Publishers Turn Up the Heat on Amazon’s Kindle

Since its arrival in November 2007, Amazon’s Kindle has been the king of the e-reader market. While there are no solid numbers on the books, CEO Jeff Besos comments that they’ve sold “millions” of Kindles. Millions might be stretching things a bit, but the proof is in the pudding. The Kindle was the “most gifted item” in Amazon history with more Kindle books sold than physical tomes. In addition, Amazon reported a 42 percent increase in sales that were credited in part to the e-reader’s popularity.

However all’s not well in Kindle land. With Apple’s iPad announcement, Amazon finds itself having to take off its rose-colored shades. When Steve Jobs ran down the specs of the much-anticipated Apple tablet, he also mentioned a deal with the five largest book publishers to price their books at $12.99-14.99 with some books priced at $9.99. According to the terms of the deal, publishers would have the power to set their own prices and Apple will take 30 percent of the profit. Not exactly a Kindle-killer, but it’s definitely throwing a cramp in Amazon’s style.

Before the iPad hit the scene, publishers were at odds with Amazon’s lowball price of $9.99 across the board. There was fear that the price would undercut physical book sales, namely hardbacks which are traditionally more expensive then the paperback versions. According to Gizmodo, Rupert Murdoch has gone on record saying, “We don’t like the Amazon model of $9.99….we think it really devalues books and hurts all the retailers of hardcover books.”

Apple’s promise of higher prices has the major publishers chomping at the bit for the iPad to hit store and putting the spurs to Amazon to raise their prices. To date, Amazon has had to raise the pricing cap for Macmillan’s best sellers after initially deciding to pull the companies books from its digital shelves. The latest rabble rouser to twist Amazon’s arm is Hachette, and Harper-Collins is starting to voice its discontent with the cap. Like any schoolyard bully, if you give them lunch money once, you start a habit. It’s hard to imagine that Amazon will be able to stand its ground against these major companies.

At the end of the day, the real losers in this whole situation is the e-reader audience. By instituting a cap, Amazon is trying to keep e-books affordable for the reader. There are no printing or shipping fees involved with producing e-books so theoretically the price should be lower. This also raises the question of how much digital content is worth. Just because there aren’t any extraneous costs does that mean that e-books should be priced one flat rate, regardless of if they’re new arrivals or best sellers? As the battle between Apple and Amazon heats up, so will the war over the value of content on the internet.