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Publishers Gain Pricing Control Over E-Books

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April 1 – 8, 2010 Edition Publishers Gain Pricing Control Over E-Books

Authorlink News/April 1–Amazon.com Inc. and Barnes & Noble Inc. will now give publishers the right to set pricing for electronic editions of books, a move designed to head off competition from Apple Inc. and its new iBook store and iPad.

According to several publishers who spoke anonymously prior to a public announcement, Amazon.com has agreed to stop charging $9.99 for a number of bestsellers and new releases. Barnes & Noble will install a similar policy no later than April 3, when Apple begins shipping its iPad tablet computer.

Sony Corp. told Bloomsberg news service yesterday that several major publishers will price most e-books at $12.99 to $14.99 on its e-reader.

The three leading digital booksellers are changing their policies to hold onto market share in the face of competition from Apple’s iPad, which lets users read digital books, browse the web and view videos.

Apple is giving publishers 70% of the revenue from titles and has installed a so-called “agency” model of pricing. Traditionally publishers sold books to retailers at a discount. Under the agency model, publishers will now sell the book directly to the consumer via the retailer and pay the retailer a commission for the service.

Publishers have bristled at Amazon’s policy of heavily discounting e-books to attract buyers of its Kindle digital book reader, and have been pushing all large retailers to adopt the agency model.

Amazon and Barnes & Noble are not yet publicly commenting on their book pricing policies.

Tokyo-based Sony has already agreed to let several publishers set e-book pricing on its Sony Reader, including Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH, CBS Corp.’s Simon & Schuster, Lagardere SCA’s Hachette, News Corp.’s HarperCollins, and Pearson Plc’s Penguin

Amazon.com owns 90 percent of the U.S. digital book market, according to Credit Suisse Group AG. Apple and other rivals are expected to reduce that share to about 35 percent by 2015, according to Spencer Wang, a New York-based analyst with Credit Suisse.

HarperColins and Hachette already have reached agreements with Amazon.com on pricing.