Amazon’s (AMZN) e-reader business which fuels sales of its Kindle e-reader is supposed to be in trouble. The e-commerce operation has charged $9.99 for many of the e-books it sells, which has helped the company keep up robust book sales. The $9.99 price is below what most best-sellers go for in retail stores, which has given Amazon a price edge. Publishers have objected to the price because it affects their profitability and what they can charge for physical books.
Apple rode to the rescue of the publishing industry when it said it planned to sell e-books for $12.99 to $14.99 as it launches its iPad tablet computer. The Apple price points pressured Amazon to raise what it charges for e-books to keep publishers from pulling their content from the Kindle maker.
But, it turns out that Apple may not have been so generous to publishers and that the $9.99 price that Amazon has charged will be the industry norm–at least for best-sellers. The New York Times reports that “Apple inserted provisions requiring publishers to discount e-book prices on best sellers — so that $12.99-to-$14.99 range was merely a ceiling; prices for some titles could be lower, even as low as Amazon’s $9.99.”
An analyst from Credit Suisse recently forecast that the market share of the Amazon Kindle would drop from 90% of the e-reader market today to 35% five years from now. That projection was in part based on the notion that Amazon would have to raise its e-book prices and lose a critical competitive advantage. Apple may make the issue of price academic and that puts Amazon back into the driver’s seat when it comes to e-book sales.
Douglas A. McIntyre
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