January 31, 2010 84
We’re not going to see the iPad hit stores for another two months, but it is already changing the ebook game and forcing publishers and consumers to pick sides.
Last night, several blogs including Venturebeat and NYT’s Bits Blog noticed something was amiss on the website of the world’s largest retailer: Amazon suddenly stopped selling books from Macmillan, one of the world’s largest book publishers.
Not every Macmillan book is gone, but popular ones such as The Gathering Storm are no longer sold by Amazon, either in physical or Kindle form. You can still find the Amazon pages for Macmillan’s books — you just can’t order the actual books.
According to the New York Times, the reason the books were pulled was the iPad. Macmillan told Amazon that it wanted to change its pricing and compensation agreement, upping the price of some books from $9.99 to $15 and splitting sales 70/30, the same model Apple uses for the iPhone app store and its upcoming iBooks store. Amazon’s apparent response was to flex its muscle and pull countless Macmillan books off the virtual shelves.
The Dynamics of the New Ebook War
Ever since we got word of the iPad’s existence, we’ve known that Amazon and Apple were on a collision course. Apple saw an opportunity to not only create a new category of device, but to get its hands into the publishing market. In the same way Apple has transformed music, the computing giant would reshape books and become the primary distributor of ebooks worldwide.
Back in September, we wrote a lengthy piece explaining why we believed Apple’s tablet would eat the Kindle’s lunch, displacing Amazon’s lordship over ebooks. We argued that its multipurpose functionality, color screen, and sexier interface and look would put it over the top. Now that we know the iPad’s starting price, ($499), our opinion hasn’t changed. While the Kindle will survive, its sales will likely never be the same.
Publishers like Macmillan apparently agree with us as well, otherwise they wouldn’t so boldly demand price changes from Amazon. Before the iPad was revealed, Amazon was the only player in the game. You played by its rules or you could take a hike. Now with a viable alternative only months away, publishers can run to Apple, where it will have more freedom over its ebook prices.
Amazon’s clearly worried, which is why it’s launching an app store and used its earnings report to remind us that the Kindle is far from dead. But if publishers decide to abandon the Kindle, then Apple will have won the war by default.
That’s why Amazon decided to use its biggest weapon, Amazon.com itself, against Macmillan to send a message to every publisher: If you don’t play by its rules, then you can’t be in its store. While a publisher can likely survive without the Kindle, the same cannot be said for Amazon.com. Publishers simply cannot afford to leave the world’s largest online retailer.
The Kindle and the iPad offer different experiences. The Kindle’s battery life and e-ink are strong selling points for the device as a reader, but the iPad offers so much more. Apple’s banking on those extra features and its undeniable reach to turn the Kindle into an endangered species.
Publishers now have to either choose a side or walk the tightrope between the two companies. The end result will be a long, drawn out war that will both help and hurt consumers. How it will end is anybody’s guess.
Posted using ShareThis
