailing negotiation is the irrationality you see in those comments. On the one side you have authors that see Amazon as wanting to chew up Hachette on their path to a monopoly, while on the other side you have Amazon outlining that the publisher desire for higher prices will kill the ebook business. Of course neither is true. What we have is a simple battle over profit margin.

. . . .

A key point that is almost universally missed outside of the tech world is that Amazon’s position in the ebook business is fragile. There is no greater chasm between author and Silicon Valley understanding than this. A very large percentage of authors feel that Amazon is in a commanding position in the ebook industry and that one of their goals is to create a monopoly position. While Amazon is in a commanding position, to think that monopoly is their goal illustrates a lack of understanding of Amazon’s relatively weak position.

Again, those in the tech industry understand the fragility of Amazon’s position: First of all, the barrier to entry for creating an ebook online store is absurdly low. In fact, Microsoft, Apple, and Google already have ebook online stores. Think about that for a minute: Three of the most formidable digital companies in the world are operating in the ebook space.

Another argument you hear is that Amazon also controls the device business. But this completely ignores the fact that Apple’s and Google’s devices are even more popular than Amazon’s. Microsoft certainly isn’t ceding this space either, as the recent purchase of Nokia indicates.

For Amazon to make any progress at all they would have to either make the ebook space not worth pursuing for those companies or to flat out beat them. But the reality is so much harsher than making progress. The assets that Apple, Google, and Microsoft bring to the table mean that Amazon’s market share is inherently tenuous. The result is that Amazon isn’t thinking offense, it is thinking defense, and this is the thinking behind their “not worth pursuing strategy.”

. . . .

So how is Amazon making the ebook business not worth pursuing? They are doing it by discounting so aggressively that the value of the book business for ebook retailers is so miniscule that it doesn’t even raise the eyebrows of the major tech companies. While the book business is big, why even bother with it if the profit margins are so small as to not even move the needle? Your time is better spent focusing on video games with in-app purchases, among many other things.

Apple’s collusion in fixing higher prices with the major publishers makes total sense in this light. The book business with Amazon cutting margins to the bone makes no sense for Apple. The book business with the major publishers setting prices and Apple getting a full 30% margin on those sales? That’s the kind of margin that gets Apple’s attention.

Unfortunately for Apple, they had to break the law to combat Amazon’s discounting. This should tell you two things: One is that the scope of Amazon’s discounting is obviously immense. If Amazon was just discounting on a small scale, Apple, Google, and Microsoft would be a lot more interested. The second is just how much Amazon subsidizes the publishing business and author earnings thanks to their discounting. Remember: They are still paying publishers and authors based on list price. When the customer pays the discounted price, Amazon eats the difference.

So we can see that Amazon has created a very low margin business, and we can also see that Apple at least has shown that if the margins are higher then they would put more attention to this line of business.

. . . .

One of the key side-effects of Amazon’s strategy of turning books into a low margin retailing business is that publishers and authors have been reaping enormous benefits. With Amazon aggressively discounting, publishers were watching their books sell in greater volume at a higher price point. Authors similarly reaped the benefit by seeing the lower price point lead to higher volume for sales without hurting their royalties.

. . . .

As I mentioned, the trouble for Amazon is that if they just stop discounting or cut back their discounting to select titles then the book retailing business is suddenly interesting to some pretty big players. Authors tend to think of Amazon’s strategy as driving Barnes & Noble out-of-business, but if they stop discounting they are much more worried about the aforementioned Apple, Google, and Microsoft .

Link to the rest at Medium.com and thanks to Cynthia for the tip.

Unpacking Amazon’s propaganda

7 August 2014

From The Global Indie Author:

As the dispute between Amazon and Hachette ramped up earlier this year, Amazon tried to exercise some leverage by delaying the sale of Hachette titles as well as increasing prices and changing Amazon’s algorithms to Hachette’s disadvantage. Hachette authors took to social media, and Amazon customers, accustomed to finding what they want at prices they like, were similarly annoyed.

. . . .

In the announcement, Amazon suggest they are happy with their 30% cut, but are committed to the $9.99 price point except for “a small number of specialized titles.” Amazon then offer unsubstantiated evidence that ebooks priced at $9.99 sell 1.74 copies to every ebook priced at $14.99, and suggest to authors that if they would agree to that price they would be earning 16% more from an audience 74% larger:

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.

. . . .

