DBW, the iPad, and Amazon

4.2.2010 von Helmut von Berg.

by Laura Dawson

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The unicorn is why. Apple is working on an ›agency‹ model with publishers – pubs tell Apple how much they want to charge for a book, and Apple keeps a percentage of that. Amazon sells a book for whatever it wants. And while some argue that the Amazon model nets publishers more money in the long run, this is about one thing that’s more important to publishers than money: Control.

In the agency model, publishers set the price. In the Amazon model, retailers set the price…and customers come to expect extremely low prices for certain things, even though the retailers are losing money on those things. Those low prices are loss leaders for the retailers’ other inventory.

Amazon claims they are capitulating, though they are certainly taking their time about it. But in another sign of their concern about the iPad, they just bought a company called Touchco, which makes touch-screens.

As for publishers…I worry that publishers’ extreme desire for control in a world they can increasingly NOT control (piracy, author behavior, new business models that disintermediate them) is pushing them to make decisions that are not really in their best interests. If you are getting more revenue by NOT controlling prices, why is it so important to do so? If you are selling more books when you’re NOT controlling piracy, why spend boatloads of money going after torrent sites? Ebooks may not be viable to sell at $9.99 right now – and may serve as a loss leader for the time being – but costs of producing ebooks will go down (they always do) and eventually publishers can make a nice amount of revenue from $9.99 ebooks.

Controlling the scene is not always good for you. The need to control may indeed be an irrational (and rather panicky) response to uncertainty.

more: LJNDawson.com

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