World's largest book publisher Random House may soon join Apple's iBookstore
Random House, the world's largest book publisher and most high profile holdout from Apple's eBook digital download, could soon bring its catalog of top selling novels to the electronics maker's iOS ecosystem.
In a brief statement to the media Monday, Random House said that it has agreed to "the agency model for e‐book sales" in the U.S. effective Tuesday. That means that going forward, "Random House will set consumer prices for the e‐ books we publish, and […] will provide retailers with a commission for each sale," the publisher said.
The concession could bring to an end a near year-long standoff between Random House and Apple's iTunes-based iBookstore, which operates on the so called 'agency model' that allows the company serving the content to take a cut of sales. For its iBookstore, Apple employs the same 70-30 split that has seen renowned success on its App Store for software on the iPhone and iPod touch.
"The agency model guarantees a higher margin for retailers than did our previous sales terms," Random House said. "We are making this change both as an investment in the successful digital transition of our existing partners and in order to give us the opportunity to forge new retail relationships."
The statement appears to imply that the publisher could be on the verge of announcing plans to bring its catalog to Apple's iOS devices though the iPhone and iPad maker's iBookstore. Currently, iOS device users can only purchase and download from Random House's digital catalog through Amazon's Kindle app for those devices.
In the lead up to the launch of Apple's iPad last April, Random House executives were said to be exploring the adoption of the agency model with their authors and agents before agreeing to Apple's terms, which dictate that Apple receives a 30% cut of all sales on the iBookstore. At the time, chief executive Markus Dohle said his company hadn't ruled out reaching a deal before the April 3rd, 2010 launch of the tablet device, but added that he was proceeding with caution.
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 agency approach has the publishers set the prices paid by consumers -- something Random House executives were concerned could lead to considerably lower prices, and thus lower profits.
Word that Random House could join on the iBookstore five of its biggest competitors -- HarperCollins, Hachette, Penguin, Macmillan and Simon & Shuster -- comes just two days before Apple is expected to take the wraps off its second-generation iPad in San Francisco, a device that is rapidly altering the landscape of the publishing industry.
In a brief statement to the media Monday, Random House said that it has agreed to "the agency model for e‐book sales" in the U.S. effective Tuesday. That means that going forward, "Random House will set consumer prices for the e‐ books we publish, and […] will provide retailers with a commission for each sale," the publisher said.
The concession could bring to an end a near year-long standoff between Random House and Apple's iTunes-based iBookstore, which operates on the so called 'agency model' that allows the company serving the content to take a cut of sales. For its iBookstore, Apple employs the same 70-30 split that has seen renowned success on its App Store for software on the iPhone and iPod touch.
"The agency model guarantees a higher margin for retailers than did our previous sales terms," Random House said. "We are making this change both as an investment in the successful digital transition of our existing partners and in order to give us the opportunity to forge new retail relationships."
The statement appears to imply that the publisher could be on the verge of announcing plans to bring its catalog to Apple's iOS devices though the iPhone and iPad maker's iBookstore. Currently, iOS device users can only purchase and download from Random House's digital catalog through Amazon's Kindle app for those devices.
In the lead up to the launch of Apple's iPad last April, Random House executives were said to be exploring the adoption of the agency model with their authors and agents before agreeing to Apple's terms, which dictate that Apple receives a 30% cut of all sales on the iBookstore. At the time, chief executive Markus Dohle said his company hadn't ruled out reaching a deal before the April 3rd, 2010 launch of the tablet device, but added that he was proceeding with caution.
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 agency approach has the publishers set the prices paid by consumers -- something Random House executives were concerned could lead to considerably lower prices, and thus lower profits.
Word that Random House could join on the iBookstore five of its biggest competitors -- HarperCollins, Hachette, Penguin, Macmillan and Simon & Shuster -- comes just two days before Apple is expected to take the wraps off its second-generation iPad in San Francisco, a device that is rapidly altering the landscape of the publishing industry.
Comments
That's what you get for breaking NDA.
Wasn't their CEO the one who talked about the iPad the day prior?
That's what you get for breaking NDA.
Link?
Also, the big publishing houses are fighting a tsunami. It's clear their days are numbered and nearly all print publications will go "e". There is no turning back.
If the publisher sets the retail price
Then how can the publisher be worried that prices will be lower.
Book exec "but we might slash prices", other book exec "yes, there would be nothing stopping us from destroying our profits!"
"But Apple's agency approach has the publishers set the prices paid by consumers -- something Random House executives were concerned could lead to considerably lower prices, and thus lower profits."
If the publisher sets the retail price
Then how can the publisher be worried that prices will be lower.
Book exec "but we might slash prices", other book exec "yes, there would be nothing stopping us from destroying our profits!"
I have to guess there's more to it than we general public know about. I think that was as generalized statement.
I remember 10 years ago talking to a windows programmer and he said Office for the mac was 5 years ahead of the Windows version. I think this can now be applied to Apple's iPhones, iPods, iPads, OS, iOS, laptops and desktops.
PS. I use iWork. I only use Apple software and hardware.
Book exec "but we might slash prices", other book exec "yes, there would be nothing stopping us from destroying our profits!"