Having read the entire 160-page Opinion and Order of United States v. Apple Inc, et al, I can report that the 30% commission was never the publisher’s idea or ideal — it was imposed upon them by Apple — and that a $9.99 price point would have meant a 46% decrease in publisher revenues compared to the old distributor discount (wholesale) model. Under that model, publishers were releasing the ebook and hardcover at the same time, and charging the same price; the average was $26.00. The ebooks were sold to Amazon at 50% off list, or $13.00; Amazon would then discount the list price to whatever they wanted, as they do with print books. But Amazon, in an attempt to drum up business for its Kindles, began selling these new releases at $9.99, taking a 23% loss. This is what started the fight. In Madame Justice Cote’s missive you can read the whole story of how Apple skillfully manipulated the publisher’s twin Achilles’ heels — fear and arrogance — the machinations between Apple, the Big Six, and Amazon a surprisingly riveting read, with a theme of mutually assured destruction not witnessed since the Bay of Pigs.

. . . .

In any case, to make a long story short, Amazon accepted agency pricing because they saw the advantage to them by the new model, and by demanding the inclusion of the same most-favoured-nation (MFN) clause* that Apple had ingeniously added, AND adding a model-parity clause,** Amazon ensured that they, despite being unhappy with the higher price point dictated by the agency contract ($12.99 for ebooks with a $26.00 hardcover counterpart), would now earn 30% of all sales and, in fact, would never risk a loss again on any ebook.

Secondly, Amazon is notorious for manipulating figures, and in their forum post they do so again: just how many authors sell 100,000 copies of a single ebook? Very, very few, estimated at about .0001% of books published per annum in the United States.

Link to the rest at The Global Indie Author and thanks to Tarra for the tip.

PG would note that Amazon’s figures are illustrative only and don’t apply only to instances in which a single book sells 100,000 copies.

The relevant numbers are that an ebook priced at $9.99 will sell 174% as many copies as an ebook priced at $14.99. That applies across the universe of ebooks sold by Amazon and should apply to a book that sells 100 copies as well as one that sells 100,000 copies.

On the conspiracy side of things, based on his professional experience with both groups, PG tends to believe that typical tech execs are a bunch smarter than typical publishing execs. He doesn’t doubt that Apple execs were perfectly capable of out-maneuvering Big Publishing CEO’s.

Apple Secretly Acquired “Pandora For Books” Startup BookLamp To Battle Amazon

26 July 2014

From MacRumors:

Apple has acquired BookLamp, a “Pandora for books” startup that aimed to provide personalized book recommendations to readers via specialized algorithms, reports TechCrunch. BookLamp first shut down in April.

BookLamp was known for its Book Genome project, a book discovery engine that analyzed the text of books to break them down by various themes and variables to let readers search for books similar to books they liked.

For example, analyzing The Da Vinci Code, the search engine would break it down to elements of 18.6% Religion and Religions Institutions, 9.4% Police & Murder Investigation, 8.2% Art and Art Galleries, and 6.7% Secret Societies and Communities, and then it would be able to recommend a book similar to The Da Vinci Code based on that data.

. . . .

BookLamp also provided content analysis services to a number of e-book distributors like Amazon, Apple, and other publishers, screening books for categorization and providing a platform for publishers to screen manuscripts. The acquisition will see Apple ramping up its focus on books, according to one source with knowledge of the acquisition.

Part of the reason that Apple made the move to acquire BookLamp was because of this long list of clients. “At first Apple and BookLamp talked about growing their contract, but then they talked more from a strategic standpoint,” a source says. “What Apple wanted to do was, instead of contract, they wanted to make sure whatever work was done was done just for them.”

And what is that work? The details are not clear yet, but the source says, “in broad strokes, the goal that [founder Aaron] Stanton and three of the folks he was working with from the original BookLamp crew is to beat Amazon at their own game.”

Link to the rest at MacRumors and thanks to Simon for the tip.

Passive Guy has no idea whether BookLamp will go anywhere for Apple or just disappear like some Apple acquisitions do.

However, PG believes if someone wants to compete with Amazon, tech innovation is the best way to do it.

Apple’s iPad reaches 78% North American tablet share as Amazon’s Kindle Fire passes Samsung, Google

23 July 2014

From AppleInsider:

iPad is making gains in North American tablet web usage, reaching an 78 percent share in Apple’s “first quarter-over-quarter usage share gain since June 2013,” notes a new report by Chitika.

. . . .

Chitika Insights published its latest figures on tablet web traffic for the U.S. and Canada, noting that Amazon’s Kindle Fire, albeit with just one tenth the share of iPad, has moved into second place ahead of Samsung and Google, both of whom are selling ‘pure Android’ tablets.

“Since April 2014, the share of tablet Web traffic generated by North American Apple iPad and Kindle Fire users has increased by 0.8 and 1.2 percentage points, respectively,” the firm stated.

“These represent the two largest quarter-over-quarter increases for any tablet brand, while Samsung’s user base exhibited the largest share loss over the same timeframe, dropping two full percentage points.”

