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Apple Raises E-book Prices For Everyone
Nom du Keyboard writes "I was informed by my publisher this week that they would have to raise my e-book prices because they planned to sell them through the Apple iBooks store. How could this happen? A lot of my individual stories sell in the $1 to $3 range, which is well within the impulse purchase amount for many people. In this price range a 50-cent price difference may well be the difference between a purchase and a pass. Meanwhile, Apple is touting its new 'agency model,' whereby the publishers set the prices. However, it seems that Apple requires books sold in its iBook store have prices ending in .99 — nothing else." (More below.)
"Furthermore, Apple requires that if you sell books through them that you absolutely cannot sell them for less through anyone else. To my understanding Amazon also requires this, so Apple and Amazon prices should be identical in the future, but Amazon doesn't force prices to end in .99. What this means is that an e-book that the author was quite happy to sell for $2.29 or $2.49 is now going to cost $2.99 from everybody. While that sounds like only a few extra cents, it adds up over time and can lead to resentment against authors for charging higher prices, even though they have little real control over pricing. I, for one, do not understand why Apple computers only understand numbers ending in .99, or just how Apple is making it better for the consumer this way."
I thought we'd all be used to spending more money for the same thing because Jobs slapped his gay little Apple logo on it.
Because you obviously couldn't charge $1.99 for that book both places?
"He's lost in a 'floyd hole"
Almost all my ebooks come from Baen. They may cost a little more, but they are 100% free of Apple-style dickery, including DRM.
"Prefiero morir de pie que vivir siempre arrodillado!"
I'm really beginning to hate Apple. I'm in the process of putting together a manuscript and I would not agree to have it put in the Apple store just on this issue.
"There is a way that seems right to a man, but its end is the way of death." Proverbs 16:25 (NKJV)
See, whenever there is a book transaction, a few cents go into a bank account. They're shaved off as a remainder. Initech will never know it's missi.. oh wait.
Yeah, this sucks.
Which makes no sense to me. Apple gets to keep all of those pennies...
This is ridiculous , you perfectly know how Apple operates, so either conform to their wish or say to hell with you Jobs, I am taking my business elsewhere.
for the last time people, I am "frodo from middle eaRTH", not "middle eaST".
I, for one, do not understand why Apple computers only understand numbers ending in .99, or just how Apple is making it better for the consumer this way.
Two thoughts come to mind:
1) Possibly, it's just for uniformity sake. When all the prices end in the same digits it might appear to Jobs that it looks cleaner in the store app?
2) It could also be to prevent snowballing pricing wars (thus keeping the costs of e-books somewhat buoyant which doesn't help the consumer at all). For example, publisher A lists a book for $1.99; publisher B lists a similar competing book for $1.97; publisher A strikes back pricing their book at $1.89, etc. This behavior is discouraged, if the publisher has to drop the books price by $1.00 when the price is only $1.99.
Except that 30% is actually really low.
now its 42.99 according to jobs.
I truly hate the .99 gimick. I actually wish they'd roll tax into the prices so what you see on the label is what you pay and its a nice round number $X.10 $X.20 $X.50 $X.00. Worse is the stupid gas stations with 9/10's of a cent. Why is it they can charge a fraction of a penny you can't possibly pay, ensuring they skim 10ths of a cent gazillions of times. I think they did that in Superman III or something. How is it after all these years, they're still stealing money?
About the only reason to sell through iBooks is that Apple is very good at marketing and riding on Apple coat tails could increase sales. The fear, as I get from the submission, is no one would buy any of these books if read some of it first, so the only hope is to sell it so cheaply that people will just read it, and not feel ripped off when they find out it is crap. The solution, then, is obvious. Write book that people are willing to pay for.
So it is not Apples fault or Amazons fault that the price is going up. There is no reason at all for anyone to sell books through them, except that Amazon, and soon Apple, are going to be selling a lot of books and both have already set up infrastructure and pay for advertising that is unfeasible for most authors. But that only matters to authors who want to sell a lot of crap. For the author in question, who obviously cares much more about the fact that Apple is out to rip off the public rather than volume sales, I think DRM free ebooks or Apps is the answer.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
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I, for one, do not understand why Apple computers only understand numbers ending in .99...
It's a math fixation... row one, column two. Mind you I don't get it either ln(2*pi) is much more challenging.
Only to idiots, are orders laws.
-- Henning von Tresckow
... but I'm genuinely interested: What exactly does a publisher of e-books "publish"?
I'm serious. You've written the book, you've put it in whatever form you decided on. I understand that you need some vehicle to distribute it -- isn't that what Apple and Amazon are doing? So what is your publisher doing? What value does he/she/it add?
The Mongrel Dogs Who Teach
It sounds like the problem is really between you and your publisher, not between you and Apple. It may be time for you to find a publisher that shares your position on the situation, because it doesn't sound like your publisher does.
