Printed from http://www.electronista.com

Random House holding out on iPad, expects price war

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.



By Electronista Staff
toggle

Comments

  1. starwarrior

    Fresh-Faced Recruit

    Joined: Mar 2006

    +2

    Cave

    Watch this guy cave-in.

  1. iphonerulez

    Fresh-Faced Recruit

    Joined: Nov 2008

    +2

    Random House will give in...

    as long as sales for the iPad are much higher than the Kindle. RH won't want to be left out in the cold when the other publishers are making money. RH is likely taking a wait-and-see attitude. It would be folly to ignore Apple's free-spending customer base in any event.

  1. dscottbuch

    Fresh-Faced Recruit

    Joined: Sep 2000

    +1

    Apple has no reason to change

    Apple make money on Hardware! If RH is not on iBookStore you can still get their titles on Kindle for iPad, etc. The hardware will still sell. Why would Apple change their model for no benefit.

  1. lamewing

    Dedicated MacNNer

    Joined: Aug 2004

    0

    Changing business models

    I am a bit of a dinosaur and not very business savvy, but even I can see then need for these guys to adapt to the new, up-and-coming business models. The business models that came out of the late 19th and 20th centuries just won't work in a digital age. Once these guys realize that they can still turn a profit they will adapt...or get passed by.

    I agree Random House will most likely cave. If not life will go on and they will find themselves playing catch up over the next few years.

  1. cmoney

    Mac Enthusiast

    Joined: Sep 2000

    0

    Multiple device support

    This is one potential win for Amazon. A book on the Kindle bookstore can be read on infinitely more devices than an iBookstore book.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    0

    Re: Random house will give in

    as long as sales for the iPad are much higher than the Kindle.

    Sales mean nothing. It's how book sales at the iBookstore compare to Kindle book sales. If everyone who buys an iPad is buying books left and right (the way everyone here seems to make it sound), then it will be high sales.

    However, as is more likely, if the number of book buyers is relatively small compared to the iPad buyers, then there's less reason to give in. And you can't go by sales in the first month or two. Just like with the Kindle and xmas sales, you have to look down the road. How many iPad owners are buying books in 4+ months after they've owned it.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    0

    Wait!

    This doesn't make sense. Everyone here trashed Amazon for insisting on fixed pricing and stuff, and praised Apple for leaving it up to the publishers. Now it's bash the publisher because they want more control over their product and money? And I'm sure if they sign with Apple, then charge more to make up for Apple's large cut, everyone would be whining how the books are too expensive and the publishers are greedy.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    -1

    Easy fix

    Of course, if publishers were actually intelligent, they'd just band together, set up their own eBookstore and create iPad/Droid/Blackberry apps. Then you could purchase from the store without having to go through Apple or anyone else, and keep the whole amount.

    Well, that would work up to the point apple keeps rejecting their apps for various 'violations'.

  1. Jonathan-Tanya

    Fresh-Faced Recruit

    Joined: Oct 2004

    -1

    inconsistent

    inconsistent is right.

    First of all I respect RH's position on this, it's either their true position, that they actually liked getting paid $14 on a book that Amazon would sell at a loss for $9.99 (what's not to like about that, way to have Amazon subsidize your sales for you).

    Or, they are just being purposely contrarian to hold out for a better deal, either way its a respectable position.

    The iPad has a ways to go to prove itself as a book selling platform. Heaven knows that computers have been technically capable of displaying a book for 30 years, handheld book reading platforms have been around for a decade.....and everything we know is that people keep buying PAPER books.

    The only exception to that, and I mean the only exception to that has been the Kindle.

    It's not clear the iPad is an exception to that - I think it will be, I think Apple will pull it off - but the early buyers are not big book readers, so it may be a slow row to hoe.

  1. Norrin Radd

    Fresh-Faced Recruit

    Joined: Nov 2006

    +1

    Uh, yeah - RH - get with it!

    I've got a list of 17 books I want to buy for the iPad. I own all of them in hardcover already - but these 17 are my list of favorites. I would LOVE to be able to take them everywhere I go. I like the looks of the UI in the iBookstore from what I have seen - and I'll restrict my purchase to the iBookstore - just to continue to line the coffers of Apple - because, yeah - I'm a fanboy.

    But here's the deal - 16 of those 17 books are published by - you guessed it - RH. SO, if they don't jump on board - there's 16 sales they're not getting. Now I know everyone isn't me - but there may be others like me. When I was working retail - every sale counted. Every sale. Just sayin'.

Login Here

Not a member of the MacNN forums? Register now for free.

toggle

Network Headlines

toggle

Most Popular

Sponsor

Recent Reviews

Razer Kraken Pro headset

Gaming headphones are a challenge to get right, for a long list of reasons that are unique to the consumer buying them. Some shoppers ...

Patriot Aero Wireless Mobile Drive

Regardless of how large a tablet you buy, you always want more space. There's always one more movie or another album you'd cram on, if ...

Patriot Fuel+ 6000 and 9000mAh batteries

Mobile device batteries are better than they used to be, but there's always a scenario where users could use more juice. Upgrade manuf ...

Sponsor

toggle

Most Commented

 
toggle

Popular News