Link to the rest at AppleInsider

Apple prepared to pay $450 million for e-book price fixing case

17 July 2014

From Cult of Mac:

One year after being found guilty of e-book price fixing, Apple has reached a conditional settlement with the U.S. State to pay $450 million for its role in the price fixing conspiracy that involved five major publishers.

Apple’s settlement could bring $400 million back to consumers’ wallets, reports Reuters, but the court documents filed on Wednesday reveal that the company isn’t quite ready to throw in the towel yet, with hopes that its appeal will shrink that fee down to just $70 million.

Link to the rest at Cult of Mac and thanks to Joshua for the tip.

The French Do Buy Books. Real Books.

10 July 2014

From The New York Times:

One of the maddening things about being a foreigner in France is that hardly anyone in the rest of the world knows what’s really happening here. They think Paris is a Socialist museum where people are exceptionally good at eating small bits of chocolate and tying scarves.

In fact, the French have all kinds of worthwhile ideas on larger matters. This occurred to me recently when I was strolling through my museum-like neighborhood in central Paris, and realized there were — I kid you not — seven bookstores within a 10-minute walk of my apartment. Granted, I live in a bookish area. But still: Do the French know something about the book business that we Americans don’t?

I was in a bookstore-counting mood because of the news that Amazon has delayed or stopped delivering some books, over its dispute with the publisher Hachette. This has prompted soul-searching over Amazon’s 41 percent share of new book sales in America and its 65 percent share of new books sold online. For a few bucks off and the pleasure of shopping from bed, have we handed over a precious natural resource — our nation’s books — to an ambitious billionaire with an engineering degree?

France, meanwhile, has just unanimously passed a so-called anti-Amazonlaw, which says online sellers can’t offer free shipping on discounted books.

. . . .

The French secret is deeply un-American: fixed book prices. Its 1981 “Lang law,” named after former Culture Minister Jack Lang, says that no seller can offer more than 5 percent off the cover price of new books. That means a book costs more or less the same wherever you buy it in France, even online. The Lang law was designed to make sure France continues to have lots of different books, publishers and booksellers.

Fixing book prices may sound shocking to Americans, but it’s common around the world, for the same reason. In Germany, retailers aren’t allowed to discount most books at all. Six of the world’s 10 biggest book-selling countries — Germany, Japan, France, Italy, Spain and South Korea — have versions of fixed book prices.

Even with the state’s help, French bookstores are struggling.

Link to the rest at The New York Times and thanks to James for the tip.

Let’s see. 1. The French “secret” is that publishers set book prices. 2. No discounting is allowed. 3. Bookstores are struggling.

Could it be that many French readers can’t afford high prices? Or that, in the face of high-priced books, more and more French people are choosing alternative low-priced entertainment options?

PG says you can’t trust traditional publishers with a nation’s literary legacy. Only authors are worthy of that trust.

Breaking Free Part 2 – One Month Later

28 June 2014

From author Nick Stephenson:

I had a bunch of emails last time I posted on this subject, asking me to update how my adventures outside of KDP Select were going after a month – so, if you haven’t read the previous post, go check that out here.

For everyone else, here’s the skinny: From my very first book release in March 2013, there had always been a common trend. Book sales would spike massively around a promotion (usually Bookbub) and then fall right back down again within a few days. Not that I’m complaining, but my eventual goal was to try and keep sales consistently strong, rather than relying on a monthly spike in numbers and then thirty days of diddly-squat.

. . . .

So, I pulled my titles from KDP Select and uploaded them onto other vendors, then set my strongest-rated novel to permafree. I applied for a Bookbub free promotion, which went live on the 27th of June. The results have been better than I could have hoped. Sales have remained consistently higher for over a month, beating out my average daily revenue of $80 by a factor of four. This last month has easily been my strongest to date, and is set to overtake the $7,000 mark by the time July rolls round. And, best of all, sales on non-Amazon retailers make up a significant portion of that figure, and Amazon UK has opened up for the first time.

. . . .

I’ve also been extremely impressed with my first experiences with other retailers. iTunes has been easy to work with (despite it taking nearly a week to get a title approved), Nook was simple and fast (12 hours from submission to publication) and Kobo was a dream. Kobo were also kind enough to feature my permafree book as one of their “first free in series” titles, which gave my numbers there a little push. Kobo is now a nice little side earner – and the efforts these guys go to in order to accommodate indies is commendable – especially given the vacuum that opens up every time I try to email Apple or Barnes and Noble. Well done, Kobo!

Link to the rest, including sales charts at Nick Stephenson

Amazon Prime Music Just Set Streaming Music’s Price

28 June 2014

From The Street:

For much of the last year, companies have been scrambling to create their own Pandora and take a piece of the growing — but poorly monetized — music streaming market. Amazon may have just stumbled upon the solution.

