E-Book Price War Has Yet to Arrive

Last spring, the Justice Department sued five major publishers and Apple on e-book price-fixing charges. The case was a major victory for Amazon, and afterward there were widespread expectations — fueled by Amazon — that the price of e-books would plunge.

The most extreme outcome went like this: Digital versions of big books selling for $9.99 or less would give Amazon complete domination over the e-book market. As sales zoomed upward, even greater numbers of consumers would abandon physical books. The major publishers and traditional bookstores were contemplating a future that would pass them by.

But doomsday has not arrived, at least not yet. As four of the publishers have entered into settlements with regulators and revised the way they sell e-books, prices have selectively fallen but not as broadly or drastically as anticipated.

The $10 floor that publishers fought so hard to maintain for popular new novels is largely intact. Amazon, for instance, is selling Michael Connelly’s new mystery, “The Black Box,” for $12.74. New best sellers by David Baldacci and James Patterson cost just over $11.

One big reason for the lack of fireworks is that the triumph of e-books over their physical brethren is not happening quite as fast as forecast.

“The e-book market isn’t growing at the caffeinated level it was,” said Michael Norris, a Simba Information analyst who follows the publishing industry. “Even retailers like Amazon have to be wondering, how far can we go — or should we go — to make our prices lower than the other guys if it’s not helping us with market share?”

Adult e-book sales through August were up 34 percent from 2011, an impressive rate of growth if you forget that sales have doubled every year for the last four years. And there have been more recent signs of a market pausing for breath.

Macmillan, the only publisher that has not settled with the Justice Department, said last week as part of a statement from John Sargent, its chief executive, that “our e-book business has been softer of late, particularly for the last few weeks, even as the number of reading devices continues to grow.” His laconic conclusion: “Interesting.”

Mr. Norris said Simba, which regularly surveys e-book buyers, has been noticing what it calls “commitment to content” issues.

“A lot of these e-book consumers aren’t behaving like lab rats at a feeder bar,” the analyst said. “We have found that at any given time about a third of e-book users haven’t bought a single title in the last 12 months. I have a feeling it is the digital equivalent of the ‘overloaded night stand’ effect; someone isn’t going to buy any more books until they make a dent in reading the ones they have already acquired.”

Another, more counterintuitive possibility is that the 2011 demise of Borders, the second-biggest chain, dealt a surprising blow to the e-book industry. Readers could no longer see what they wanted to go home and order. “The print industry has been aiding and assisting the e-book industry since the beginning,” Mr. Norris said.

It is possible that Amazon, which controls about 60 percent of the e-book market, is merely holding back with price cuts for the right moment. The next few weeks are when e-book sales traditionally take a big jump, as all those newly received devices are loaded up with content.

Amazon declined to comment beyond saying, “We have lowered prices for customers from the prices publishers set on a broad assortment of Kindle books.” Barnes Noble declined to comment on its pricing strategy.

The question of the proper price for e-books has shadowed the industry ever since Amazon introduced the Kindle in late 2007 and created the first truly popular portable reading device. Amazon had a natural impulse to build a market and was an aggressive retailer in any case, so it took best sellers that cost $25 in independent bookstores and sold them for $9.99 as e-books. Consumers liked that. E-book adoption soared.

Article source: http://www.nytimes.com/2012/12/24/technology/e-book-price-war-has-yet-to-arrive.html?partner=rss&emc=rss