Ipad Of Apple Deal Gives Hachette Pricing Leverage Against Amazon

While the letter from Hachette CEO David Young did not specifically mention Amazon or changing prices of new books to between $12.99 and $14.99, it did state the company intends to transition e-book sales to an "agency model." That model allows the company serving the content to take a cut -- in Apple's case with the App Store, 30 percent of all sales.

 

"There are many advantages to the agency model, for our authors, retailers, consumers, and publishers," Young wrote. Publisher Macmillan wanted the ability to set those prices on the Amazon Kindle e-reader, which led to a temporary suspension of sales of the publisher's content from Amazon.


But shortly after, the two companies reached an agreement, with Amazon reluctantly agreeing to sell most hardcover releases between $12.99 and $14.99. Amazon, however, noted that it felt the prices were "needlessly high."


In addition to Macmillan, Hachette is joined by publisher HarperCollins, which also intends to renegotiate its deal with Amazon for e-book prices. News Corp CEO Rupert Murdoch said the new prices will be "slightly higher," but in the wake of Apple's iPad agreements, Amazon is finally "ready to sit down" and have discussions. We're taking the long view on e-book pricing, and this new model helps protect the long term viability of the book marketplace."


All three companies -- HarperCollins, Hachette Book Group and Macmillan -- were specifically highlighted by Apple last week when it introduced its new iBooks application for the iPad. They, along with Penguin and Simon & Schuster, have agreed to content deals with Apple.


Is Amazon's Kindle with a touch screen?
Yesterday news broke of Amazon buying Touchco. Touchco is a small company that was birthed out of a project at New York University’s Media Research Lab. The company itself had yet to ship a product but was working with display technology, called interpolating force-sensitive resistance, that can detect an unlimited number of simultaneous touch points, and for what could be cheaper than the cost to produce a capacitive touch screen.


The news has everyone speculating that a color touch screen could be coming soon to the Kindle. So, perhaps Amazon is just trying to guarantee that it could be competitive if needed, or maybe the company is indeed preparing to go touch? This screams research to me, and since Touchco will now join the Kindle hardware group, I would expect that it’s going to be research for a while still. If Amazon fast tracks Touchco’s technology, at the very least it will take the focus off of Apple’s iPad, with Kindle lovers potentially holding off on the iPad purchase in hopes of seeing a touch-friendly Kindle by year’s end.


Regardless of how Amazon decides to use Touchco’s technology, the company has now succeeded in keeping current with the iPad, with both an announcement of its pending Kindle Development Kit and now it’s acquisition of Touchco.


While most people continue to say that they want the Kindle to just be a good ebook reader, with a touch Kindle and an App Store, Amazon could have a killer device on its hands.

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