The New York Times reports that recent shifts in the eBook publishing industry, spurred by Apple's entrance into the market, to allow for higher prices and greater publisher control over their content may offer more flexibility in pricing than previously thought. The "agency model" being promoted by Apple and pushed by many book publishers has been looking to break Amazon's stranglehold on the eBook market with its $9.99 pricing for best-sellers by allowing publishers to set retail prices on such releases, rumored to be targeted to sell at $12.99 to $14.99.
But according to at least three people with knowledge of the discussions, who spoke anonymously because of the confidentiality of the talks, 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.
Moreover, for books where publishers offer comparable hardcover editions at a price below the typical $26, Apple wanted e-book prices to reflect the cheaper hardcover prices. These books might be priced much lower than $12.99, even if they did not hit the best-seller list.
The switch to an agency model is seen by publishers as a means to create a more sustainable eBook industry as a whole, countering Amazon's strategy of selling eBooks at a loss in order to build market share and spur sales of its Kindle devices. Earlier this week, The Wall Street Journal reported on research from Credit Suisse analyst Spencer Wang, who expects that Amazon's share of the eBook market will fall from its current 90% to only 35% by 2015 as Apple and others enter the industry.
