As $9.99 ebooks evaporate, Amazon's Kindle will suffer

As $9.99 ebooks evaporate, Amazon's Kindle will suffer

Summary: It seems that Amazon's dream of the $9.99 ebook for the Kindle is dead. First it was MacMillan who strong-armed the book giant, then HarperCollins, and now Hatchette. Where does this leave the Kindle?

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It seems that Amazon's dream of the $9.99 ebook for the Kindle is dead. First it was MacMillan who strong-armed the book giant, then HarperCollins, and now Hatchette. Where does this leave the Kindle?

As it stood, with ebooks for the Kindle costing $9.99, Amazon had an advantage over Apple's iBooks store for the iPad. That made the iPad a poor buy compared to the Kindle for book lovers. Now that publishers are pulling out of the flat-fee deal with Amazon and setting their own prices (which will, of course, be higher no doubt), that advantage will likely disappear.

What's happened here is pretty obvious. Initially Amazon had the publishers over a barrel when it came to pricing. If publishers wanted in on the Kindle wave, they had to play ball. Barnes & Noble's Nook wasn't enough of a game changer to change things.

But the iPad is different.

My guess is that Apple's behind this change of heart by the publishers. While the Kindle has enjoyed some success, it's a fair bet that if the iPad takes off, it'll be far bigger that the Kindle could ever have been, so now is a good time to shake up the pricing.

But there's another side of the coin, and that is that the $9.99 price was likely unsustainable for publishers, especially given that printing costs of hardback books is something in the region of $2.50. While $9.99 was attractive to both Amazon and consumers, it's likely to have been painful for publishers.

But the question is, will the Kindle suffer because of the new pricing? It's easy to think no, given that pricing will be consistent from different outlets. However, the problem is that people get used to pricing at one level, and raising prices is likely to annoy those who have been faithful to the Kindle. But that effect is likely to be short-lived (remember when iTunes raised the prices of tracks ... it quickly blew over). What's going to be more damaging is that the Kindle is a one-trick pony compared to the iPad. Sure, the Kindle is a good ebook reader, but that's it. Compared to the Kindle, the iPad is a digital Swiss Army Knife. It's that fact, and not the price of ebooks, that's going to harm the Kindle in the long run.

The Kindle is a single-purpose device in a convergent world.

Late last year I gave the Kindle three years. Now, that could be as little as 18 months.

Topics: Hardware, Amazon, iPad, Mobility

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64 comments
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  • I must agree

    While I think dedicated ebook readers have some life left due to their screen characteristics it's pretty darn clear that "one trick pony" devices like the Kindle and Nook have a finite lifespan and a limited clientele. Although I do not necessarily think that is bad, the format change to ebooks is well underway and unstoppable. There will be increasing competition amongst distributors for customers and publishers attention, but the devices themselves will become largely irrelevant.
    oncall
  • RE: As $9.99 ebooks evaporate, Amazon's Kindle will suffer

    I like my local library. I don't pay $9.99 or more for something I may not even like, and that book gets shared with whoever else wants to read it, before and after me. AND I don't have to be the custodian of the thing. What could be better?
    rgcustomer@...
  • RE: As $9.99 ebooks evaporate, Amazon's Kindle will suffer

    I believe there is more to the pricing issue than just $9.99. I have read that Amazon actually pays the publisher more than the Apple deal, and in fact sells at a loss at $9.99.
    The publisher gripe is that 9.99 really makes paper backs and hard backs look too expensive and will drive business to epub rather than their traditional mode.
    On the surface, as usual it is we "consumers" who are getting the higher price shaft and it is curtersy of Apple.
    twms
  • Oh Come On Now .... Stop drinking the Apple Kool-Aid.

    Oh come on, Adrian.

    There are books on the Kindle that cost less than $9.99. And then there are the newspapers that are at that price point or below on a monthly basis. Popular magazines are cheap very much below $9.99 on the Kindle on a monthly basis. And then there are cheap blogs that are much more below that price point on a monthly basis. Notice I say monthly basis. Amazon wants Kindle users to buy every month. Either buying books or getting hooked in on monthly subscriptions to magazines, newspapers, and blogs at attractive affordable prices.

    The current hoopla about the ebook pricing that Apple is supposedly influencing on eBooks ignores the strategy of the higher pricing on books is to steer users towards buying apps and games for $9.99 each on the Apple iPad. Which are you going to buy? A book for $15 or an app or a game for $9.99 on the Apple iPad? The Apple iPad is a multimedia device. It's not really an ebook reader. When all the dust settles, Amazon will continue to have the Amazon Kindle for eBooks and Apple will have the Apple iPad for games and apps.
    i-want-gizmos
  • Kindle 3 ?

    He's right. The Kindle will go the way of the dinosaur unless the Kindle 3 is a dazzler. I have a Kindle 2 and love it, but who wouldn't want touch and color and a multi-functional device? My next e-reader will not be a Kindle unless Amazon produces something inline with the Maxipad - sorry, iPad.
    jpr75_z
    • How do you share your ebooks?

      I was looking into a gift for my uncle this past x-mas and was planning to get him a Kindle. When I researched the device, it became very obvious that it is not worth the cost ... even if it was free.