In a message to Amazon Prime members in mid-June, Amazon unveiled Prime Music, a collection of more than a million songs and hundreds of playlists available to Prime members through the Amazon Music app. The service is accessible through Amazon’s Kindle Fire and Fire TV products, Android and Apple iOS devices, Samsung Smart TVs and speakers and just about any Mac or PC.

. . . .

So what separates Prime Music from Pandora One or Apple’s iTunes radio and its recently purchased Beats Music? Prime customers are already paying for it, bundled with a bunch of other services including two-day shipping of Amazon marketplace products and Prime video streaming of movies and television shows.

. . . .

Apple attempted to work around them with with iTunes Radio — and its failing attempt to use streaming to sell music downloads — but it discovered the streaming audience doesn’t care about buying music. Only about 2% of iTunes Radio listeners ever hit the “buy” button to download a song.

. . . .

All of the above are just an attempt to wring money from music that consumers are loathe to pay for anymore. The number of music download purchases dropped for the first time in 2013, according to Nielsen and has just continued to plummet in the first half of 2014. Interactive streaming like that offered by Spotify and Beats Music increased volume to 34.28 billion streams in the first quarter of the year from 25.44 billion streams during the same period in 2013. With music executives putting 1,500 streams at the equivalent of a full digital album, streaming equivalent albums have increased by 10.1 million units so far this year as download sales dropped by roughly 9 million units, according to Nielsen.

. . . .

When Amazon raised the price of Prime for new members from $79 a year to $99 earlier this year, it faced the same question that’s still puzzling Pandora: Where’s the value? Amazon responded by securing proprietary streaming content for its video service and tapping into its supply of cloud-based music content to cobble together a streaming service. It may not be quite as intricate as what Pandora offers or tailor its playlists to a user’s profile as the Music Genome Project does, but it’s a streaming service that existing Prime customers get as a freebie and that new customers see as added incentive to sign on for Prime service.

Prime Music does what the Fire Phone can’t and what Apple’s iTunes infrastructure won’t: It enhances the overall value of the service. Amazon’s Fire products have had a tough time keeping pace with Apple even at lower prices, but the integration and bundling of all of Amazon’s offerings — marketplace, video, audio, e-books, etc. — under one payment and on several different devices is making a strong pitch to consumers. Amazon isn’t pleading with them to ditch Netflix, Pandora or even iTunes on-demand services, but showing them how much Prime can offer under one roof.

. . . .

Amazon, however, took the extra step of setting up an all-inclusive pricing scheme and shoving everything else into it. Instead of streaming music and bringing in zero for it while hoping consumers find it in their hearts to download the occasional album, Amazon gave itself a base membership price to work with and built up. It’s not unlike what Costco did by making membership fees the foundation of its retail model, and much of that bulk shop’s growth and ancillary offerings including tire shops, auto sales and travel services are bolstered by that base consumer investment.

Link to the rest at The Street

PG says the music business started experiencing technology disruption with the introduction of the iPod and iTunes in 2001. No two disruptions are the same, but it’s instructive to study the development of different disrupted business.

Publishing Vs. Amazon: A Play in Five Acts

27 June 2014

From Insatiable Booksluts:

Act I:

Amazon: Hey Publishing, we just invented a new thing that we think you’ll like. You know how after you make a book you have to pay a buttload of money to get it all printed and shipped and stuff? We figured out a way that you could not have to pay all that money and still sell lots of books.

Publishing: OMG NO WHAT IS THIS WHY ARE YOU TRYING TO DESTROY PUBLISHING

Customers: Hey! These ebooks are pretty cool! I can carry a bunch with me all the time and it sucks less when I have to move!

Publishing: NO THEY ARE NOT COOL, PAPER BOOKS FOREVER, WE KNOW YOU JUST WANT TO STEAL OUR CONTENT OFF OF THE INTERNETS. CAN WE TRIPLE THE DRMs PLEASE

Customers: ……

. . . .

Act III:

Amazon: Hey Publishing, since it only costs you like a fraction of a percent actually to produce ebooks vs printing books, why do they cost so much?

Publishing: SHUT UP

Apple (aside to Publishing): Hey, I know how you guys can make more money off of ebooks.

Publishing: You have our attention.

Apple and Publishing whisper quietly between themselves.

Publishing: OK SO FROM NOW ON EVERYONE HAS TO SELL AT THE PRICE WE DECIDED AND YOU ONLY MAKE 30%

Amazon: What? But . . . I mean, we’re a retailer, not a consignment shop? And your prices are higher than paperbacks–isn’t that kind of silly for a medium that costs significantly less to produce? Why not price them less so you can sell at a higher volume, since you have no limit on the units you can sell?

Publishing: NO WE ALL DECIDED ALREADY

Apple blows a raspberry at Amazon, then sells them a bunch of iPads and iPhones.

Link to the rest at Insatiable Booksluts and thanks to Nick for the tip.

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