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Price concerns keep Random House content from Apple iPad

post #1 of 94
Thread Starter 
The largest book publisher in the world may not offer its content for the iBookstore on Apple's iPad when the device launches April 3, as Random House is reportedly concerned over the effects of e-book prices.

According to the Financial Times, Random House executives want to explore the matter further with their authors and agents before agreeing to Apple's terms, which dictate Apple would receive a 30 percent cut of all sales on the iBookstore. Markus Dohle, chief executive of the publisher, said his company could still reach a deal before the iPad goes on sale April 3, but he is proceeding with caution.

The concern is over Apple's adoption of the "agency model," which allows the company serving the content to take a cut of sales. Apple has employed the same 70-30 split to great success with its App Store for software on the iPhone and iPod touch.

Under the traditional business model, resellers have bought books from publishers at discount prices, and then marked them up to make a profit through sales. But Apple's approach would have the publishers set the prices paid by consumers -- something Random House executives are concerned could lead to considerably lower prices, and thus lower profits.

The holdout from Random House exists after five of its biggest competitors -- HarperCollins, Hachette, Penguin, Macmillan and Simon & Shuster -- were all announced as iBookstore partners at Apple's official unveiling of the iPad. Books will be sold through the iBooks application, which will be available for download at launch through the App Store.



But reluctance from Random House is not the first example of publishers showing skepticism over Apple's new business model for the print world. Last month, the Times also reported that talks "stumbled" with some newspapers who are uncomfortable with Apple's revenue sharing plan and unwillingness to share consumer information -- data that is a valuable asset for traditional print publishers.
post #2 of 94
I think there's a typo in the article, shouldn't it read that they get to keep 70% of the sales and not 30%?
post #3 of 94
Quote:
Originally Posted by StarrGazer View Post

I think there's a typo in the article, shouldn't it read that they get to keep 70% of the sales and not 30%?

No kidding - I think if I were Random House I would worry if I was the only one getting 30%!

[Fixed already - WOW!]
post #4 of 94
Their mistake.
post #5 of 94
Hope publishers get their heads out of their collective arse and make content available soon, especially for technical content. It is a shame backward organizations like IEEE and NFPA are so awful about logical publishing arrangements, especially for their members.
post #6 of 94
The iPad and other devices like it spell the end of the line for the big publishing houses and they know it.

Authors can now self publish and actually sell a book for money on the iBookstore. What use is a publisher?
post #7 of 94
Quote:
Originally Posted by Mikefrompluto View Post

The iPad and other devices like it spell the end of the line for the big publishing houses and they know it.

Authors can now self publish and actually sell a book for money on the iBookstore. What use is a publisher?

I'm sure it will work out that way for some, but publishers provide other valuable services besides just taking a cut (ie editing, understanding readers and the market, good publishers work like an agent.)
But as you say, publishing is in for some big changes.
post #8 of 94
I'm not sure I see the problem...

Does an book author get a smaller PERCENT royalty when books are priced at different price points? I'm not talking about the dollar amount here, clearly the $ royalty per paperback is not as high as a premium priced hardcover but the actual percent... is it smaller with a lower price version of a book?

In other words, does a book author simply see a set amount per book no matter how much the publisher prices it at? Say for example $1.00 per book no matter if it was a hard or soft cover and no matter if it was priced at/sold for $15 or $5 or does what the author gets reflects the actual price the item was sold for? ... Or, using 10% as just an easy example... does the author get $1.50 per book when they are priced at (sell for) $15 and .05 when the book is priced at $5.00.

OR

Is it something in between where hardcover priced books kick back $1.00 each in author royalty and paperback editions kick back .50 each.

If it is something like the system above then yes, I can see when Apple wanting a flat 30% no matter what the selling price is might be seen as an issue.
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post #9 of 94
I'm not so sure I buy Random House's reasoning. This deal is clearly better for them and the market than what Amazon offered.

