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iPad Leads to Tense Negotiations at Amazon
Dennis Moons asked:
Negotiations with between big companies have always fascinated me, probably it has something to do with the world of secrecy and NDAs that surrounds them. So when details of certain agreements get public, I get excited (sort of). The story in which Amazon is entangled these last few days is very interesting.
Amazon, the world’s largest online retailer, has a big piece of the book market. With its recent launch of the Kindle, an ebook reader, they started selling next to paper books also the electronic version of them. They asked a fixed price of $9.99 for all titles, which is logically lower than the price for hardcover editions of the same books. Publishers were not very happy with this deal. Not because of the fact that they get less money, Amazon pays the difference with the paper version, making a loss on every ebook to promote its device. (So if the publisher charges $15 for the normal book and the ebook costs $9.99, Amazon will pay the publisher $5) The main argument of the publishers is that cheap ebooks cannibalize the sale of paper books. But Amazon’s size allowed it to get these kind of deals, as they are too big for the publishing companies to ignore. They basically told the publishers to take their offer or leave it.
Then came the iPad, also an e-reader. Apple agreed with the big publishers on a model where they would let the publisher set the price, and take 30 percent of the revenues. While Amazon mainly focuses on sales of its reader, more money might be made by taking the percentages on the content.
Seeing what Apple has done to the music industry, there is a lot of potential in this new device. And it is exactly this potential that allowed publishers to relieve some of the pressure in their contract with Amazon. Publisher MacMillian was the first to demand higher prices. Amazon tried to use its biggest asset, its online store to show their power, and in a nervous move they pulled all MacMillian titles from the store. After continued negotiations Amazon gave in and they agreed on a model similar to the iBook store of Apple.
This showed other publishers that probably they too could get a better deal. HarperCollins and Hachette already spoke up and the others will undoubtedly follow. Amazon will have to reevaluate its pricing strategy.
One rather ironic outcome of this increased competition are higher prices of ebooks.
Another outcome for Amazon might be the damage to its brand. Pulling certain books out of its store might leave some marks.
Over at Yahoo finance there was short story about a customer:
“Doug Miller, a 45-year-old information-technology consultant in Indianapolis, owns two Kindles and dozens of Amazon e-books, but was so frustrated by the removal of Macmillan books that he has put his e-book purchases on hold indefinitely. “It was Amazon that was acting monopolistic. That seriously damages my trust in them,” he said. “I’m very leery of further investing in any e-book platform until I see some sort of standardization. In the meantime I’ll buy paper books — but probably not from Amazon.”
The ebook market is still developing and many customers are getting introduced to the technology. While Amazon mainly focuses on sales of its reader, more money might be made by taking the percentages on the content. Although some people have lost trust in Amazon, these might only be the early adopters. So if Amazon can get them back in the Kindle camp, real damage might be avoided.
Caffeinated Content – Members-Only Content for WordPress
Negotiations with between big companies have always fascinated me, probably it has something to do with the world of secrecy and NDAs that surrounds them. So when details of certain agreements get public, I get excited (sort of). The story in which Amazon is entangled these last few days is very interesting.
Amazon, the world’s largest online retailer, has a big piece of the book market. With its recent launch of the Kindle, an ebook reader, they started selling next to paper books also the electronic version of them. They asked a fixed price of $9.99 for all titles, which is logically lower than the price for hardcover editions of the same books. Publishers were not very happy with this deal. Not because of the fact that they get less money, Amazon pays the difference with the paper version, making a loss on every ebook to promote its device. (So if the publisher charges $15 for the normal book and the ebook costs $9.99, Amazon will pay the publisher $5) The main argument of the publishers is that cheap ebooks cannibalize the sale of paper books. But Amazon’s size allowed it to get these kind of deals, as they are too big for the publishing companies to ignore. They basically told the publishers to take their offer or leave it.
Then came the iPad, also an e-reader. Apple agreed with the big publishers on a model where they would let the publisher set the price, and take 30 percent of the revenues. While Amazon mainly focuses on sales of its reader, more money might be made by taking the percentages on the content.
Seeing what Apple has done to the music industry, there is a lot of potential in this new device. And it is exactly this potential that allowed publishers to relieve some of the pressure in their contract with Amazon. Publisher MacMillian was the first to demand higher prices. Amazon tried to use its biggest asset, its online store to show their power, and in a nervous move they pulled all MacMillian titles from the store. After continued negotiations Amazon gave in and they agreed on a model similar to the iBook store of Apple.
This showed other publishers that probably they too could get a better deal. HarperCollins and Hachette already spoke up and the others will undoubtedly follow. Amazon will have to reevaluate its pricing strategy.
One rather ironic outcome of this increased competition are higher prices of ebooks.
Another outcome for Amazon might be the damage to its brand. Pulling certain books out of its store might leave some marks.
Over at Yahoo finance there was short story about a customer:
“Doug Miller, a 45-year-old information-technology consultant in Indianapolis, owns two Kindles and dozens of Amazon e-books, but was so frustrated by the removal of Macmillan books that he has put his e-book purchases on hold indefinitely. “It was Amazon that was acting monopolistic. That seriously damages my trust in them,” he said. “I’m very leery of further investing in any e-book platform until I see some sort of standardization. In the meantime I’ll buy paper books — but probably not from Amazon.”
