Why There Will Soon Be a Huge Rise in Ebook Sales

Following a price-fixing conviction against Apple and major publishers, the Supreme Court refused to hear the case, which means the lower court’s antitrust ruling stands. As such, Apple will have to pay $450 million, and five major publishers will pay another $166 million. ($50 million of this is going to lawyers.) As this Bloomberg article points out:

Apple will have to pay out $400 million in refunds to e-book customers, which they can only use to buy new e-books. The total revenue to publishers for trade e-books in the United States for the first ten months of 2015 was just a bit more than $1.1 billion, so Apple’s settlement could be a significant shot in the arm for the languishing industry.

The author doesn’t include the $166 million that publishers are paying, and I’m not sure how this money will be distributed. But even if there’s $400 million that will be spent on ebooks – and, while many people may never spend what they get, others will spend more than what they get, because their share won’t be enough to buy a book – this amount will inject a huge sum of money into the publishing industry.

Unfortunately, it comes at a time when ebook prices have gotten ridiculous, as the Bloomberg article points out. New books are often in the $12 – $15 range, and older ebooks often cost more than paperbacks. The publishing industry is killing off ebooks, by pricing them out of the market, and it’s a shame.

24 thoughts on “Why There Will Soon Be a Huge Rise in Ebook Sales

  1. “The publishing industry is killing off ebooks, by pricing them out of the market, and it’s a shame.”

    Not only is it a shame, but it’s a bizarrely Pyrrhic victory for the publishers.

    Ever since they won the battle to force Amazon to sell at their required price, OVERALL revenues and profits for the publishers has gone noticeably down.

    In short, the publishers are idiots. I do understand their reasoning, but it’s simply incorrect.

  2. “The publishing industry is killing off ebooks, by pricing them out of the market, and it’s a shame.”

    Not only is it a shame, but it’s a bizarrely Pyrrhic victory for the publishers.

    Ever since they won the battle to force Amazon to sell at their required price, OVERALL revenues and profits for the publishers has gone noticeably down.

    In short, the publishers are idiots. I do understand their reasoning, but it’s simply incorrect.

  3. “Ever since they won the battle to force Amazon to sell at their required price”

    They didn’t win that! Do you not know what this was even about. The judge killed that off years ago! Amazon isn’t eating the cost of the blades because they changed the pricing model of Kindles. They used low costs of books to drive kindle sales (at high margins) and then when this came out was when they wanted to shift to the blade model which was always their intent.

    Ebook sales are climbing and expected to surpass physical books in the next couple years because they are convenient and people pay for convenience. And with the DOJ killing off the one chance we had for some meaning full competition (iBooks) we shouldn’t be surprised at the result.

    This trial, and ruling was insane, and I would love to know why it wasn’t heard in the supreme court.

    • “Required price” – he means that the publishers now choose the price (except for promotions, in which case I think Amazon has the right to discount books, but they take the hit).

      The Bloomberg article I linked to says:

      “E-book sales declined 12.3 percent over the first 10 months of 2015, compared with the previous year”

      I don’t know where you get your data that ebooks are climbing…

      • Sep 2013, Judge imposed remedies that ended the Agency pricing model

        “The Justice department ended up forcing Apple and the big five publishers to abandon the agency pricing model. They called it collusion that they formed a price fixing cartel, which is illegal in the US.”

        There has been some attempt by publishers to move back to this model oddly without Apple’s intervention (stupid DOJ).

        The numbers I was looking at were projections based on 2014 numbers that expected ebooks to overtake physical books in 2016-2017.

  4. “Ever since they won the battle to force Amazon to sell at their required price”

    They didn’t win that! Do you not know what this was even about. The judge killed that off years ago! Amazon isn’t eating the cost of the blades because they changed the pricing model of Kindles. They used low costs of books to drive kindle sales (at high margins) and then when this came out was when they wanted to shift to the blade model which was always their intent.

    Ebook sales are climbing and expected to surpass physical books in the next couple years because they are convenient and people pay for convenience. And with the DOJ killing off the one chance we had for some meaning full competition (iBooks) we shouldn’t be surprised at the result.

    This trial, and ruling was insane, and I would love to know why it wasn’t heard in the supreme court.

    • “Required price” – he means that the publishers now choose the price (except for promotions, in which case I think Amazon has the right to discount books, but they take the hit).

