Monday, February 1, 2010

The Dark Side of the iPad

Steve Jobs has done it again. Wooed all of us with another Wow device with the introduction of the iPad last week, a new color ebook, email and web browser tablet that many critics say will go head to head with Amazon's Kindle.

And Kudos to Jobs for bringing another technological marvel to the market, but there is a darker side to the iPad.

With the launch of the new iBooks app for the iPad, five of the largest book publishers, Hachette Book Group, HarperCollins Publishers, Macmillan, Penguin and Simon & Schuster had signed up to provide e-book content for the new tablet.

And one of the major reasons they jumped on board so quickly is because the iPad gives them the opportunity to sell their books between $12.99 and $14.99 whereas Amazon limited their highest priced titles to $9.99.

The dark side to all of this is greed. These publishers are going against the natural laws of the market by forcing a higher price for ebooks on an already well accepted market price of $9.99.

One of the major reasons for the attractiveness of the Kindle is the $9.99 price for mainstream book titles. For the price of one hardcover book, a Kindle owner can have three major titles. I know many Kindle owners who have filled up their Kindles to capacity because of this low price and I know of others who easily spent upwards of $300 plus on Kindle titles.

These publishers are following the same path as the music industry – attempting to raise prices beyond what the market has deemed the comfortable price point. And they are using the same lame excuses – the publishers claim the low ebook prices are hurting hardcover sales; the music industry claimed the low price of downloadable songs cut into their CD sales.

Both are false. Many young people do not read books today preferring to get their content on video games, the Internet, ebook readers or on mobile devices. The older generations buy fewer books because of the high price of hardcover titles and wait for the paperback versions.

The trend is clear – sales of ebooks and electronic content are exploding; sales of print books are decreasing. This is the reality of the market, but the book publishers refuse to accept this.

Instead, they see an opportunity with the iPad to further preserve and hopefully bolster their failing business model – to give the booksellers as many printed titles as they want on consignment and allow them to return what they don't sell at no cost to the bookseller.

They believe the higher ebook price will cause people to buy the hardcover version. I don't think so. I believe they will only decrease sales of both versions. The $9.99 and lower price point will prevail.

The iPad pricing model is also bad news for mid list and back list authors because with the higher ebook prices only the major titles by the bestselling authors will sell, again closing the door to many unknown authors with good content.

If Amazon raises the prices of their books to be in line with these publishers, it will turn the ebook business model into the failing print book model – where publishers depend on bestsellers to support their businesses and publish fewer and fewer unknown authors.

And Jobs – he supports the higher ebook price because Apple will make 30 percent of each book sale on the iPad. The following from The New York Times on 1/27 sums it up:

"Mr. Jobs credited Amazon with pioneering the category with the Kindle, but said 'we are going to stand on their shoulders and go a little bit farther.'"

Remember that when you decide to purchase an iPad.

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