Did you RTFA? This is Apple's policy, not the publisher's. His options are:
1) Raise his prices across the board
2) Lower his already-low prices across the board
3) Lower his prices on the Apple iBooks store to below the prices on other stores
4) Not make his books available to iPad users
His publisher has chosen option 1 for him, but if he wanted to go with one of the other options, I'm sure an agreement could be reached. The problem is that none of these options are desirable.
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A 30% flat rate is really cheap, considering you don't have so set up and maintain distribution yourself, and that you are going to reach 80 million potential customers.
I still cannot find the droids I am looking for...
Did you RMFP?
The publisher made a decision the poster disagrees with. If it's a big enough deal then the poster should find a new publisher that refuses to sell through Apple until Apple changes their policy.
Seriously, will this .99 and .95 thing ever die? Does anybody really look at a price-tag that says $4.99 and not just think in their head "$5"?
which means the developer would get $700,000 without the requirements of setting up distribution and to a large extent marketing. Clearly you've never run a business and had to pay for sales, marketing, advertising and distribution expenses.
30% for built in exposure to 80 million potential customer and application distribution is actually pretty cheap. Plus it's a flat pay-as-you-go situation. Generally you have to pay for marketing sales and distribution channels up from and hope you make enough to cover your costs.
Personally I don't like Apple's schizophrenic approval process, but the model is brilliant.
I still cannot find the droids I am looking for...
OK. You write an app and put it on a webserver set up to take credit cards, pay-pal,etc, and charge $1.99 for it (as in you have to charge their card before they download it). I'll write a similar app and put it in the App store for $1.99. I guarantee you I'll make way more money than you even with the 30%.
I still cannot find the droids I am looking for...
The role Apple and Amazon have with regard to ebooks sold through their respective roles is a combination of the role of retailer (in terms of being the person who sells directly to the customer) and distributor (in terms of being the person who buys directly from the publisher.)
The role of the publisher continues to be played by the existing publishers.
In the parent post it says the author did some trials and found out $2.49 was the price where he made the most profit. At a lower price, enough new customers weren't created to offset that lower price. A higher price caused customers to chose not to buy. Profit was optimized. So selling at $1.99 means forgoing revenue, as would selling at $2.99. Now if parent didn't say they had experimented with pricing, either pricing higher or lower could end up creating more revenue.
http://en.wikipedia.org/wiki/Price_elasticity_of_demand
Seriously, will this .99 and .95 thing ever die? Does anybody really look at a price-tag that says $4.99 and not just think in their head "$5"?
Quite the opposite: a lot of people think $4. That's the whole point.
http://en.wikipedia.org/wiki/Psychological_pricing
I've caught friends doing this on a few occasions, and when I call them on it they do a sheepish "oh, yeah". :)
and they hate that.
On the iPod they had no competition when selling content so they sold inferior content for higher prices then their competitors (who sold 192Kbps for $0.79, but never got far cause they couldn't license Apple's DRM).
They won't be able to repeat that trick for eBooks but their is a solution that allows them to avoid competing and continue selling things at Apple high prices: force the other retailers to raise their prices to Apple's levels. They can do this because of their clout and the new U.S. law that allows the publishers to enforce the recommended sales price. Actually, the publishers didn't mind and are happy to enforce the higher price now that they have a powerful ally.
This is primarily aimed at Amazon (though smaller publishers and consumers get hurt, of course) who could have competed on the iPad. Now, with everyone selling books on the iPad at the same price users are very likely to choose Apple because of the ease and the integration.
(If you think you detect some dislike of Apple, you are right. I have no personal interest in any of this, but I have grown increasingly disgusted by this company.)
So selling at $1.99 means forgoing revenue...
selling at $1.99 in one market place.
I've worked for a large software company and we used to analyze this all the time. It is exceedingly difficult to account for all the variables. Did he, for example control for seasonality? Did he try to calculate if the potential additional sales from another marketplace would offset or erase the potential loss?
Obviously if he simply lowered the price in the Amazon store (my assumption) he would leave money on the table based on the information provided. But that is not the case we are discussing. I am suggesting that a simultaneous lowering of price and availability in another large marketplace might offset the price reduction and even net him more revenue. just a thought, hence my use of the word might above.
Regardless, you'd think that would be an analysis he would perform before posting.
I still cannot find the droids I am looking for...
Like who? Handango for example are one of the main resellers of mobile apps for Symbian, Android Blackberry etc. They take 40%.
I see the "Let's place an ad in the New York Times and we'll be rich because SO MANY PEOPLE READ IT" fallacy made it to the net intact.
Your "exposure" to 80 million customers is bogus. There are tens of thousands of apps - how many people are going to see YOUR app?