      The Bloomberg article I linked to says:

      “E-book sales declined 12.3 percent over the first 10 months of 2015, compared with the previous year”

      I don’t know where you get your data that ebooks are climbing…

      • Sep 2013, Judge imposed remedies that ended the Agency pricing model

        “The Justice department ended up forcing Apple and the big five publishers to abandon the agency pricing model. They called it collusion that they formed a price fixing cartel, which is illegal in the US.”

        There has been some attempt by publishers to move back to this model oddly without Apple’s intervention (stupid DOJ).

        The numbers I was looking at were projections based on 2014 numbers that expected ebooks to overtake physical books in 2016-2017.

  5. The publishing industry is killing off ebooks, by pricing them out of the market, and it’s a shame.

    Or, possibly, they’re pricing them at levels which actually pay for their production, rather than using physical books to subsidize them (no, the physical production costs are *not* a major part of book production costs).

  6. The publishing industry is killing off ebooks, by pricing them out of the market, and it’s a shame.

    Or, possibly, they’re pricing them at levels which actually pay for their production, rather than using physical books to subsidize them (no, the physical production costs are *not* a major part of book production costs).

  7. “They didn’t win that! Do you not know what this was even about.”

    I’m well aware the Apple case has zero to do what I was discussing. I was responding to a specific point from Kirk about how publishers were killing eBooks through pricing.

    “Amazon isn’t eating the cost of the blades because they changed the pricing model of Kindles.”

    This is simply wrong. There was a MASSIVE contractual battle between the publishers and Amazon about whether or not Amazon could discount eBooks and eat the cost. Amazon simply lost the battle. But the publishers lost the war.

    If the publishers were to change their minds, Amazon would go back to selling below cost in an hour.

    “This trial, and ruling was insane, and I would love to know why it wasn’t heard in the supreme court.”

    It WAS heard by the Supremes. They refused to proceed further because it was unambiguously clear that Apple was in violation of antitrust laws, as pretty much everyone who has followed the case has known.

    —–

    “I don’t know where you get your data that ebooks are climbing…”

    You are indeed correct, Kirk. They’re not.

    But as noted, it’s even WORSE than just that. Overall sales and profits for eBooks and dead-tree books COMBINED have noticeably declined since the publishers won their battle…

    • It is my understanding that we haven’t been under the Agency pricing model since the ruling back in 2014 and that….

      “HarperCollins is rumored to be returning to agency pricing in the next few months.” this was from an april 2015 article and they were the first.

      So declining sales in the first 10 months of 2015 would not be an indication of how Agency pricing has affected anything.

      Also, the supreme court “declined to hear” apple’s arguments. They didn’t rule on those arguments.

    • That is not the way it works. They deal primarily with constitutional issues or issues where previous Supreme court rulings are involved. This case was just about a judge that didn’t have a clue. Got it in her head that Apple was wrong (before hearing any evidence) and fixated on Steve saying that he knew that prices on iBooks would be the same as Amazon (which is simply the definition of Agency Pricing).

      Apple signed contracts with book publishers identical to those they signed with every music label, TV producer, Movie Company and independent application author that they used over the past decade with iTunes. But because Amazon had been driving book sellers out of business with predatory pricing and subsidizing ebook prices to keep them artificially low and that ended as part of this it must some how be collusion. Even tho we see now after the fact that the book publishers are driving to the same pricing model without Apple.

      Ya, this case was cut and dry.

  8. “They didn’t win that! Do you not know what this was even about.”

    I’m well aware the Apple case has zero to do what I was discussing. I was responding to a specific point from Kirk about how publishers were killing eBooks through pricing.

    “Amazon isn’t eating the cost of the blades because they changed the pricing model of Kindles.”

    This is simply wrong. There was a MASSIVE contractual battle between the publishers and Amazon about whether or not Amazon could discount eBooks and eat the cost. Amazon simply lost the battle. But the publishers lost the war.

    If the publishers were to change their minds, Amazon would go back to selling below cost in an hour.

    “This trial, and ruling was insane, and I would love to know why it wasn’t heard in the supreme court.”

    It WAS heard by the Supremes. They refused to proceed further because it was unambiguously clear that Apple was in violation of antitrust laws, as pretty much everyone who has followed the case has known.

