US Government Intercedes with E-books
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Todd Bailey April 17, 2012
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Todd Bailey |
Todd Bailey is Vice President of Digital Strategy at WebiMax, a leading SEO company with 500+ clients and 150+ employees as well as Lead Contributor at SEOservices.com
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Todd Bailey
has written 21 articles for WebKnowHow. |
View all articles by Todd Bailey... |
The US Justice Department interceded in the business affairs of Apple
and Amazon lately, ruling on the side of lower-priced e-books. The
Department posed an antitrust suit on Apple and five other large book publishers.
The government felt the group of publishers was strategically
attempting to raise the prices on e-books, prices which Amazon has
lowered to $9.99 for new and popular books.
Obviously there must be some limits to how brands treat consumer
wallets. As the Times article highlights, the economically-priced
e-books of the Amazon brand is fueled by its interest in selling its own
e-reader, the Kindle.
Publishers, who want more money for books from suppliers, looked to
Apple to charge more money. Kindle is able to 'take a loss' on book
sales to leverage the market, a market it controls 60% of at present.
When Amazon fields enough leverage, it can then dictate 'its own
terms.' Publishers are looking to recruit more money from e-book sales
due to the waning sales of physical books. Publishers fear if Amazon
widens the price gap between physical and e-books, the former group will
lose even more of a hold on the physical book market as they also get
defeated regarding e-book sales.
When Apple came out with the first iPad, it seemed publishers had
another vehicle. As the government suit reflects, it seems publishers
were resentful toward the evolution of relations with Amazon. The suit
quotes David Shanks: "I am now more convinced that we need a viable
alternative to Amazon or this nonsense will continue and get much
worse."
As the article relates, the government's decision will aid consumers
at present. A publishing consultant sees a different dynamic. "But in
the longer term, competition erodes as the spread between e-books and
physical books grows greater. There will be fewer retail stores."
Book retailers fear for their livelihood and the fate of major
publishers. "My fear is that the major publishers won't be able to stay
in business just selling e-books. You can't bring in enough money to
support the infrastructure. If that happens there goes the marketing,
the editorial, the author tours, the expertise of the book industry,"
says one bookstore owner.
The plaintiffs are the consumers who were suddenly charged $14.99
rather than $9.99. Hagen Berman, the firm representing the plaintiff is
housed in a Seattle office space, one also housing Amazon, though the
former party denies any affiliation or connection.
Publishers, at present, are keeping a firm stand, not wanting to be
bullied by Amazon and falling prices of e-books. Curt Matthews of IPG
asks, "Why should publishers cede all of their power to this new player
in the book business?"
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