      Books are items that aren't supposed to be throwaways. After one person reads it, it is usually shared with other family members or a friend. Some are even good enough to be shared generation after generation.

      With the Kindle, you buy an electronic version that can only be watched in a single physical device. There is no way to share a legally purchased ebook without passing the device to the other person .... meaning, two people can't read two books at the same time.

      On top of that, Amazon talks about $10 ebooks, but in reality most ebooks in their store are about the same price as a normal paperback ($40+) .... and in very few cases even more expensive.
      wackoae
      • How to Share

        Kindle books: register Kindle or Kindle devices
        to same account to download same book to
        multiple devices. The book will still be
        readable even if the device is later
        deregistered. Some books have a 5 or 6 devices
        limit. There is no limit as to how many Kindles
        can be placed on one account.

        Nook: limited sharing written into firmware

        eReader: place book onto other person's device
        and unlock using your unlock key which is the
        credit card name and number used to purchase
        it. The unlock key is not accessible on the
        device. It is used only once to unlock the
        book.
        caroline1008
        • Thanks!

          Cool info. Much appreciated.
          Azathoth
      • Good point but...

        ...when's the last time you paid $40 for a normal (sized) paperback? Bestsellers usually run around between $12.99 and $17.99 around my area.

        I have to agree your other points though. Even if someone was the sole owner of an eBook collection with no sharing involved, I'd have this problem with having my entire library on a single electronic device that is pretty much not guaranteed to last as long as a single old fashioned book would.

        Or am I being too old fashioned about it? ;-)
        bandersnatch42vt
    • The battle lines are drawn

      My wife and I (and several close relatives) are happy Kindle 2 owners. I am also the owner of an iPhone 3GS (on which, coincidentally, I have the Kindle for iPhone app loaded). I can immediately understand the allure of the iPad with its multiple capabilities. It reminds me of four or so years ago, when I was all too happy to see my separate cell phone and PDA converge into a single device (smartphone). The single-purpose Kindle has two advantages that I can see over the multi-purpose iPad (now that the e-book pricing advantage is vaporizing): (1) it can be read outdoors or in strong direct light which is a notable weakness of the iPhone and iPad, (2) it is less expensive by a considerable margin.

      Going forward, the battle may hinge on whether Amazon can move Kindle 3 into the multi-purpose category without sacrificing its present two advantages. From Apple's perspective, what can it do with an iPad 2 that would make it readable out of doors? Can Apple reduce the cost gap between the iPad and the Kindle to neutralize that present advantage? It will be highly interesting to see how these two e-heavyweights address these and related competitive issues. I don't think the present generation of either device will determine the outcome conclusively. I think the subsequent generation of each device (and the pricing) will tell the tale.
      im4nits
  • RE: As $9.99 ebooks evaporate, Amazon's Kindle will suffer

    Maybe. But as a kindle owner (and iPhone owner) I'd never
    replace my kindle with an ipad. People who really read books
    won't.

    I'm pissed at the blatant price-fixing going on, with Jobs assuring
    the media that all the prices will be the same. How is that even
    legal?

    Leave it to Apple to enter a market and make it WORSE for
    consumers instead of better. If they had more than fanboys
    covering them, we'd see actual reporting on this nonsense.
    hicorrie
  • RE: As $9.99 ebooks evaporate, Amazon's Kindle will suffer

    Sure - since Apple made the price of books go up, I'm going to run out and buy their device at more than twice the price, plus a monthly fee. What are you smoking?
    phil8765
    • More than twice???

      The Kindle DX is about $500 and it is the closest to an iPad. And it barely compares.

      Unless you are talking about the already obsolete Kindle 1.0, I don't see where you get the "twice the price" part. When compared to the same price Kindle DX, the iPad is actually a better buy (more memory, can do more than just display ebooks, etc).

      And BTW, I don't plan to buy an iPad any time soon. Maybe after the 3rd or 4th generation when it evolves into more than just the newest gadget.
      wackoae
    • Pricing