    —–

    “I don’t know where you get your data that ebooks are climbing…”

    You are indeed correct, Kirk. They’re not.

    But as noted, it’s even WORSE than just that. Overall sales and profits for eBooks and dead-tree books COMBINED have noticeably declined since the publishers won their battle…

    • It is my understanding that we haven’t been under the Agency pricing model since the ruling back in 2014 and that….

      “HarperCollins is rumored to be returning to agency pricing in the next few months.” this was from an april 2015 article and they were the first.

      So declining sales in the first 10 months of 2015 would not be an indication of how Agency pricing has affected anything.

      Also, the supreme court “declined to hear” apple’s arguments. They didn’t rule on those arguments.

    • That is not the way it works. They deal primarily with constitutional issues or issues where previous Supreme court rulings are involved. This case was just about a judge that didn’t have a clue. Got it in her head that Apple was wrong (before hearing any evidence) and fixated on Steve saying that he knew that prices on iBooks would be the same as Amazon (which is simply the definition of Agency Pricing).

      Apple signed contracts with book publishers identical to those they signed with every music label, TV producer, Movie Company and independent application author that they used over the past decade with iTunes. But because Amazon had been driving book sellers out of business with predatory pricing and subsidizing ebook prices to keep them artificially low and that ended as part of this it must some how be collusion. Even tho we see now after the fact that the book publishers are driving to the same pricing model without Apple.

      Ya, this case was cut and dry.

  9. “Or, possibly, they’re pricing them at levels which actually pay for their production, rather than using physical books to subsidize them”

    Nope.

    Prior to winning their Pyrrhic victory over Amazon, the publishers were selling eBooks to Amazon for THE EXACT SAME PRICE.

    The ONLY thing that’s changed is that they’ve successfully stopped Amazon from selling them at a loss.

  10. “Or, possibly, they’re pricing them at levels which actually pay for their production, rather than using physical books to subsidize them”

    Nope.

    Prior to winning their Pyrrhic victory over Amazon, the publishers were selling eBooks to Amazon for THE EXACT SAME PRICE.

    The ONLY thing that’s changed is that they’ve successfully stopped Amazon from selling them at a loss.

  11. “So declining sales in the first 10 months of 2015 would not be an indication of how Agency pricing has affected anything.”

    “Agency pricing” is a red herring. By negotiating contracts with Amazon that stop Amazon from selling below the required price, they have achieved the EXACT same end result for the consumer as they sought with “agency pricing”. And that’s what the decline in both eBooks and ALL books reflects.

    That’s the irony in Apple and the publishers conspiring to blatantly violate the law. If they’d just waited for the contracts to come up for renewal, they’d have gotten exactly what they wanted legally.

    “Also, the supreme court “declined to hear” apple’s arguments. They didn’t rule on those arguments.”

    Semantic nonsense. “Decline to hear” in this situation is legal jargon for ‘we looked at this and saw zero merit whatsoever in proceeding further’. They indeed ruled on the argument, and ruled the same way every other court ruled. It’s been an open and shut case since the very beginning.

  12. “So declining sales in the first 10 months of 2015 would not be an indication of how Agency pricing has affected anything.”

    “Agency pricing” is a red herring. By negotiating contracts with Amazon that stop Amazon from selling below the required price, they have achieved the EXACT same end result for the consumer as they sought with “agency pricing”. And that’s what the decline in both eBooks and ALL books reflects.

    That’s the irony in Apple and the publishers conspiring to blatantly violate the law. If they’d just waited for the contracts to come up for renewal, they’d have gotten exactly what they wanted legally.

    “Also, the supreme court “declined to hear” apple’s arguments. They didn’t rule on those arguments.”

    Semantic nonsense. “Decline to hear” in this situation is legal jargon for ‘we looked at this and saw zero merit whatsoever in proceeding further’. They indeed ruled on the argument, and ruled the same way every other court ruled. It’s been an open and shut case since the very beginning.

  13. puggsly,

    With all due respect, you don’t seem to have to the slightest clue of what’s going on here in ANY of the many angles at play here.

    Since you’re seemingly more interested in the case itself than anything else, check out the emails that clearly show antitrust collusion. Beyond that, I simply can’t help you.

    Cheers,
    Media Guy

    • I’ve read the emails, and there was nothing there that sold this case because all they showed was a company trying to sign similar but separate agreements with 5 different companies. What sold this to the judge were two statements.

