Well, Amazon’s tiff with Macmillan ended in tears (for Amazon). My hunch is the lawyers quickly acted on antitrust concerns. But what should readers think of all this?
The issue is somewhat complicated. The straight out economist in me likes that idea that Amazon is really just a re-seller and delivery mechanism for books and that the price the consumer should see is the one the publisher wants (actually, I’d like it to be what the author wants but let’s not get crazy). The reason is that this avoids the double mark-up problem and ensures that Amazon is paid based on units sold rather than the book’s quality.
But there are other considerations. First, $9.99 for a book may make it a ‘no brainer’ purchase just like those $0.99 iPhone apps. In that case, pricing above that could see a dramatic loss in sales. That is something Amazon is thinking about but if that is really the case, the publishers will come into line anyway and it is unclear why Amazon should care more or less than them about eBook sales. In each case, they have paper book businesses and if anyone thinks that the Kindle as a device is going to earn Amazon money on its own, they’re dreaming.
Second, there is the issue of piracy. What will it take to pirate an eBook? Once you have worked out how and have a device that can accommodate pirated books, then it should be really easy. But that is the issue: you have to work it out. The issue with music and videos is that consumers worked it out prior to content providers getting with the program. Once consumers have sunk those costs, it is all too late.
Now arguably, Apple’s $0.99 price insistence for music stemmed the tide. Not because of the $0.99 itself but of Apple’s commitment to some sort of price. With that knowledge along with an easy to use system, those who hadn’t invested in pirating technology, may well have chosen not to. The move away from DRM has made that so much easier by getting rid of some annoyance.
The problem publishers face is that they now have no similar commitment mechanism. Amazon wants to hand them one and maybe Apple will do so as well at a higher price point. But if they want the free option of being able to set prices ‘at will,’ consumers will be more tempted to expend the costs in working out how to pirate and not pay anything at all. Only a price commitment that, yes, gives consumers a better deal than hard copy books, will be able to accommodate that. And if you think normal trade eBooks are the big game here, think again. Textbooks is where the real threat lies. Let’s hope the $49.99 textbook price commitment comes soon.