Its a staggering concept really – e-books don’t need to be printed or shipped and aside from the cost to transmit an electronic book on a wireless M2M network to a non-WiFi Amazon Kindle reader, distribution is a matter of very small bandwidth and cloud charges. We’re talking a fraction of a penny or so.
So hearing that electronic books are in some cases more expensive than their print counterparts is a bit surprising. Turns out Apple pushed the major book publishers to set retail prices as opposed to charging a wholesale price and letting book discounters set the price based on market demand.
This is why books on the Kindle have escalated in cost from $9.99 to $18.99 or even more.
Obviously convenience is a factor as not having to lug physical books is a great benefit as is being able to have various devices sync and allow you to continue reading your book on any reader you choose.
But this story is more than one of increased convenience manifesting itself into higher prices – or free markets at work. Turns out Steve Jobs didn’t want to compete on discounted book pricing with Amazon so he lobbied book sellers to set retail prices for e-books. And as you might imagine, this has turned into a Justice Department probe.
The social media universe isn’t very happy with this trend and @afmblog said this is Steve Jobs legacy. Sharon Vaknin at CNET said on Twitter that she hopes the result of the investigation is lower e-book prices.
I look at this from a few perspectives… Do large tech companies have too much power? In other words, Steve Jobs and Apple knew this move by book publishers would increase book prices overnight for hundreds of millions of book buyers but they pursued setting these higher prices in order to level the playing field. Most tech companies probably couldn’t even get appointments with major book publishers, let alone having them changes their business models.
Moreover, as a free market advocate I am torn. Obviously this was a very consumer-unfriendly move but Apple has such a halo over it consumers won’t likely abandon the company.
But Apple should be held accountable – not necessarily by the government but by free markets. Be sure to let others know the reason e-book prices are increasing. It is in part thanks to Apple. I would imagine with enough bad PR Apple might be more careful in the future. Ditto for other corporate giants looking at this situation from a distance.
Disclosure: I am still an Apple shareholder.