      1) Steve, when asked about the difference between the $9.99 and $14.99 price points said that they will be the same. Because he knew the book publishers didn’t like Amazon’s practice of pricing books below cost to push the eBook/kindle distribution method. And he knew that they just signed contracts that would ether allow Apple to sell for $9.99 or cause Amazon to sell for $14.99 and thus the prices would be the same but Apple didn’t care which.

      2) A Quote from his bio said that in discussing the possibility of the Agency pricing, WHERE THE PUBLISHER SET PRICES. That Apple would get 30% and the consumer might pay more but that was what the publishers were looking for.

      These statements came from a soon to be player in an established industry that currently had 0% of the ebook sales and 0% of the eReader market. This was not a player who could dictate anything, just one that could agree to do what publishers wanted to do even though it knew that letting them do that would increase prices.

      None of the emails were sent to multiple publishers. None stated that publisher A thinks price X is what publisher B and C should also set. None indicated anything but Apple negotiating in good faith 5 different but similar contracts. Note: these contracts were not just similar to each other but they were similar to those signed with every other media distributor Apple had done business with for the past decade.

      So you are correct abut not swaying my opinion on the stupidity of the case.

      What I felt you were incorrect in was that the Agency pricing model was to blame for ether ebook prices or ebook sales in general because it was nullified as part of the case and is only now starting to show up again (without any intervention by Apple).

      I was also incorrect in thinking that eBooks were still on the rise as they have been for the past 7 or 8 years. I didn’t know that 2015 saw a dip in sales, but the fight between Amazon and the publishers might be part of that as well.

      Regardless, Amazon’s practices of selling books under cost couldn’t last for ever and when you stop subsidizing products it is no surprise that over all sales decline. Those where the points I was trying to make. I just couldn’t help myself but point out as well that the case points out how our legal system can go so totally wrong due to one person’s bias. (note: I’m also aware that my bias shows through in my comments)

  14. puggsly,

    With all due respect, you don’t seem to have to the slightest clue of what’s going on here in ANY of the many angles at play here.

    Since you’re seemingly more interested in the case itself than anything else, check out the emails that clearly show antitrust collusion. Beyond that, I simply can’t help you.

    Cheers,
    Media Guy

    • I’ve read the emails, and there was nothing there that sold this case because all they showed was a company trying to sign similar but separate agreements with 5 different companies. What sold this to the judge were two statements.

      1) Steve, when asked about the difference between the $9.99 and $14.99 price points said that they will be the same. Because he knew the book publishers didn’t like Amazon’s practice of pricing books below cost to push the eBook/kindle distribution method. And he knew that they just signed contracts that would ether allow Apple to sell for $9.99 or cause Amazon to sell for $14.99 and thus the prices would be the same but Apple didn’t care which.

      2) A Quote from his bio said that in discussing the possibility of the Agency pricing, WHERE THE PUBLISHER SET PRICES. That Apple would get 30% and the consumer might pay more but that was what the publishers were looking for.

      These statements came from a soon to be player in an established industry that currently had 0% of the ebook sales and 0% of the eReader market. This was not a player who could dictate anything, just one that could agree to do what publishers wanted to do even though it knew that letting them do that would increase prices.

      None of the emails were sent to multiple publishers. None stated that publisher A thinks price X is what publisher B and C should also set. None indicated anything but Apple negotiating in good faith 5 different but similar contracts. Note: these contracts were not just similar to each other but they were similar to those signed with every other media distributor Apple had done business with for the past decade.

      So you are correct abut not swaying my opinion on the stupidity of the case.

      What I felt you were incorrect in was that the Agency pricing model was to blame for ether ebook prices or ebook sales in general because it was nullified as part of the case and is only now starting to show up again (without any intervention by Apple).

      I was also incorrect in thinking that eBooks were still on the rise as they have been for the past 7 or 8 years. I didn’t know that 2015 saw a dip in sales, but the fight between Amazon and the publishers might be part of that as well.

      Regardless, Amazon’s practices of selling books under cost couldn’t last for ever and when you stop subsidizing products it is no surprise that over all sales decline. Those where the points I was trying to make. I just couldn’t help myself but point out as well that the case points out how our legal system can go so totally wrong due to one person’s bias. (note: I’m also aware that my bias shows through in my comments)

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