Maybe it's longterm concerns about the iBookstore taking too much business, like the iTMS, thereby hurting every area of business involved with printed distribution. Or perhaps the threat Amazon has made to publishers who go for the agency model Apple is offering.
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post #10 of 94
At least someone has the balls to tell Apple that their way isn't what some companies want. Whether it works out for Random House or not, at least they stood up.

I could see this working for my dad who reads a lot of material and buy books. If only their wi-fi router stopped dropping signal all the time. Maybe it's time to get me a new AEBS and give my old one to my parents.
post #11 of 94
You cannot teach old dogs new tricks...

Another old school media company reluctant to embrace new technology and so will at some point become irrelevant.

Authors won't need the services of the publishers (printing costs, advertising, editing...) in a few years and the companies that cannot adjust will perish.

KRR
post #12 of 94
Quote:
Originally Posted by krreagan View Post

You cannot teach old dogs new tricks...

Another old school media company reluctant to embrace new technology and so will at some point become irrelevant.

Authors won't need the services of the publishers (printing costs, advertising, editing...) in a few years and the companies that cannot adjust will perish.

KRR

You should know better than that. They are another old school media company. Which means that once sales start dropping they will blame pirates and pay off the government to pass laws mandating their business model to be the only legal business model and then extort and abuse the public for a decade or more.

What is truly sad is that they didn't seem to learn a dang thing from the music industry when they went through this. They still want to incorporate ineffectual and unnecessary DRM.

Isn't it amazing that even after the music industry dropped DRM that they didn't go out of business within a week because of all the piracy that would kill them without DRM? I guess the pirates weren't affected by DRM and so getting rid of it didn't do anything to increase or decrease piracy. Go figure.

Of course the movie, game, and publishing industry still insist that they must have DRM because without it the pirates will kill their business within a week without it.

Whatever.
post #13 of 94
Publishers still have a role and the name of the publisher matters. I used to buy books for a library and for its specialty needs if the publisher was one I knew to produce quality books in the particular niche my library served, I generally had to do little research on the book. Books from unknown or self publishers took a lot more work. To sell a lot of books you still need good marketing. E-Books do make it less expensive up front to produce, books because you do not have to pony up to get 10,000 copies printed and hope you sell them.

One question is what companies are going to spring up to help people get on Apple and what sort of split of the 70 percent will they want. Will Apple allow individuals to submit books directly? Will they set up something like the developers get where you can pay $100/yr to sell on the store?

My daughter is looking at publishing a comic book that really needs color. The cost of printing such a book is so high (in color) that it makes it very unlikely it would sell well. $10 a book she might be able to get OK sales, at $30 or $40, which is the current print prices it would be very tough. If she can sell on Apple for $5 and keep $3.50, it would be worth her time to produce the book and have a couple of hard copies made to send in for Copyright registration.
post #14 of 94
I've seen that same sort of backward thinking with manufacturers who resist having their products sold on the Internet in such venues as Amazon and eBay. They fear that they'll upset their traditional brick and mortar storefront dealers. Some are so retarded that they actually attempt to keep their products off the Internet entirely (high end Swiss watch manufacturers come to mind as an example).

Each company must decide whether to live in the future or in the past. The old saying, "Lead, Follow, or Get Out of the Way," comes to mind.

The Internet isn't going to go away no matter how much these old fashioned companies wish that it would. By holding back they give license to their competitors to learn and dominate an important new venue.

Apple is arguably the world's foremost technology leader and innovator at the present time. Getting aboard their vehicle is an opportunity not a problem.
post #15 of 94
All the information taken shows the iPod Touch crowd buying the iPad.

The App Store's chief sales are games.

Polls taken show most people don't spend a lot of money at the App Store, with more that 50% not paying anything at all.

http://www.macpolls.com/?poll_id=577

Also look at these polls again what people plan to do with the iPad

http://www.comscore.com/Press_Events..._on_Apple_iPad


So with all this information it goes to show that the iPad/iPod Touch market is the young crowd, with little disposable income and unlikely to purchase higher priced items like ebooks.

