Richard Curtis on his blog E-Reads Tuesday, January 19, 2010

Apple Promoting a New (and Radical!) Business Model for Selling E-Books?

Is an e-book a physical thing? Or is it virtual and without mass? An object or a file? And is there a different model for selling virtual than there is for selling physical?

We're about to find out. Jeffrey Trachtenberg of The Wall Street Journal reports that Apple has been in discussions, and possible negotiations, with HarperCollins over the terms of e-books to be carried on the soon-to-be released Apple tablet, which everyone is calling the iSlate until the official announcement on January 27th proves otherwise. It would appear however that Apple is discussing a similar agenda with other members of the so-called big six publishers (Simon & Schuster, Random House, Penguin, Hachette, Macmillan and HarperCollins).

Michael Cader, publisher of Publishers Lunch, has written an extensive analysis drawn from the molten news as it leaks out of so-called confidential discussions. "Apple," writes Cader, "has agreed in principle to do business with publishers under what is called the agency model--as opposed to the wholesaling model currently in place for ebook sales and most physical book sales. In the agency model, the publisher is considered as keeping possession of the actual goods (the ebook files) and it pays a commission to its authorized selling partners. So the publisher sets the retail price of the ebooks, and the commissioned agents have no ability to change that price. Ebooks sold under the agency model would be offered to any established trading partners who agree to the commission and other particulars."

Cader adds:

"Given that publishers, agents and even retailers have already skirmished over whether ebook sales are a traditional sale or a license, and given the completely different nature of selling access to a digital file versus a physical object, there's plenty of room to argue that a new selling model is only logical and overdue."

The implications of this development cannot be overstated, for it means restoration to publishers of control over the timing and pricing of e-books. It also means some pushback against Amazon, whose approach to pricing and simultaneous release of e-books has pretty much put publishers in a corner.

You can read the Wall Street Journal article here.

We've come a long way since Apple CEO Steven Jobs, referring to e-books, sneered "People don't read anymore." (See Will Steve Jobs Eat His Words with Ketchup, Mustard or Mayo?)

Richard Curtis

Every Blogger owes a debt of gratitude to newspapers and magazines. This posting relies on original research and reporting performed by the Wall Street Journal.