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The Battle of $9.99
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The Battle of $9.99

How Apple, Amazon and the Big Six Publishers Changed the E-Book Business Overnight

Andrew Richard Albanese
PW, 2013

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Editorial Rating

8

Qualities

  • Comprehensive
  • Innovative
  • Overview

Recommendation

Veteran journalist Andrew Richard Albanese’s tale of corporate warfare in the e-book business reads like a gripping long-form article ready for your Kindle or iPad. At the onset of the e-book mass-market industry, Amazon’s $9.99 per-book pricing strategy came as an unwelcome surprise to publishers. When Apple wanted to enter the e-book market, publishers saw its arrival as a way to wrest back the pricing control they had ceded to Amazon. Their counterattack led to antitrust charges. The publishers settled, but the court found Apple guilty of price fixing. With clarity and directness, Albanese walks you through each step of Apple’s careful orchestration of a master plan that altered publishing’s prevailing business model. The sheer volume of filings and testimony provides Albanese enough paint to produce a revealing portrait of Apple’s decision-making system. Direct quotes from the principals and attention to detail lend credibility to the saga, yet the book falls short in one regard: Albanese’s sense of chronology is set too loosely, presumably for narrative purposes, so readers may sometimes find it hard to follow the sequence of events. getAbstract recommends this brief, illuminating report of savage corporate infighting and its unintended consequences to anyone interested in the evolving dynamics among content producers, publisher, gatekeepers and distributors, and to everyone who buys books.

Summary

An Early Lead

By late 2009, Amazon unquestionably dominated the e-book market. Two years earlier, the Kindle had premiered to instant success. Its 90,000 titles spawned an entirely new industry. By selling books for its electronic reader at $9.99, a financial loss, Amazon brought its share of the e-book market to more than 90%, a clear signal of turmoil in the publishing business.

Recognizing what factors had doomed earlier e-readers, Amazon understood the need to put a bookstore right into its consumers’ hands. The Kindle’s success stemmed from the e-books’ low price and the ease with which users could connect to the Internet and instantly purchase bestsellers.

When the “Big Six” publishers – Random House and Penguin [which have since merged], Simon & Schuster, Macmillan, HarperCollins, and the Hachette Book Group – negotiated their initial e-book contracts with Amazon, they applied their print-book pricing model. They offered the usual retail 50% discount to Amazon and, not really knowing how to price an e-book, they also set an additional 20% “digital discount.” This financial fumbling would haunt them when Amazon began its now infamous $9.99 per e-book...

About the Author

Andrew Richard Albanese is the features editor at Publishers Weekly. He writes on the publishing and information technology industries for numerous periodicals.

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