Apple's Ebook Pricing Secret

There have been many articles written about Apple's plans to sell ebooks on the new iPad for around $14.99, which is $5 more than the average Kindle price of $9.99. The New York Times reports that it has uncovered a dirty little secret in Apple's deal with several major book publishers: if a book becomes a bestseller, the book's price may drop to $9.99.
[A]ccording to at least three people with knowledge of the discussions, who spoke anonymously because of the confidentiality of the talks, Apple inserted provisions requiring publishers to discount e-book prices on best sellers -- so that $12.99-to-$14.99 range was merely a ceiling; prices for some titles could be lower, even as low as Amazonís $9.99. Essentially, Apple wants the flexibility to offer lower prices for the hottest books, those on one of the New York Times best-seller lists, which are heavily discounted in bookstores and on rival retail sites. So, for example, a book that started at $14.99 would drop to $12.99 or less once it hit the best-seller lists.

Moreover, for books where publishers offer comparable hardcover editions at a price below the typical $26, Apple wanted e-book prices to reflect the cheaper hardcover prices. These books might be priced much lower than $12.99, even if they did not hit the best-seller list.
Naturally, Apple refused to comment for the article. But publishers' general unhappiness with the price of ebooks may not be going away with the introduction of the iPad.

Posted on February 22, 2010

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