Amazon Loses Another E-Book Publisher, Hates Apple

By: Nate Nelson (Contributing Writer)

Amazon and their supporters could not have been pleased when Apple revealed the iBookstore during the rollout presentation for the iPad. Not only did it mark the first major competition to their Kindle line, but also Apple’s revenue plan for e-books was very different, and followed the model of traditional booksellers. In the fallout, as major publishers dispute e-book prices with Amazon and pursue the industry model, it becomes increasingly clear that Amazon will not be sending Apple a Valentine’s Day Card this year.

HarperCollins, Macmillan, and most recently Hachette are the three major publishers who have abandoned the Amazon model so far. The other two – Penguin and Simon & Schuster – are still operating under current agreements, although industry analysts anticipate they will pursue renegotiation with Amazon as well. All five major publishers have deals in place with Apple to distribute over the iBookstore.

Amazon pays the publisher $15 per book under their model, and then subsidizes the book for $9.99 to consumers. Apple’s iBookstore model allows the publisher to set the price for the book, and then pays Apple 30% of the revenue.

Even though the Amazon model brings more e-book revenue to the publishers when compared to the Apple model, booksellers have long complained that the Amazon model devalues books and hurts the brick-and-mortar retailers. The Apple model puts pricing back in the hands of publishers, which is significant as long as book sales remain strong.

If the Apple iPad booms – the safest bet by far – publishing companies may need to start looking for a comfortable niche for the future. Book sales have remained strong in the face of an online news and social media revolution; at least when compared to newspapers and magazines. But a burgeoning competition between retail giants with massive advertising budgets could finally begin swinging public opinion in favor of e-books.

The bottom line for book lovers is they will be paying more for e-books in the future. Reinforcing the old rule of economics: when large companies conspire to make money, the consumers end up with empty wallets. (Okay, so that’s not really an economic rule as far as I am aware – I just made it up. But it should be.)

(via Computerworld)