So I see Apple allowing people to read iBookStore content on their Mac's and PC's and if they want to transfer that to their kids or personal iPad's they can, in addition to buying on the device itself.

The iPad is more and more a device for parents and teachers to place content on for children without the complexities or drawbacks of a real computer.


There is a huge demand for educational types to help design software for the iPad.
post #16 of 94
Quote:
Originally Posted by mknopp View Post

Of course the movie, game, and publishing industry still insist that they must have DRM because without it the pirates will kill their business within a week without it.

I would be fine with publishers keeping DRM to protect their content so long as all of the publishers agreed to a universal standard. That way you could use any protected software with any hardware. You'd have customer choice in both content distributor and hardware device, while the publishers would be protected from piracy. The problem as I see it is that most hardware companies and publishers want a proprietary DRM, where the software only works in their ecosystem. The obvious problem is that you have to buy a separate proprietary hardware device for each content publisher.

I know that Apple works in the latter manner, forcing users to use their hardware and software for all DRM content. However, Apple is also the one company with enough clout to force all these publishes to agree on a universal proprietary standard (albeit Apple's DRM standard). Since I don't see DRM content leaving anytime soon, I personally would rather be locked into Apple's system but know that I can purchase most of the content I want through them, than to have to purchase separate hardware for each publishing company's proprietary DRM schemes.
post #17 of 94
I agree it does seem a very shortsighted approach especially with the success of iTunes for music.

iTunes is a success when one compares profit from iTunes music 'Purchases' with zero profit from 'pirated' music which I think is still in the >90% range.

The music companies only compare profit from iTunes music 'Purchases' with CD sales, which is dying form of selling music, to say the least.

I remember way back when, when the Theatre industry was trying to kill the VCR and Movies being rented/sold on VCR tapes. The reasoning was it would stop people from going to the movies.

In fact, as it turned out, the opposite was true. People did rent movies...but it had a positive effect because it also encouraged people to see more movies on the 'Big Screen' as well. More people were going to the movies after the introduction of the VCR and than before the VCR.

Edit: Please don't ask me for the article...this was about 20-25 years ago!
post #18 of 94
Quote:
Originally Posted by johnthebaton View Post

I would be fine with publishers keeping DRM to protect their content so long as all of the publishers agreed to a universal standard....

DRM is coming for sure, but like before it only keeps the honest one's honest.

Those willing to take the time to snapshot each page and run it by OCR software will get the text, but not all the interactive stuff obviously. So the cracked stuff would be downgraded quality.

Unlikely other companies will adopt Apple's DRM standard. DRM and formats like AAC are used as leverage to gain market share.
post #19 of 94
It boils down to yet another content provider who sees the end it's way of life. We all fear change.

But when the supposed hang up is the agency model... This is a company with severe cranial rectal inversion.

Lets break it out. The retailer buys X books from you at Y wholesale price. When the retailer sell less than some function of X books, they strip the covers and return it to the publisher for a credit of some function of Y wholesale price.

Basically, the publisher is concerned that it will realize less revenue because in the agency model, there is none of the above spoilage. They realize that they profit... handsomely.. from the inefficiency inherent in the dead tree book world and are loath to change that model.

I find their reticence repugnant on several levels.
post #20 of 94
I fully expect Apple to offer the same gift giving option for books as is now offered for songs and apps, so mommy and daddy will be able to keep their little dependents on a short leash with the textbooks...

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post #21 of 94
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #22 of 94
Quote:
Originally Posted by SpamSandwich View Post

I fully expect Apple to offer the same gift giving option for books as is now offered for songs and apps, so mommy and daddy will be able to keep their little dependents on a short leash with the textbooks...

Just what I wanted for my birthday - a "Geography Text Book" gift. Thanks Mommy!
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #23 of 94
Quote:
Originally Posted by Ireland View Post

Just what I wanted for my birthday - a "Geography Text Book" gift. Thanks Mommy!



"The Large Breasted Blonde Swedish Tribe of Northwestern Africa" ... by National Geographic ..


