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February 22, 2010

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Michael DiMarco

Technically, the publisher is not setting the base price, the publisher is setting THE price and Amazon (and the coming iBooks store) get 30% of THE price (just like the current iTunes model.) The big departure that Macmillan and other publishers now following suit have done is essentially telling Amazon, "you are not a publisher licensing content from us, you're an agent that can sell our ebooks for a cut of the price we set." A bit different than what you described.

This is also an important distinction in selling ebooks because unlike Amazon or CBA retailer models, the retailer never actually buys the book from the publisher and 'stocks' it. So there's no "discount" from the publisher. The ebook seller earns a 30% commission on the sale of the ebook since there's nothing physical to inventory or stock, just the costs associated with digital storage, web catalog, and e-delivery bandwidth. If the book is $11.99, Amazon gets 30%. If the book is $1.99, Amazon gets 30%. You might say this is a case of tomato, tomahto, but it's a totally different retail paradigm.

Andrew McGovern

Amazon does not have an "eBook monopoly" although they probably have the lion's share of the market. Consumers can access the same eBooks in other formats and on many other devices than the Kindle. The upcoming iPad may help level this playing field significantly.

Labeling eReaders as “oppressive” just seems a bit over the top. Who exactly are eReaders oppressing? Apparently not the consumers who are paying $300 or more for them. Why not view eReaders, computers, smartphones, etc. as simply tools to access an expanding world of digital content?

There will be a frenzy of competition over the next few years between companies looking to capitalize on this emerging trend. Scribd.com is an excellent example of an eBook community that will be a factor in the competition.

It is good to see the publishers pushback against Amazon's model, but price fixing, MAPs, etc. are not a permanent solution in a free market. If your product is superior, it will outsell its competition. Retailers and E-tailers will need the freedom to then adjust pricing to compete with one another when selling the same product.

Publishers should focus on quality content and quality promotion of their products rather than trying to manipulate prices. Retailers and E-tailers should focus on eBooks as a tremendous business opportunity, rather than a threat to their livelihood or industry.

The real lesson to be learned and applied in our industry is: “How do we not miss this great opportunity in eBooks like we missed the digital revolution in music?” How that question is answered may make the difference in the long term existence of independent booksellers.

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