The ebook market is still developing and many customers are getting introduced to the technology. While Amazon mainly focuses on sales of its reader, more money might be made by taking the percentages on the content. Although some people have lost trust in Amazon, these might only be the early adopters. So if Amazon can get them back in the Kindle camp, real damage might be avoided.
Caffeinated Content – Members-Only Content for WordPress
Amazon’s Kindle V.s. the Sony Reader
Groshan Fabiola asked:
In the last few months we witnessed the launching of Amazon’s Kindle. The marketing strategy was fierce; the new device was being advertised on major TV shows and on the news everywhere, sales skyrocketed in the first few hours. People that weren’t familiar with e-ink based technology thought this was the greatest innovation ever; Although the technology wasn’t new: Sony had been in the market for almost 2 years with their PRS-505 e-reading device. Even though they were the pioneers in implementation of the e-ink technology they didn’t receive the attention the Kindle got. Why? Because Sony’s marketing was weak. They focused on other products such as the PS3 and Blu Ray players. They didn’t think the niche for e-book readers was that large, but they were wrong: Amazon hasn’t been able to meet the demand for kindles. Currently the wait list is of three weeks (reminds me of the Wii euphoria) and the resale price on Ebay goes up from $800.
Is kindle up to the hype? Only if you live in the USA that is. If you live elsewhere forget about buying e-books right from the device itself or loading your own e-books or documents to it. Apple learned that their biggest consumers for their online music store Itunes would be in Europe and it proved right. Europe has a more stable economy and the income per capita is greater. There are currently 17 virtual stores for European customers. Amazon, although it ships paper books to almost all no-conflict zones in the world (about 150 countries) shipping for their e-book reader is limited to the US. territory only.
Sony is also selling inside their e-reading devices in the US. alone but differently from the Kindle this fact hasn’t been an obstacle for people from other countries to get one of those. The Sony online store (that looks like itunes) for e-books has limited access to US. residents like Amazon. The only difference between those technologies is the flexibility of Sony’s. The PRS-500 and its successor the PRS-505 can be connected via USB to a computer and you can load almost any .rtf (rich text format) and any .pdf you can think of but with the limiting feature that those letter-sized e-books and documents will display a tiny font in the paperback sized 6” screen making them sometimes unreadable.
The solution for adapting documents and non Sony Store e-books for the PRS-505 didn’t come from Sony (due to a conflict of interests: they prefer you buy the e-book again from their store) but from another company, the one that produces the PRS-505 formatting software “Michelangelo”.
Michelangelo: The PRS-505 formatting software has the simplest interface and mechanism for formatting e-books and documents for the Sony Reader. With only a copy-paste operation and pressing 2 buttons you can have your e-book ready to be read in your PRS-505 with a comfortable text size in 8 minutes saving you time and money.
Flexibility in technology is what Sony is showing here by providing options for the use of different formats. We could hope that in the future Amazon displays the same dynamicity by allowing other formats in their devices.
For more information on the PRS-500 formatter please go to http://www.prs-500formatter.com
In the last few months we witnessed the launching of Amazon’s Kindle. The marketing strategy was fierce; the new device was being advertised on major TV shows and on the news everywhere, sales skyrocketed in the first few hours. People that weren’t familiar with e-ink based technology thought this was the greatest innovation ever; Although the technology wasn’t new: Sony had been in the market for almost 2 years with their PRS-505 e-reading device. Even though they were the pioneers in implementation of the e-ink technology they didn’t receive the attention the Kindle got. Why? Because Sony’s marketing was weak. They focused on other products such as the PS3 and Blu Ray players. They didn’t think the niche for e-book readers was that large, but they were wrong: Amazon hasn’t been able to meet the demand for kindles. Currently the wait list is of three weeks (reminds me of the Wii euphoria) and the resale price on Ebay goes up from $800.
Is kindle up to the hype? Only if you live in the USA that is. If you live elsewhere forget about buying e-books right from the device itself or loading your own e-books or documents to it. Apple learned that their biggest consumers for their online music store Itunes would be in Europe and it proved right. Europe has a more stable economy and the income per capita is greater. There are currently 17 virtual stores for European customers. Amazon, although it ships paper books to almost all no-conflict zones in the world (about 150 countries) shipping for their e-book reader is limited to the US. territory only.
Sony is also selling inside their e-reading devices in the US. alone but differently from the Kindle this fact hasn’t been an obstacle for people from other countries to get one of those. The Sony online store (that looks like itunes) for e-books has limited access to US. residents like Amazon. The only difference between those technologies is the flexibility of Sony’s. The PRS-500 and its successor the PRS-505 can be connected via USB to a computer and you can load almost any .rtf (rich text format) and any .pdf you can think of but with the limiting feature that those letter-sized e-books and documents will display a tiny font in the paperback sized 6” screen making them sometimes unreadable.
The solution for adapting documents and non Sony Store e-books for the PRS-505 didn’t come from Sony (due to a conflict of interests: they prefer you buy the e-book again from their store) but from another company, the one that produces the PRS-505 formatting software “Michelangelo”.
Michelangelo: The PRS-505 formatting software has the simplest interface and mechanism for formatting e-books and documents for the Sony Reader. With only a copy-paste operation and pressing 2 buttons you can have your e-book ready to be read in your PRS-505 with a comfortable text size in 8 minutes saving you time and money.
Flexibility in technology is what Sony is showing here by providing options for the use of different formats. We could hope that in the future Amazon displays the same dynamicity by allowing other formats in their devices.
For more information on the PRS-500 formatter please go to http://www.prs-500formatter.com
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