Hee-hee. Reminds me of the governor of Wisconsin saying he must get rid of unions' right to bargain because even if we cut benefits the union will just bargain them up again. As if management's negotiators are helpless against union negotiators? Yeah, negotiating is a skill business people don't have. Only workers do?
"The agency model guarantees a higher margin for retailers than did our previous sales terms," Random House said. "We are making this change both as an investment in the successful digital transition of our existing partners and in order to give us the opportunity to forge new retail relationships."
Wonderfully mealy-mouthed rhetoric.
It's about time! Most of the books I read are Random House and I've just refused to buy any until they sign up with iBooks.
I agree!!! I hope the Eragon books will be iBooks!!!!!
Jeff
Link?
Also, the big publishing houses are fighting a tsunami. It's clear their days are numbered and nearly all print publications will go "e". There is no turning back.
My mistake, that was McGraw-Hill... who are still absent, I believe.
Good! Any company that doesn't "hitch its wagon" to Apple does so at its own folly.
Nike certainly seem to have done well with the nike+ integration.
"But Apple's agency approach has the publishers set the prices paid by consumers -- something Random House executives were concerned could lead to considerably lower prices, and thus lower profits."
If the publisher sets the retail price
Then how can the publisher be worried that prices will be lower.
Book exec "but we might slash prices", other book exec "yes, there would be nothing stopping us from destroying our profits!"
Ever heard of "market pressure"? If prices aren't fixed, there's a race to the bottom.
Of course, there's a race to the bottom already in every bookstore. So this isn't a cause for concern.
When I first bought my iPad I thought it would also be used as en Ebook reader but I think it's a bit too big and bulky to hold and read long periods of time. I actually bought a Kindle a couple of months ago and absolutely love the size, weight and reading on the e-ink text
Nice. How many bucks were you paid for this commentmercial of yours?
Wasn't their CEO the one who talked about the iPad the day prior?
That's what you get for breaking NDA.
That was Terry McGraw, CEO of McGraw-Hill. They weren't on the slide, not sure if they're in the iBook Store or not, but I doubt very much that, if they aren't, it's by Apple's choice. But, they do a lot of textbooks, science books, etc., not so much in the way of novels, I don't think.
Edit: I see you already posted an update.
When I first bought my iPad I thought it would also be used as en Ebook reader but I think it's a bit too big and bulky to hold and read long periods of time. I actually bought a Kindle a couple of months ago and absolutely love the size, weight and reading on the e-ink text
IMHO bad choice.
I would have gone with the Nook given that B&N doesn't lock you to just the Nook reader but the ePub + Adobe DRM is used by Sony as well. This is also a format used by libraries so you're also locked out of borrowing ebooks on the Kindle. Kindle also doesn't support Overdrive either (the other common library ebook format).
I use and like the iPad.
Ever heard of "market pressure"? If prices aren't fixed, there's a race to the bottom.
How can there be a race to the bottom for a given book or author? It is not like games where game (a) and game (b) are really the same from devs no one has an attachment to anyway. Same for flashlight apps or whatever. Nor is like bookstores because with the agency model Apple or Amazon can't race to the bottom.
If you want a Bryce Courtney ebook there isn't options, like publisher a or b. Perhaps with reference books but the bottom is already zero anyway because enthusiasts post all that on the web. Education? The institution dictates the resource and it is free in the library.
Since apple released variable song pricing there hasn't been a race to te bottom in music. If you want band a there is no choice within the store. You go to another store. I'd say that is why Apple offered the agency model, they had no strength in ebooks so Amazon would have price cut to zero, by promoting the agency model the publishers themselves blocked amazon from doing this by demanding the same terms.
If you want a Harry potter ebook you have 2 choices pay or find an OCR pirate copy or I suppose borrow it from the library and waste a week making your own pirate copy.
the idea that there will be a race to the bottom doesn't work for books. There is too much attachment to the specific author and/or content. An unknown author may cause a publisher to offer cheap but if they attract a following the next book won't be.
I call nah
Hee-hee. Reminds me of the governor of Wisconsin saying he must get rid of unions' right to bargain because even if we cut benefits the union will just bargain them up again. As if management's negotiators are helpless against union negotiators? Yeah, negotiating is a skill business people don't have. Only workers do?
In both cases we are dealling with throw away statements here. Sometimes you have to say somthing even if it doesn't reflect the depth of your thoughts on a subject. Businessmen are very wary of anything new impacting an established business. Some can adapt others can't. In the end this is why you will see many publishers going under. A transition to digital seems pretty damn simple to us outsiders but there is all sorts of peril for businesses built around a different model.
This reality isn't confined to publishing either. Consider the recent fortunes of companies like Kodak that simply couldn't wrap their heads around the idea that their business model of a 100 years was screwed.
As to the people that dis Kindle and the Nook, they need to realize that these highly optimized devices work really well in their intended application. More important the size is manageable. People that have in the past grabbed a paperback to read are not going to grab an iPad as a replacement. This was confirmed by me while on vacation over the holidays, you just don't see iPads around the pool.
When I first bought my iPad I thought it would also be used as en Ebook reader but I think it's a bit too big and bulky to hold and read long periods of time. I actually bought a Kindle a couple of months ago and absolutely love the size, weight and reading on the e-ink text