SCORE!
post #24 of 94
Quote:
Originally Posted by Mikefrompluto View Post

The iPad and other devices like it spell the end of the line for the big publishing houses and they know it.

Authors can now self publish and actually sell a book for money on the iBookstore. What use is a publisher?

Now, this is the funniest thing I've read this morning.
post #25 of 94
Quote:
Originally Posted by wally626 View Post

My daughter is looking at publishing a comic book that really needs color. The cost of printing such a book is so high (in color) that it makes it very unlikely it would sell well. $10 a book she might be able to get OK sales, at $30 or $40, which is the current print prices it would be very tough. If she can sell on Apple for $5 and keep $3.50, it would be worth her time to produce the book and have a couple of hard copies made to send in for Copyright registration.

To copyright something like that all you have to do is send it via registered post in a sealed padded envelope to yourself, which will be signed and dated - and when you receive it you simply don't open it. Thereby making an earlier date for the same content that other people can get a hold of - thus proof it's your work. People use this method for making music too. You only have to pay a small postage fee and you have copyrighted signed and dated content. You're welcome!
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #26 of 94
If I had said to my Dad (former CEO), 'Dad, I want to start a business where I cut down a bunch of trees, manufacture/print, store, ship, pickup and destroy unsold books!' He would have said I was 'daft' just put them on the iBook store for the iPad and sell them digitally.

Kind of like Apps on Apple's iPhone App store! I wonder how that's working out...They just downloaded their third billion and it only took three months!


Edit: 'Daft' and 'Another harebrained idea' were two of my late fathers' favorite descriptions when describing me!
post #27 of 94
Quote:
Originally Posted by krreagan View Post

You cannot teach old dogs new tricks...

Another old school media company reluctant to embrace new technology and so will at some point become irrelevant.

Authors won't need the services of the publishers (printing costs, advertising, editing...) in a few years and the companies that cannot adjust will perish.

KRR

Yep, and often the bigger they are the more resistant to change. Kodak comes to mind.
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post #28 of 94
Quote:
Originally Posted by Mikefrompluto View Post

The iPad and other devices like it spell the end of the line for the big publishing houses and they know it.

Authors can now self publish and actually sell a book for money on the iBookstore. What use is a publisher?

That comment is either completely stupid or way ahead of its time.
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #29 of 94
Quote:
Originally Posted by digitalclips View Post

Yep, and often the bigger they are the more resistant to change. Kodak comes to mind.

Kodak...good analogy!
post #30 of 94
Quote:
Originally Posted by solipsism View Post

I'm not so sure I buy Random House's reasoning. This deal is clearly better for them and the market than what Amazon offered.

Maybe it's longterm concerns about the iBookstore taking too much business, like the iTMS, thereby hurting every area of business involved with printed distribution. Or perhaps the threat Amazon has made to publishers who go for the agency model Apple is offering.

Maybe they got the 70% and 30% the wrong way around
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post #31 of 94
Quote:
Originally Posted by christopher126 View Post

If I had said to my Dad (former CEO), 'Dad, I want to start a business where I cut down a bunch of trees, manufacture/print, store, ship, pickup and destroy unsold books!' He would have said I was 'daft' just put them on the iBook store for the iPad and sell them digitally.

Yeah cause that paper book business never made any money, did they?
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post #32 of 94
Quote:
Originally Posted by Ireland View Post

That comment is either completely stupid or way ahead of its time.

Very funny! I never met an existentialist who was funny too!
post #33 of 94
Quote:
Originally Posted by Mikefrompluto View Post

The iPad and other devices like it spell the end of the line for the big publishing houses and they know it.

Authors can now self publish and actually sell a book for money on the iBookstore. What use is a publisher?

Quote:
Originally Posted by DESuserIGN View Post

I'm sure it will work out that way for some, but publishers provide other valuable services besides just taking a cut (ie editing, understanding readers and the market, good publishers work like an agent.)
But as you say, publishing is in for some big changes.

Here's the problem...

