Apple's Ebook Pricing Secret

Posted on February 22, 2010

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.

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