Monday, August 02, 2010

The Evolving E-Book Market

Connecticut Attorney General Richard Blumenthal announced that he was beginning an investigation on whether the current model for selling e-books is somehow anti-competitive.  Blumenthal, you might remember, stretched the truth a scootch about his military service and is also a candidate for US Senator to replace the corrupt Christopher (financial reform with special rates for US Senators) Dodd.

The agreement that Amazon and Apple have put together is called an Agency Model.  It clips about a third of the purchase price from the sales price, and then let's the publisher divvy up the rest in any way they want.  A couple of things are clear about the current state of the market.  First,  prices for e-books are well below what hard cover and paperbacks are priced at.  Second, prices seem to be converging between the two biggest sellers (Apple claimed 22% of the total market in e-books last week and Amazon claimed that their e-books now outsell hardbacks - so this is a robust market).  That could suggest either collusion or a simple reality that this is a dynamic market.   I have not seen, as of yet, an aggregator which would work like Kayak does for travel, which allows you to see all the providers and their pricing on a book.   When someone figures out how to do that, I suspect there will be some more bounce in the market.  The last two books I bought as e-books I looked at both sites and prices were very close - in one case, exactly the same.  But I did not immediately think, wow this is some kind of a conspiracy.   Finally, it seems to me that one of the benefits of the e-book market is a developing "long tail" there are tons of odd and curious books now in e-format.  Some are Gutenberg editions.  I recently looked for one Dickens novel and found prices ranging from free to more than $12.50.  All of those prices were below the deluxe printed edition.

I mentioned that Blumenthal is not entirely truthful about his own record and running for the US Senate. One could argue that this "investigation" is politically motivated.  Indeed, that is the conclusion I would come to.   In a market where things are moving as quickly as they seem to be in the e-book market, it seems prudent to spend a bit more time observing before trying to impose a regulatory regime.  From my perspective if there is collusion, the instantaneous nature of e-purchases will force natural competitors to actually compete.

No comments: