Sony to Cut E-Book Prices and Offer New Readers
By BRAD STONE and MOTOKO RICH
Published: August 4, 2009 in The New York Times.
Adding to mounting tensions in the publishing industry over the pricing of electronic books, Sony Electronics announced Tuesday evening that it was lowering prices for new and best-selling books in its e-book store, to $9.99 from $11.99.

The new Sony Readers, which are replacing more expensive models and going up against the Kindle.

Book publishers have worried about the $9.99 flat price ever since Amazon.com introduced it for its Kindle reader in 2007, fearing that it could cannibalize sales of higher-priced hardcover books.
Sony is also introducing two new electronic reading devices: the Reader Pocket Edition and Reader Touch Edition. They will sell for $199 and $299 respectively and will go on sale at the end of August. The devices replace earlier and more expensive versions of the Sony Reader, the 505 and 700, which cost $269 and $399.
Although Sony’s reading devices are available in retail outlets like Wal-Mart and Best Buy, sales have lagged those of Amazon’s Kindle, which is sold only online and was recently reduced in price as well, to $299.
“The e-book industry has not hit the mainstream yet. We are focusing on affordability,” said Steve Haber, president of Sony’s Digital Reading Business Division.
Regarding the price cut for digital books, Mr. Haber said: “We have to offer value. It’s clear e-books should be less expensive than regular books, with the savings on printing and logistics getting passed on to the consumer.”
Book publishers will still retain their traditional cut of every e-book sale — about half the hardcover retail list price. But they are concerned that as online retailers like Amazon and Sony gain market power, they will eventually tire of losing money on e-book sales and ask publishers for lower wholesale prices, a move that would cut into their profit margins.

Read the full story at NYT.