09 Apr 10 Why Is Increased Competition Producing Higher E-Book Prices?
Increased competition is, as a general rule, good news for consumers. It usually produces a downward pressure on prices - as well as increasing the choice available to end users. There are very few exceptions to this - you will see prices being forced downwards time and again in a wide variety of different markets.
There's no particular reason why the e-book reader and e-book market should be any different. The Amazon Kindle reader has dominated this market for some time now. The February 2009 release of the Kindle 2.0 reader saw Amazon confirm itself as the market leader and Amazon has done much to develop the market for both e-book readers and the e-books to fuel them.
Competing manufacturers, such as Sony, Plastic Logic and Barnes and Noble, have either updated or developed e-book readers of their own to challenge the Kindle and to obtain a share of the rapidly growing and developing e-book reader marker. Whilst there has been no sign of a bona fide "Kindle killer" to date, and Amazon still remains the market leader by some distance, the increased level of competition has seen a reduction in the price of e-book readers. Which is exactly what you would expect. Healthy competition driving prices down to the benefit of the customer.
So it does seem a little strange that now that the Kindle has some genuinely tough competition - in the form of Apple's new iPad - it seems likely that prices are going to rise. Amazon's policy of pricing e-books at $ 9.99 or lower has created some friction with the large publishing houses who are keen to preserve the profit margins of their hardback editions. However, as well as launching the iPad, Apple will be setting up their own e-book store, and Apple will allow the big publishers to fix their e-book prices at whatever level they wish. So long as they don't allow any other book outlet (Amazon for example) to access their content at a lower price level. This has meant that Amazon have had to climb down and permit publishing houses to fix prices higher than their $ 9.99 target level for newly released editions.
Aside from safeguarding the profits of the publishers, it's difficult to see any logic in this move. Apart from the fact that an increased level of competition should tend to reduce prices rather than to increase them, why would the buying public be prepared to pay inflated prices for an electronic product which costs a tiny percentage of the cost of the equivalent physical product and has practically no delivery fees?
It does appear as if Apple have teamed up with the big publishers in order to maintain prices and profits at a high level. The tactic might work quite well in the short term - but whether or not customers will accept artificially inflated prices for e-books in the mid to long term remains to be seen.
Check out the Amazon Kindle for yourself and view the wide range of Kindle accessories available to help you personalise your reader.
Tags: amazon kindle, apple iPad, ebooks, electronics, gadgets, Product Reviews, Technology