And the more apps in the closed store, the less that being in that closed store is worth.
Think of it - if everybody had 10,000 friends on facebook, it would become even more useless than it already is. You'd have to filter out 99% of it somehow.
Network effects don't scale when the amount of time a person has doesn't scale.
If it's such a great model, and the best way to get your apps sold, then why is Apple afraid to let people install stuff from outside the App Store? They should welcome inefficient competition as a way of demonstrating their superior approach - except that, like any pyramid scheme, it's only superior for those at the top.
You'd probably be wrong. You're competing for attention with tens of thousands of others in a limited store. The other person has the entire world to work with. Plus the freedom to develop their app using any technology they want - like flash, for example. It worked for youtube ...
They also have the opportunity to sell it as a service, and to continually add new features to grow the customer base. YOU, on the other hand, are competing in a market where everyone is either free or 99 cents to "get market share." Adding new features? Let us know how customers feel about being charged for their updates.
This wasn't even some crazy coup by Steve Jobs, it's in fact actually the standard publisher price. I heard the business model on Fresh Air this week and it's quite interesting.
Amazon has been taking a loss on almost every new ebook in their store. They did this to gain marketshare (they have about 80% of the ebook market) and hoped to make up the difference on kindles. The publishers feared that Amazon would demand lower prices from them over time since they have a huge marketshare and because Amazon wants to drive sales of kindles. Amazon is also trying to cut the publishers out by providing publishing services for books. The old publishers hate Amazon right now.
Along comes Apple and the iPad, and Steve basically made an agreement with publishers that they like. Steve doesn't compete on price, he competes with flash and glamour, and does to very well. The publishers in fact like the fact that there's more competition now, and that Apple has agreed to, for one year, a price structure favorable to what they want. Now Amazon will lose marketshare and be in a less favorable negotiating position and publishers can increase their prices again.
Yes Apple did agree to this, but besides the .99 thing, Steve could care less about the true price of the book. The price increases came from the publishers directly.
It's the 4/29/10 podcast of Fresh Air on NPR, check it out.
"All great wisdom is contained in .signature files"
Isn't corporations collaborating to fix prices in the free market an offense?
Well, if I have a well written app that serves a particular niche that isn't too crowded, then potentially a lot of people. If I have a 99 cent fart app or a tip calculator, then not probably not many.
I still cannot find the droids I am looking for...
You're forgetting the transaction charges for credit cards/paypal. You're forgetting the cost of aquiring/developing/setting up your ecommerce system. You're forgetting that when your sales are already good on the App Store, the appearance on best seller lists pushes your sales into high gear. You're forgetting the time taken to set up your own registration number scheme or whatever other form of rights management you do. You're forgetting all the time that you would otherwise spend looking up users registration codes that they've lost. There's no such thing as 100 cents on the dollar.
But the main thing that you're forgetting is that the one stop, easy route to purchase of the App Store means that you will sell orders of magnitude more copies on the App Store than you would from selling mobile apps from your own store. 70% of 50,000 downloads is a lot more money than 100% of 500 downloads.
Yes, I have been there and done that. You haven't.
I, for one, do not understand [...] just how Apple is making it better for the consumer this way."
Well, there's your problem. Apple's goal isn't to make things better for the consumer, it's to make money.
rooooar
In the parent post it says the author did some trials and found out $2.49 was the price where he made the most profit. At a lower price, enough new customers weren't created to offset that lower price. A higher price caused customers to chose not to buy. Profit was optimized. So selling at $1.99 means forgoing revenue, as would selling at $2.99. Now if parent didn't say they had experimented with pricing, either pricing higher or lower could end up creating more revenue.
If only it weren't mandatory to sell on the Apple store. Oh wait, it isn't, and he can keep selling as he is now. Seriously, this guy is bitching because he wants to add another retailer, but doesn't like their rules - DON'T FUCKING ADD THEM THEN.
Track your TV Shows with your iPhone - FREE
I'm well aware of the retail margins - and no, the publisher doesn't get $1 - $2 on a $50. A buck doesn't even cover the cost of packaging and production. Look in the trades - $10 to $20 is the norm on a $40-$50 retail product. Why do you think the retailers are screaming about thin margins - they're the ones who only get a 5% to 10% markup.
Nintendo actually published their figures. Look around for them. ISTR that Microsoft also did for their XBox titles.
Still, this doesn't address the real issue - control. As long as people have to funnel through the App store, you have a chance. However, the iPhone is under serious attack, and the leaked next-gen phone doesn't hold up all that well against the competition - especially against the latest droid from HTC. Android phones might outsell iPhones this year - they already surpass iPhones in terms of web surfing activity.
And the leaked iPhone falls short when set beside the Evo 4g. I'm not a google fan, but this phone just looks NICE!