updated 08:30 am EDT, Wed March 24, 2010
Random House fears Apple model worse than Amazon
Random House has so far refused to sign up for Apple's iBookstore because it might trigger a fight over e-book pricing, the publisher's CEO Markus Dohle said Tuesday. The executive hinted that a deal with Apple was still an option even with just days left before the iPad's launch but that Apple's insistence on taking a 30 percent cut would force Random House to give up pricing control. He preferred a wholesale model used by Amazon and some physical stores, where retailers buy the books at a set price and then charge extra to meet their needs.
Adopting Apple's model wasn't ruled out but would need discussion with authors before it went ahead, Dohle said. He expected a tangible financial impact for those who put their text on the iBookstore.
The attitude is a sharp contrast to those from Macmillan and the four other major publishers signed up for the tablet-oriented store. These have largely argued in favor of an agency-style model that varies the actual price to carry a book but also gives more control over the sale price of the book itself. Amazon has faced mounting resistance to the wholesale model as it has used this to sell Kindle books below the raw prices, voluntarily taking a loss but also setting price expectations that publishers argue are unrealistic.
Random House may nonetheless feel pressure to sign on as its parent company, Bertelsmann, faced a loss in 2009. It now expects a profit this year but anticipates this partly based on cost cutting rather than sheer sales.