Amazon Pulls Books, Lowers Prices, Raises Royalty Rates to Keep Market Share
Katie Cordrey — January 31, 2010 — Business
References: teleread.org & komonews
Some publisher’s print books and e-books were recently pulled from Amazon.com’s virtual shelves over a pricing dispute. Publishers have objected to Amazon’s $9.99 pricing saying that it is too low and could hurt hardcover book sales.
To preserve the more lucrative hardcover business, some publishers will now impose delays on the release of digital copies.
Amazon isn’t disclosing much about their strategy and it is widely speculated that they are guarding against market share challenges from Barnes & Noble’s Nook, Sony Corp‘s e-book readers and more importantly, the long-awaited Apple iPad tablet computer with a new online book store modeled on iTunes. It is rumored that some publishers may offer e-titles to Apple before they are allowed to go on sale at Amazon.com.
To offset the effects of reduced inventory, Amazon has been offering a new 70% royalty option for authors and publishers who want to release e-books through its online store for use on Kindle.
The protectionist move by publishers coupled with Amazon’s insistence on lowering e-Book prices while raising royalty rates has the potential to radically change the balance of power in the e-book publishing industry.
To preserve the more lucrative hardcover business, some publishers will now impose delays on the release of digital copies.
Amazon isn’t disclosing much about their strategy and it is widely speculated that they are guarding against market share challenges from Barnes & Noble’s Nook, Sony Corp‘s e-book readers and more importantly, the long-awaited Apple iPad tablet computer with a new online book store modeled on iTunes. It is rumored that some publishers may offer e-titles to Apple before they are allowed to go on sale at Amazon.com.
To offset the effects of reduced inventory, Amazon has been offering a new 70% royalty option for authors and publishers who want to release e-books through its online store for use on Kindle.
The protectionist move by publishers coupled with Amazon’s insistence on lowering e-Book prices while raising royalty rates has the potential to radically change the balance of power in the e-book publishing industry.
Trend Themes
1. Pricing Dispute - The pricing dispute between Amazon and publishers presents an opportunity for disruptive innovation in pricing models for e-books.
2. Digital Copy Delays - Publishers imposing delays on the release of digital copies provides an opening for disruptive innovation in alternative distribution channels for e-books.
3. 70% Royalty Option - Amazon's new 70% royalty option for authors and publishers creates an opportunity for disruptive innovation in revenue sharing models within the e-book industry.
Industry Implications
1. Online Retail - The e-book pricing dispute and market share challenges open up opportunities for disruptive innovation in online retail strategies for e-book platforms.
2. Publishing - The changes in pricing and royalty rates in the e-book industry create disruptive innovation opportunities in publishing models, including hybrid print and digital releases.
3. Digital Reading Devices - The entry of Barnes & Noble's Nook, Sony Corp's e-book readers, and the Apple iPad create opportunities for disruptive innovation in digital reading device technologies and features.
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