Quote:
Originally Posted by DuckieTigger
It was about market share. Apple had no interest to discount at all. Without discounting they would have had a real hard time getting any ebook business. It was Amazon's discounting of the best sellers that the publishers didn't like. Apple just plain and simply did not like any discounting from anybody. Amazon had a market share of around 90% and that was a lot of discounting to attack. Except the other stores had a chance to survive by doing their discounting less aggressivly money wise, but differently. More like a reward system or coupons or bundles. I don't think Apple thought it all the way through what it would mean for the smaller stores and how they were able to distinguish themselves from Amazon. And really, they probably didn't care.
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If you look around here at deal threads from 2008-2009 around you'll find that Amazon prices were *NOT* always the lowest. On some books they were, sometimes, but not always and not on everything. Through micropayment rebates, coupons, loyalty programs, or just short-term sales, it was often possible to get ebooks cheaper than at Amazon. There were entire websites dedicated to tracking promotions so readers could find the best prices.
The reality was that there was a healthy, competitive market where *in aggregate* if you *only* bought from one ebookstore, Amazon was cheapest. But if you shopped around and bought from whomever had the lowest price on a given day, you would save more than just going with Amazon.
It was also a reality that Amazon's mythical 90% share (from early 2009, after the Oprah endorsement coup) was already gone by the time Agency went into full effect in may 2010 since the entry of Nook expanded the market dramatically over the first three months of the year. There was a Teleread report from april 2010 that Nook might even be outselling Kindle (during march 2010) and Nook bragged of 25% market share in their quarterly report featuring the last pre-agency data. Kobo wasn't much of a player yet but Sony was and so were the indie stores. Amazon's market share on the eve of agency was really in the 56-60% range by some published estimates.
The Agency conspiracy killed creative marketting of BPH titles. And at that time BPH titles were around half the books at Amazon and 75-90% at the indie stores. Smashwords was ramping up but the main sources for indie titles were Amazon and Fictionwise. Everybody else, Sony and Nook included, were heavy on BPH.
The Agency conspiracy raised baseline prices by 50% overnight, creating a price shock among readers that sent hordes to buying indie titles just as Amazon spurred an explosion of indie titles at KDP by switching to a 30% distribution fee on most titles.
The Agency conspiracy inspired Nook to move to near-cost ereader pricing which moved the ebook market from one where interoperable epub was relevant to one dominated by walled gardens where interoperability was meaningless and where generic Adept ebookstores had nothing distinctive to offer.
The conspiracy derailed a competitive market where Amazon had two large competitors and many small ones, all relying on interoperable epub to one extent or another and created one where walled gardens and epub mutants rule. And in a market like that there is no room for generics. Even Google barely registers these days.
Amazon is holding steady at 60-66% (they have actually *grown* their share thanks to their exclusive indie titles) of a much bigger market than in early 2010, Nook has lost half their peak share but seems to be hanging on to 12-15% and Apple has picked up Nook and the small players' lost share and also have 12-15%.
Kobo peaked at 8% or so and are probably under 5%.
Add it up and 4 players control 90-96% of the market.
That is what the *unnecessary* conspiracy achieved.
Amazon was facing strong competition in an rapidly growing market and the conspiracy crippled them all to facilitate Apple's entry.
Edit:
http://www.teleread.com/ebooks/more-...dles-in-march/
http://www.dailyfinance.com/2010/04/...your-hopes-up/
Back in the heyday of UNIX workstations, number two player HP bought out number three Apollo to become top dog on paper. Scott MacNeally, CEO of SUN MICROSYSTEMS reacted to the merger with glee. "Before, I had to worry about what HP might be doing and what Apollo might be doing. Now I only have HP to worry about. And for the next year HP is going to be tied up in the merger."
A year later, SUN was on top and perfectly positioned to exploit the internet boom of the 90's.
Sometimes it is better to have inept enemies than competent friends.
That worked out beautifully for intel, Microsoft, and Google among others.
Amazon seems to be on the same track.