It's publishers who singed and/or acquired the rights of bands like Kiss, Sting, The Police, The Stones, etc who then made BIG PROFITS from said artists that allowed them to SPECULATIVELY SIGN total unknowns (at the time) where a PRECIOUS FEW become tomorrows mega stars.

Unfortunately the publisher also had to sign lots of one hit (or no hit) wonders in the hunt for the next super sensations who's mega profits would THEN help fund the publishers search for the NEXT tomorrows superstars... and so on and so on and so on.

Publishers are not unlike mutual fund managers.. they pool funds and spread it out over a diverse set of companies (usually in the same basic field) with the full knowledge that SOME of the companies are going turn out to be DOGS and loose money for the fund but others are going to be WINNERS and the overall success of the fund (manager) is how well his overall portfolio is performing. Over time they take the profits realized by SOME of the stocks they purchased and RISK it in the hopes they find another equally successful future stock.

Now if tomorrow all the MEGA STARS had the ability to drop out of their contracts and simply market themselves do you have ANY idea what that would do to the chances of ANY new yet to be discovered artist hoping to make their 'big break' it would all but crush them...

If all of the publishers 'money making artists' simply left tomorrow the sickly shell of a company left behind wouldn't be worth the powder to blow em back to hell. No income = no talent scouts, no signing bonuses, no private planes, no studio equipment, no promotion budget, no album debuts, etc etc etc. The party would truly be over.

I know its fun to pick on the labels and I do more than my fair share of it without a bit of remorse but... I need to ask a really simple and honest question... Is it 'fair' for an artist to leave a label at the first chance he/she/they get simply because they now have a name for themselves? I'm not asking if its 'okay' because if a contract is up the of course the band can do whatever they want but what I'm asking is would THEY think its the 'fair' or 'right' thing to do?

Knowing FULL WELL that it was some other wildly famous band who stayed with that label that in turn gave the label the funds needed to discover THEIR (now successful) BAND in the first place.

These businesses have been evolving over DECADES to work this exact way.

Now you want to pull out of the publisher and not contribute to the good of the overall industry... well thats certainly your right but how long with the industry survive if everyone did that?

While I'm using music publishers, book publishers are the same side of a different coin... they basically work the exact same way but they USUALLY keep a writers drug abuse, week long wild drunken sex orgies and trashing of hotel rooms on the down low instead of on the front cover of 'Book Review Monthly'...

In both cases the business model has been... throw a bag of cash at 10 different artists and if we hit ONE or TWO then we got what we need and then some for the bag of cash we'll need for next years dart game. (and I'm totally making up the numbers... I don't know how many failed artists are signed for each successful one... it could be 1 - 20 or 1 - 50 for all I know... I just know that for every King, Rowling and Steel there are untold thousands of other published authors that MIGHT be lucky enough to break even or only be a SLIGHT loss for the publisher.

We are basically looking at a paradigm shift of a magnitude never seen before in these industries.

- Yes people CAN self publish from the start AND have a chance at being successful (as good of a chance or better than what you'd have had if an industry publisher involved? That's a good argument and one that will probably shift back and forth as time goes by.

Does this mean the end of the publishing stalwarts of yesteryear?

- Maybe yes, Maybe no... an awful lot will have to do with how nimble the publisher can be and how QUICKLY they can envision what their industry will be like in the next 5-10 years (maybe less) and how well can they cope ... not so much with their blockbuster A team leaving them in one feel swoop but with the possibility of new 'GREAT' talent not banging on their doors but instead lots of 'marginals' still waiting for a check.

Remember, its the 'GREATS' and their works that translate into income that funds the search for new GREATS... however if all they start finding is 'marginals' and NO GREATS how are they going to possibly survive.

There's lots of different ways this can all turn out but just me putting this stuff into type has be thinking I'm glad I'm not on of these established publishers. No matter how I color it... their world isn't gonna be the same no matter how hard they try to make it so.
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post #34 of 94
Quote:
Originally Posted by Ireland View Post

Yeah cause that paper book business never made any money, did they?

Are you referring to the 'dead tree' paper book business?

