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Originally Posted by robinson
This is a great thread! Incredibly informative, even if speculative.
Now, given what Amazon has done to MacMillan-- dropping all its books, hard copy and ebook, in a big power play, distributor-publisher spat--how likely is it that Amazon would even permit Stanza to run on the iPad? Perhaps it will pull Stanza from both the iPad and the other i-devices.
Of course, Amazon is said to be more interested in selling books than Kindles... in which case, it would want to make sure Stanza can run on the iPads and make Apple look bad if Apple even thinks of blocking it (think of Apple's foot-dragging on Google Voice that got the feds involved).
But how will this all work? Apple is rumored to want a wide open pricing market for ebooks, not a fixed price (odd considering its iTunes history, but understandable given the publishers' desire to circumvent Amazon's $9.99 fixed price). If books are going to sell for more via the iBooks book store, then how will Apple permit other apps to run that can fetch the books at cheaper prices from Amazon and fictionwise?
Or does Apple want to leave it all open, too-- and it's the publishers who then say to Amazon and fictionwise-- sorry, we're only going to make our ebooks available at a certain price-- that of the iBooks store-- so Amazon if you want to play, you'll have to change your pricing!
I think this last scenario might be the one that plays out... it assumes that Apple is more interested in selling iPad then ebooks, but then again I know little about such matters and haven't even thought enough about it to make an informed judgment. What are your more informed judgments?
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Well, apparently what Apple has done is offered publishers exactly the same revenue model that they offer to App store developers. Based on observation of the app store over the past two years, it seems to me that Apple's goal here is to be a gatekeeper overall. They'll take a slice of profit from devices that are sold, whether because of the availability of books or apps or any other reason, and on top of that they'll take a predictable cut of the cost of apps/books/etc. It does differ in their (previous) model for music, tv, and movies but it seems to me that their goals are inverted as well. In the case of music especially, providing a la carte, predictable pricing was a huge selling point of the iTunes store. You always knew, assuming the music was there, that you could log on and download your favorite new top 40 song (gag me) at 99 cents.
Of course, there were always exceptions there with regards to "album only" tracks, but you get the idea.
In the case of the app store, and by association, iBookstore, it seems they are taking an entirely different stance. Their sales pitch is to the content providers now, saying "Hey, we're going to be about as simple and fair as you could ever ask for, and offer a better revenue split than any other similar controlled distribution channel. So come sell your stuff through our pipes!" And the advantages to Apple here are twofold, content sells devices, and 30% cut of millions of sales adds up. But the pricing and marketing responsibility are almost entirely left to the content providers.
That's just plain genius on Apple's part. They get to sit back and do what they do best, which is produce designer hardware and novel software (even if it doesn't quite burn your toast exactly to specifications, they showed that their style and marketing savvy could sell iPods, a largely inferior DMP experience for the time, despite everything including a dumb name) and then leverage the effort of third parties both for added revenue and for marketing purposes.
As far as how this affects publishers and their relationship with Amazon... well it does this: Apple gives pricing control to the publisher, with strong recommendations based on their knowledge of their userbase, and that puts pressure on Amazon to change their strongarm tactics. It gives publishers another outlet that has the potential to rival Amazon. Apple has a far more successful digital music sales business than Amazon, or anyone for that matter, and has proven the ability of their distribution channel to push devices and sales merely by existing with the App store. This may be enough to convince publishers to take their ball and go home from Amazon, and head to Apple instead. If Amazon loses all its content, they will not sell any more kindles. Amazon will be forced to follow Apple's lead.
What's interesting is that this same sort of thing happened with games. Apple's industry-unique fairness in developer/distributer pricing cut pushed Sony to offer better terms to developers who would be willing to bring smaller-scale games to their PSP platform for digital sales. Those are called "PSP Minis" and consist partly of ports of iPhone games.
Of course, only time can tell what will really happen. I never would have expected a price war that started in digital distribution to extend to physical distribution like the Amazon -> wal-mart -> target circle-jerk of a few months ago. It seems like the publishing industry is too insulated from its customers, and they could probably benefit from more direct distribution. Apple seems to be offering a more direct distribution channel by giving total control to the pub on pricing and availability. Other smaller retail channels may exist but remember, we're talking mass market appeal here, and so far, in eBook-land, there are only two truly mass-market visible entities, and that's Amazon and Barnes & Noble. I'm not sure what control pubs have for BN, but I would guess it's nothing more than setting their wholesale costs, not the real price.
If Apple has convinced the major publishers (all of which are on board, apparently) that the same mass "direct" marketing success of the App store can be had for eBooks, you just may see a major shake-up in the eBook world starting in about 60-90 days.