Amazon’s ebook pricing structure has crumbled. Hachette’s the third major publisher to push for the agency model, following MacMillan and HarperCollins: They’ll set the ebook prices (higher, natch) and the bookseller takes a cut. The $US9.99 ebook? Poof.
It looks the pricing model reportedly first proposed by Apple to publishers – from $US12.99 to $US14.99 as a suggested price for hardcover bestsellers, though the publisher will set whatever price they want – is the way things are indeed going to shape up, so Steve Jobs wasn’t idly riffing when he said the price difference between Kindle and iBooks would go away. MacMillan CEO John Sargent has specifically mentioned those same price points as their baseline, so you can expect every other publisher will hew to that.
With a majority of the major publishers now going to the agency model, it’s logical that the final two, Penguin and Simon & Schuster, won’t be far behind, especially since they’re a part of Steve’s team. (HarperCollins hasn’t officially switched, but Rupert Murdoch said on their earnings call they’re renegotiating to that, so I’m counting it.) Three out of five, we’re calling it: Amazon’s dream of a flat $US9.99 for ebooks has flatlined.
Amazon’s price advantage over iBooks, also evaporated. Even though Amazon won’t take losses on ebooks anymore to sell them cheaply, it’s a bad situation for them, because they lose that marketshare-building advantage. (That is, Amazon’s happy to spend $US50 subsidising cheap books to hook you into Kindle for life. If, eventually, they’re the only game in town, like iTunes was for music, then they’d have the power to push back against publishers anyway.)