Saturday, October 8, 2011

Ebook Pricing Wars Continue: Apple in Collusion?

So this should be of interest to those wondering why ebook pricing seems so confusing. This piece by Barbara Hernandez is available here at PBS Mediashift. Thanks to Len Edgerly from Kindle Chronicles for this.

Did Apple Collude with Publishers to Fix Prices on E-Books?

Apple's iBookstore wields enough power to change how electronic books are sold and priced, according to plaintiffs in class-action suits against the Cupertino, Calif., company and several traditional publishers. The complaint alleges that Apple violated antitrust laws by colluding with publishers to keep e-book prices high.

Hagens Berman, a consumer rights class-action law firm, filed the original complaint in U.S. District Court in California in August alleging that Apple, HarperCollins, Hachette Book Group, Penguin Group, Simon & Schuster and MacMillan teamed up to force Amazon to raise its $9.99 e-book pricing to a new, and often more expensive, "agency model" where publishers set the price. The complaint also alleges that "Apple had strong incentives" to help the publishers because the Kindle is "a competitive threat to Apple's business model," according to court filings.


The e-book market isn't a huge one yet, but it definitely is a growth market now with the affordability of e-readers and widespread wireless networking. Only about 3 percent of adults even download e-books, but those who have e-readers buy 66 percent of their books in digital form, according to Forrester Research. Sales are expected to grow from $1 billion in 2010 to $2.8 billion by 2015.

Apple maintains a 30/70 split with publishers, with Apple getting a 30 percent commission on any e-book sold, with 70 percent going to the publisher.

Wait a minute, with Amazon ebooks an AUTHOR gets 70% and Amazon gets 30% ... it's important now to distinguish the "who gets what" part of ebook revenue split numbers people toss around. You will hear people say "30/70 split" and "70/30 split" or other numbers and you need to be sure you know who's getting which part of the split and don't assume it's obvious.

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