eBook Wars
When Apple launched its iTunes store in 2001 few at the time would have predicted the magnitude of its impact on the music industry. Since then the CD market has crumbled and digital downloads now dominate, leaving Apple almost the only player in the game. With the iPad and its new e-book store due to hit the US market in a matter of weeks the big question is: could the same thing happen for electronic books?
Amazon certainly seem to think so.
And as their Kindle has nearly half of the existing electronic book market they have a lot to lose.
Their first shot in the battle was to announce that they would reduce their cut from 70% to 30% to match Apple’s. But there was a catch. A big one. The deal forced publishers to undercut their own physical copies, allowed Amazon to set the prices and prevented them from doing a better deal with anyone else. In other words publishers would allow Amazon to choose how much to pay them with no fear of being undercut themselves.
The business model Apple is pushing is one where they act as a fixed-price distributor, leaving author and publisher with the bulk of any profits. In contrast, Amazon want to act as a publisher / distributor, effectively using author and publisher as mere content providers for their Kindle platform. In short, Apple want to provide a service for a percentage; Amazon want control as well.
Unsurprisingly, not all publishers are happy with Amazon’s vision and Macmillan began negotiating proposals of their own. To everyone’s amazement Amazon responded by removing all of Macmillan’s titles from their stores without prior warning.
Macmillan countered diplomatically, praising Amazon as “a valuable customer” and proposing an alternative scenario.
Amazon followed up their salvo with a curiously worded statement on a Kindle forum that they were ultimately going to have to give in to Macmillan because they have “a monopoly over their own titles” – whatever that means. So they appear to have blinked first.
A victory for Apple? It seems so. Steve Jobs apparently pitched to publishers earlier in the year and it has obviously gone down well. Macmillan have come out of it with their reputation enhanced as well. Amazon, on the other hand, have shot themselves in the foot and gratuitously alienated a lot of Macmillan authors. Not to mention the book-buying public.
But does any of this matter?
Well yes and no. The spat will soon be forgotten, I imagine. But if Apple’s entry into the music business is anything to go by, then the market will be shaken up, consumers should see lower prices, and authors and publishers should get a better deal.
Time will tell.