I was just thinking if Gutenburg had the option of sending an apprentice out to 'make some' paper (see you in a week) to use his new invention on or just hit the 'Enter' key on his MacBook and send his printed text to the iBook Store which would he have used?

It may seem a facile analogy...but that is exactly the dilemma the publishing industry is facing today! It's just that many of them don't know it yet!
post #35 of 94
These stories are usually unverifiable, so even if there is a grain of truth, we might never know where that truth is. As it is, the story doesn't add up, it seems like either something is missing or something is incorrect.
post #36 of 94
Quote:
Originally Posted by Ireland View Post


And somehow you think it's APPLE who doesn't want to sell stuff to the entire world all at once because they WANT to show how fantastic the US is and doesn't NEED money from anywhere BUT the US?

***OR***

Could it POSSIBLY BE that the PUBLISHERS only have the ability to allow Apple to sell their titles in the US (at the present time) since many/most/all have signed exclusive contracts with publishers/distributers and or in-house international devisions who have the SOLE rights to sell titles in various countries in Europe and elsewhere?

And just like with the iTunes music store this will SLOWLY change as the BOOK PUBLISHERS contracts (that were previously signed exclusives) expire, are renegotiated or otherwise modified to once again give the publisher the ability to permit international sales with the realization that the new international contracts are not NEARLY as VALUABLE to international publishers now that they have the 'digital sales - waiver' tacked on to the end. After all what is a company in Ireland paying a sizable fee for exclusive distribution rights in their company when any resident with iTunes can buy the same book from Apple instead.

So... Simply allowing Apple to sell worldwide is not only a difficult thing to have happen OVERNIGHT it is also going to DEVALUE the money the publisher currently gets from selling exclusive international distribution contracts.
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post #37 of 94
There is a role that the big publishing houses serve that needs to be discussed.

I am torn about this role myself, and so I will not offer 'solutions' just commentary.

Publishers act as arbiters of taste by filtering out of millions of submission, those that are 'worthy' of becoming 'literature'. They are the gate keepers. There are several 'self publishing houses, I have worked for one as a technician (iUniverse - are they still around?). The drek that comes through the 'self publish' model is astounding. So, I am torn with 'big publishing's' role as a quality filter.

Big Publishing also imposes standards other than 'quality'. They normalize most books into 'standard' English through copy editing.[note, I am an English speaker, so I used English as the example language].

But the role of copy editor is not limited just to publishing houses. Small companies and individuals make a livelihood out of it independent of them.

The major positive role, for the author, of the Publishing House are the marketing and distribution channels. The major Positive role for the consumer is a readable book with some reasonable assumptions of quality.

When the distribution channels become available to the author directly [or 'more directly']. The remaining value of the publishing house becomes... fungible.

This, I believe is a major reason that Random House is dragging its feet.
post #38 of 94
Quote:
Originally Posted by DaveGee View Post

And somehow you think it's APPLE who doesn't want to sell stuff to the entire world all at once because they WANT to show how fantastic the US is and doesn't NEED money from anywhere BUT the US?

***OR***

Could it POSSIBLY BE that the PUBLISHERS only have the ability to allow Apple to sell their titles .

OR

Could it possibly be that Ireland was pointing out the fact that he doesn't much care/is annoyed that this doesn't involve him yet.
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post #39 of 94
Measure twice, cut once.

There's nothing wrong with being cautious before embarking upon a new business model. As partisans, this is obviously the business model we as Apple fans want to succeed. But if Apple's proposed model winds up being good for Apple and detrimental to Random House... just because we won't care much, it doesn't mean the people at Random House won't. Let them be cautious. If it's a good model, they'll come. It won't be a calamity if the iPad bookstore doesn't have every title in the Library of Congress on day 1 (so long as the gaps don't involve books I want to read, of course, then it'll be an ENTIRELY different matter )
post #40 of 94
Give it a few months. They'll come 'round... sort of like NBC decided to when they pulled their TV shows off iTunes temporarily.
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