So Amazon.com has lost its fight with Macmillan over the price of e-books. The book seller will have to price books in line with the publisher's desires, not theirs.
Who's the winner?
From what I've read, Apple will give the publisher a 70% royalty of the list price of the electronic title. Apple has also let the publishers determine the list price. The selling price of iPad titles will be set by the publisher and will rise from the $9.99 (Amazon's selling price) to an average $13.50 for the latest releases of top selling authors.
It looks like the publishers are the winners: they set the price for their intellectual property. If Apple has to discount the e-books, the lost revenues will come out of their 30%.
The lessons of Intel are, it seems, ignored. One of the core principles of the Chickens and Pigs framework is that your customer's customer isn't yours. Intel launched its "Intel Inside" campaign to bypass the computer makers and speak directly to the end user. The ideas was that the end user would demand that their computer have an Intel microprocessor inside.
The campaign was a resounding success. The computer makers capitulated. Intel printed profits
When Intel wanted to diversify, though, the price of their Intel Inside campaign became clear. Intel wanted to get into cell phones. Having seen how Intel treated its customers, the cell phone manufacturers would not let Intel put a microprocessor into their products. No matter how good the technology that Intel offered, the chip maker was left on the outside.
The publishers are acting as though e-book customers are theirs. Wrong. Apple and Amazon are the publisher's customers. Readers like you and me aren't the publisher's customers: we are not invoiced by, nor do we send revenue, to the publishers. (See this page on my web site for a discussion.)
Chickens and Pigs says: Build a successful business by helping your customer be successful with his customer. It's hard to see how Amazon.com is helped by Macmillan's practices.
By using a new entrant (Apple) as a vehicle to muscle their approach to pricing, the publishers are signaling future partners how they "play the game." Don't be surprised if, in a year or two, the publishers come to regret their recent victory.
Who's the winner?
From what I've read, Apple will give the publisher a 70% royalty of the list price of the electronic title. Apple has also let the publishers determine the list price. The selling price of iPad titles will be set by the publisher and will rise from the $9.99 (Amazon's selling price) to an average $13.50 for the latest releases of top selling authors.
It looks like the publishers are the winners: they set the price for their intellectual property. If Apple has to discount the e-books, the lost revenues will come out of their 30%.
The lessons of Intel are, it seems, ignored. One of the core principles of the Chickens and Pigs framework is that your customer's customer isn't yours. Intel launched its "Intel Inside" campaign to bypass the computer makers and speak directly to the end user. The ideas was that the end user would demand that their computer have an Intel microprocessor inside.
The campaign was a resounding success. The computer makers capitulated. Intel printed profits
When Intel wanted to diversify, though, the price of their Intel Inside campaign became clear. Intel wanted to get into cell phones. Having seen how Intel treated its customers, the cell phone manufacturers would not let Intel put a microprocessor into their products. No matter how good the technology that Intel offered, the chip maker was left on the outside.
The publishers are acting as though e-book customers are theirs. Wrong. Apple and Amazon are the publisher's customers. Readers like you and me aren't the publisher's customers: we are not invoiced by, nor do we send revenue, to the publishers. (See this page on my web site for a discussion.)
Chickens and Pigs says: Build a successful business by helping your customer be successful with his customer. It's hard to see how Amazon.com is helped by Macmillan's practices.
By using a new entrant (Apple) as a vehicle to muscle their approach to pricing, the publishers are signaling future partners how they "play the game." Don't be surprised if, in a year or two, the publishers come to regret their recent victory.
How true Harold! It would seem that not only are the lessons of intel lost - but those of history itself. "Dictatorships" always inspire, at some level, the desire to rebel.
Posted by: Tony Cundiff | 03/10/2010 at 01:46 AM