Ebook pricing gets even more interesting: Apple’s model vs. Amazon’s subsidy

Tablets and devices will get all the coverage, but I believe ebook pricing is going to be 2010’s biggest issue for publishers. To illustrate … this New York Times piece explains how Apple’s $12.99-$14.99 range represents the outer limit…

iPad and Kindle

Tablets and devices will get all the coverage, but I believe ebook pricing is going to be 2010’s biggest issue for publishers.

To illustrate … this New York Times piece explains how Apple’s $12.99-$14.99 range represents the outer limit for iBooks pricing. Those price points aren’t set in stone. From the Times:

<blockquote

… Apple inserted provisions requiring publishers to discount e-book prices on best sellers — so that $12.99-to-$14.99 range was merely a ceiling; prices for some titles could be lower, even as low as Amazon’s $9.99. Essentially, Apple wants the flexibility to offer lower prices for the hottest books, those on one of the New York Times best-seller lists, which are heavily discounted in bookstores and on rival retail sites. So, for example, a book that started at $14.99 would drop to $12.99 or less once it hit the best-seller lists.

Sounds like Apple and Amazon are closer than we initially thought, right?

Nope. Not at all.

The single most important sentence in that Times article is buried at the very end:

Under the agreements with Apple, both the publishers and Apple should make money on each book sale. [Emphasis added.]

Ahh, there we go! Whether the price is $14.99, $12.99, $9.99 or $1.99, Apple will take its 30 percent. Set the price lower and sell more books? You betcha! Jack the price up and sell fewer? Absolutely!

What Apple won’t do is subsidize a price point.