      "Apple made the price of books go up."
      You've got to be kidding. The price of books has been going up for
      decades. The price point of ten bucks on a Kindle was artificially fixing
      the price. Apple brings the free market to the genre. If MacMillan
      wants to sell an in your hands paper book for $24.99 let them. If they
      want to sell an ebook copy for the same price, again, let them. It is the
      buyer who makes the choices on what sells more than a few
      publishers in spite of a long standing tradition of 'fixing' the
      marketplace by the necessity of economics. By that I mean
      traditionally a publishing house had to put up the cost of printing,
      marketing, editing, and any up front remuneration of the author
      before they made a dime. That meant that a select few editors gleaned
      hundreds of manuscripts for a 'salable' one before making that
      commitment. Even then not that many books made all that much
      money, especially for the authors.
      In Amazon's business model they became another 'choke' point in
      artificially fixing prices. Yes, consumers benefitted to a degree in that
      you could buy a 'best seller' easily for $9.99 (not counting the cost of
      your ebook reader. Amortize that over how many books you're going o
      read). With that $9.99 cap publishers are going to be leery of
      launching competing paper books either hard cover or paperback. So
      far the Kindle thing has been a publishing toe testing of a new
      business model for publishers. Seems that they like the idea of a free
      market better.
      Now some ATBA person will jump on my parenthetical comment about
      amortizing the cost of your ebook reader into that ten dollar Amazon
      gets by saying that the iPad has to suffer the same economic rigor.
      My response to that is certainly if the only thing the iPad could do was
      read books, ala the Kindle. But wait, it's also a gaming device, a
      notebook/tablet computer, an iPod, a presentation device, a thin
      network client, and has far greater potential with 140,000 existing
      apps (yes I know many are silly, but there are thousands that aren't).
      Add to that Apple's first class industrial design (hold a Kindle, then
      hold an iPad), UI, OS, and the fact that you're getting a full color high
      end LCD screen and we're talking Apples vs. well, it isn't really a
      contest now.
      Oh yes, add in the whole Apple consumer experience of ease of use,
      customer service and a well developed ecosystem and I see the Kindle
      in Apple's rear view mirror rapidly vanishing.
      Speaking as a published author I'd also like to point out there is a not
      so noticeable upside to Apple's opening freemarket gates in
      publishing on the iPad. It begins to remove the cold dead hand of
      traditional publishing houses from the throat of authors. I am
      finishing up a novel as we speak, well as I write. Now, I should have
      already shipped off my presentation packages to various select
      publishers and already have a sizable section of my office papered
      with rejection slips. I've not done that in anticipation of Apple's eBook
      store.
      If Apple follows the model of the App store authors, independent of
      any traditional publishing house or even of a printing press can
      publish a book. The 70/30 split (again if they follow the App store
      model) is about ten times what the brick and mortar publishers offer
      authors, unless you're Stephen King. I see a renaissance of novels and
      literature happening. The traditional publishers will survive with
      certainty, but their business model and pricing structure probably
      won't stand up to the winds of change that Apple is blowing here.
      I look forward to the beginnings of a new era in publishing.
      dheady@...
  • Amazon was taking a loss on the $9.99 price point

    Publishers set the digital list price which they
    frequently place at the same level as the hardcover.
    eBooksellers like Amazon give them a percentage of
    that price for every unit sold. The figure usually
    given is 50% although Amazon may get additional
    discounts due to volume. For example, if Lost Symbol's
    digital list price is $29.99, then Amazon pays Random
    House $15 per Kindle book and take the $5 loss. Amazon
    loses on nearly every NYT hardcover bestseller. Jeff
    Bezos was once asked how long he can keep taking this
    loss and he said forever. Obviously not. Publishers
    objected to Amazon's pricing because they thought
    $9.99 per book lowers people's perception on what
    books are worth. However, insisting that ebooksellers
    not discount the digital list price is good for
    smaller ebooksellers like BooksonBoard or Fictionwise
    which uses rebates to lower ebook prices. While Amazon
    will make more money on their loss leaders, they will
    also lose their biggest advantage which is being
    cheaper than their competitors. How come no one is
    howling about price fixing?? If the publishers allow
    Amazon to discount, we'll be back to the $9.99 price
    point with Amazon taking the loss.
    caroline1008
  • RE: As $9.99 ebooks evaporate, Amazon's Kindle will suffer

    Publishing E-Books have enormous advantages for the published and book-seller. Once a book is available in a digital format then the distribution and storage costs are practically zero. No need for big warehouses, no need for personnel to print, pack and ship the books, etc. etc.

    Naturally the consumer expects these cost savings reflected in the price of the book. The fact that the consumer no longer owns a copy of the book, makes the up-going price levels of e-books even more incomprehensible.

    I believe there is big money to be made out of e-books. However what Amazon, Apple and the publishers are doing, looks more like killing the chicken with the golden eggs than trying to support a new market-channel, that is still struggling to get out of its infancy.
    Tom62
    • Agree

      This is the RIAA all over again. Pirating may become a huge problem for them. The DRM will be broken and e-books will flood the P2P networks.

      When that happens it will serve them right for their unbelievable greed. Technological progress is supposed to benefit mankind, not just the intellectual property barons. The internet and digital distribution should make information and culture a lot cheaper, but so far it has not with a few notable exceptions. The publishers are hoping to cut the costs by 90% and keep the prices the same.

      Edit: Maybe Amazon should go into the publishing business selling electronic books only. Offer authors a fair cut and sell the books from 99 cents to $9.99, depending on the quality of the work and expected demand. That will give both the other publishers and Apple something to think about.
      Economister
      • Wow, first time ever I have to agree with you 100%. [nt]

        nt
        Coogol
      • P2P

        "The DRM will be broken and e-books will flood the P2P networks."

        Already happening. Usenet and RapidShare are full of ebooks (and audio books), decrypted or scanned from hard copy. Not to mention comic books (according to my LCS owner when I picked up my reserve).
        Azathoth
      • Chew on this ...

        http://www.baen.com/library/

        nice piece from an AUTHOR .... not a wag, about DRM and how things work in the real world



        PS. I started buying more of Eric Flints because of this ....
        cammobus@...