Attention Apple Lovers

If you read the article Apple doesn't set the prices, the publishers do. Apple takes a 30% cut of the ebooks that are sold through their store. Amazon used to buy in bulk and had the leverage to make the publisher come to their terms. Once the iPad was released with iBooks the publishers had the option with Apple to set their own prices, so it's the publishers that set the prices not Apple. Apple gave them that option with the agency model. Amazon had previously bought in bulk and sold some at a loss to build the market for the Kindle which in turn would have more people buying ebooks. Amazon was trying to build it's base and was willing to take a loss on some books. Apple came along and used a different model that the publishers preferred.

It amazes me how everyone try's to blame Apple for all kinds of issues. If the other companies were so great why hadn't they produced a touch screen smart phone before the iPhone? Because they weren't forced to. Most of the mobile manufactures try to dictate what the consumer wanted and Apple looked at what they though consumers wanted and end up hitting a home run. All the mobile companies and pundits said Apple wouldn't be successful with a mobile phone because they weren't in the industry and were new to it. Well they basically rewrote the book for device manufactures and they are all trying to play catch up now. Amazon had basically dictated what the ebook market was and again Apple has rewritten the tablet market and everyone is trying to play catchup.

Apple's model actually allows anyone to sell ebooks that they write and Apple takes a 30% cut regardless who publishes it. If someone as an independent person publishes an ebook with Amazon or B&N they will take up to a 70% cut of the sale price so who is really motivated by profit and taking advantage of people?

Apple keeps changing they industries, first with music, then the iPhone and now tablets and everyone is trying to play catchup and doesn't like Apple. If the publishers loved Amazon's model so much why were they read to jump at Apple's model. Oh yeah and one of Apple's policies is that digital textbooks that they now sell can only be priced up to $14.99, to keep them affordable.

Apple takes a 30% cut

30 percent? Does not this impact what a publisher must set a price at? (Higher)

No, that's not how the market works. They "need" to set the price that will net them the most dollars. The fact that Apple takes any percentage will have no bearing on that, because it's a consumer or demand driven curve. The publishers had wanted higher prices (in theory, based on what they teach in econ) because they believed that even though they would sell fewer books, the total of (# eBooks) * (price of eBooks) would be more than they were receiving with Amazon. Amazon had an arrangement where they would buy the eBooks at a particular price and then sell them at whatever price they wanted. When Apple came into town, they simply offered to sell books the same way they sell everything else. The program writer or publisher gets to set the price, and Apple gets their cut for bringing buyers and sellers together. But up to this point there is no funny business--just companies being companies.

Perhaps Jobs encouraged the publishers to play hardball with Amazon to end the wholesale model and move to the agency model. I don't know, but if they did, then that would be antitrust behavior. That's what the DoJ would be investigating, and we'll see what comes of that.

My whole issue with eBooks is that publishers have everything backwards. They're hanging dearly onto their dead trees, and in my opinion, they're giving up a lot of profits because of their fear. I think rather than maximize their income on eBook sales as they should be doing economically, they're pricing their intellectual property at a place that preserves their physical publishing model. There is no marginal cost to producing another eBook, unlike a physical book. Once the book is written, edited and typeset, that's it, there are no more creation costs--those are all fixed/sunk costs. From there, their distribution model (physical or electronic) has to be based on marginal costs. So besides paying an author on whatever agreement the publishers have, it doesn't cost them anything to sell an eBook.

In practically every industry, economics shows that the price of a good approaches the marginal cost of production. This is because of competition, and any excess profit over marginal cost will bring more producers into the market until "economic profit" = 0. This does not happen when producers collude, which would lead to artificially high prices, which really seems to be the case in the eBook market. I hope something changes.

Wow...that article was bias and misrepresented the truth.

Well speaking of fanboys. Amazon has a near cult status with readers. And yet they are destroying the book market: they let people sell print books for a penny. Subtract about $3 on a book sale that Amazon takes upfront. Than add just under 1.00 back to ship the book. ($3.99- $3.00)  If you are bookseller for a living you compete with that. Now they offer to buy back your book too in direct competition to independent booksellers for mere pennies on the dollar in book credit. Apparently if people are dumb enough to lose money selling books, they might as devour them from the getgo.

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Reported as a canned pork product