Reports Say Apple Wants To Control eBook Prices

With the iPad due to launch, Apple is negotiating with major publishers for the right to sell e-books at a reduced price depending on market circumstances, according to a report in the New York Times.

According to the newspaper, three sources close to the negotiations said Apple wants the right to cut the cost of the elcectronic versions of books which are selling for a reduced price in hardcover, or which hit the bestseller lists. This could change the e-book market, which has seen prices remain relatively static despite rapid evolution in technology.

The NY Times says Apple wants to take e-books that would ordinarily sell for $12.99 (£8.40) or $14.99 (£9) in its online store, and let customers downloa them for $9.99 (£6.50). Aple is talking to publishers including Simon & Schuster, the Penguin Group, Macmillan, HarperCollins Publishers, and the Hachette Book Group, the article says..

Apple’s negotiations, coupled with the upcoming release of the iPad, have begun to affect the overall e-reader industry in drastic ways. At the end of January, Amazon complained when Macmillan wanted to raise the price of popular titles such as “Wolf Hall” from $9.99 to between $12.99 and $14.99, leading the online retailer to temporarily yank the publisher’s titles from its digital shelves. Nonetheless, other publishers soon followed in attempting to gain a higher price-point for their offerings.

Some of those publishers cited the introduction of new devices into the marketplace as justification for the re-negotiations, while others have argued that the rise of e-readers is a disruptive influence on the larger publishing industry, one that threatens to sink their financial model unless adjustments are made early in the evolution of the format.

“It’s important to note we are not looking to the agency model as a way to make more money on e-books,” David Young, chairman and CEO of Hachette Book Group, wrote in a memo posted on the media blog Mediabistro on . “We’re willing to accept lower return for e-book sales as we control the value of our product — books, and content in general. We’re taking a long view on e-book pricing, and this new model helps protect the long-term viability of the book marketplace.”

Reports indicate that Apple is offering 70 percent of e-books’ consumer price to publishers as their revenue share, in turn forcing Amazon to also negotiate on that front. Amazon has indicated that it will acquiesce to higher price points on publishers’ books.

In addition to books, Apple is apparently negotiating with studios to port television shows onto the iTunes store for a dollar per episode. According to a story in the Financial Times, those negotiations have proven successful with an unnamed number of companies. Normally, television shows bought through iTunes cost $2 for standard definition and $3 for high definition.

If the iPad proves a popular device, it could accelerate the popularisation of tablet PCs, which have long been viewed as a niche computing device. Hewlett-Packard is apparently planning to start a price war by undercutting the iPad; smaller vendors such as British company X2 are making a play for the new sector, and Amazon’s acquisition of Touchco suggests more competition from the Kindle. Others point to iPad use in business. and speculate the iPad will include a camera, as the competition moves to features.

The hope among content providers, obviously, is that a bestselling iPad will translate into increased sales for their own products, as well.