Apple May Discount Best Selling iBooks to $9.99?

iBooks app for iPad

So after all that pushing by publishers for the 70/30 split "agency model", and bullying of Amazon into raising eBook best-seller prices to $14.99, the New York Times is now reporting that Apple may be allowed to discount the price of those same bestsellers to $9.99 -- the original Amazon price.

Yeah, we're confused too. Amazon used to lose money selling aBooks at $9.99 because the publishers got paid the same amount regardless of price or discounts. Under the new "agency model" and 70/30 split, the publishers get less money, 70%. What they wanted, however, was a higher sticker price for consumers whether or not they lost some money on it. See, it was all about the "perceived value" of eBooks. They don't want us to think eBooks are cheap, and they'll take less money to charge us more. Apple, wanting to compete with Amazon (and liking the consistent 70/30 model they already use in the iTunes and App Stores) agreed to the deal with the launch of the iPad and the iBooks app. Big publishers then started pressuring Amazon to do likewise.

Which brings us -- again still confused -- to the New York Times story:

according to at least three people with knowledge of the discussions, who spoke anonymously because of the confidentiality of the talks, Apple inserted provisions requiring publishers to discount e-book prices on best sellers — so that $12.99-to-$14.99 range was merely a ceiling; prices for some titles could be lower, even as low as Amazon’s $9.99. Essentially, Apple wants the flexibility to offer lower prices for the hottest books, those on one of the New York Times best-seller lists, which are heavily discounted in bookstores and on rival retail sites. So, for example, a book that started at $14.99 would drop to $12.99 or less once it hit the best-seller lists.

So did Apple give publishers everything they thought they wanted, and somehow still keep the ability to charge $9.99 for bestsellers? And if our heads are throbbing from all this, is Amazon CEO, Jeff Bezos' near ready to 'splode?

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Rene Ritchie

EiC of iMore, EP of Mobile Nations, Apple analyst, co-host of Debug, Iterate, Vector, Review, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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Reader comments

Apple May Discount Best Selling iBooks to $9.99?


I'll preface thus by saying I have no knowledge of pricing policies but...I never understood the concept that a book reaches the best sellers list and then the price drops but once it is an "older" book the price rises (back to that list price that is). I would think once it sells well and becomes a best seller the price would be higher (or in this case the list price) since it is in more demand and then cheaper when it is older to try to clear it off the shelves. I understand having a lower price when released to stimulate sales initially but not this later discount.
Anyway, yep this negotiation has been an odd one to follow but I think we need to wait another month to see what actually happens since Apple is not in the business of confirming or denying anything before a product release!

Wait wait wait...
The Agency model yields 70% to the publishers...
Publishers force higher prices...
Publishers make LESS money than they did at 45%???
Bistro Math!!!
Somebody Call Leanna!

Simple thing we can do as consumers. If the price isn't right don't buy. Things like books and music and movies have elastic prices. They will charge the absolute maximum they can for the product. The bottom price is costs plus a profit. The upper is what ever the majority will pay. Want your music back at 99 cents? Don't buy anything above that. Want your books for less Thant £/$15? don't buy anything prices that high. We are the consumer. We dictate the price of elastic goods.

So when a song on iTunes reaches the best seller list its price inflates, while the same situation for a book causes a price drop? Makes sense...

Let's not forget here that a large part of operating costs are being lost by the publishers. No more printing overseas, shipping, hard cover roll out ... followed by a paperback version. No more storing books in crowded wearhouses ... or figuring out what to do with a projected best seller that flopped.
I fail to see how they will LOSE $$ here -- they are essentially transforming themselves into online brokers for people who write with a team of designers to create digital front covers.

P.S. (as a 20 year publishing veteran)... the reason a best seller can drop in price is actually simple math, the more books you print, the less the printer charges the publisher per book ... so book prices can drop. The average book does a 5,000 initial print run which does not leave a lot of margin for discount (once the author is paid an advance etc.) -- but when it becomes a "best seller" and the publisher goes back to print 50,000 copies -- lots of room for discount.
The real question is, who will be monitoring the digital best seller list? And why should we pay more or less when the COST and RISK to the publisher is about to vanish?!

The next time I read a weblog, I hope that it doesnt disappoint me as a lot as this one. I imply, I know it was my option to read, but I truly thought youd have one thing interesting to say. All I hear is a bunch of whining about something that you would repair should you werent too busy looking for attention.