Publishers Win a Bout in E-Book Price Fight
By Motoko Rich
Published New York Times: February 8, 2010

Could book publishers suddenly be in the position of telling Google what to do?

Photo left by Ethan Miller/Getty Images shows the enTourage eDGe, shown at a trade show in Las Vegas last month, combines an e-book with several other functions.

With the impending arrival of digital books on the Apple iPad and feverish negotiations with Amazon.com over e-book prices, publishers have managed to take some control — at least temporarily — of how much consumers pay for their content.

Now, as publishers enter discussions with the Web giant Google about its plan to sell digital versions of new books direct to consumers, they have a little more leverage than just a few weeks ago — at least when it comes to determining how Google will pay publishers for those e-books and how much consumers will pay for them.

Google has been talking about entering the direct e-book market, through a program it calls Google Editions, for nearly a year. But in early discussions with publishers, Google had proposed giving them a 63 percent cut of the suggested retail price, and allowing consumers to print copies of the digital books and cut and paste segments. After Apple unveiled the iPad last month, publishers indicated that Apple would give them 70 percent of the consumer price, which publishers would set.

According to several publishers who have been talking to Google, the book companies had balked at what they saw as Google’s less generous terms, and basically viewed printing and cut-and-paste as deal breakers.

Now that both Apple and Amazon have agreed to terms more to the book companies’ liking, several publishers said that their conversations with Google have taken on a more flexible tone.

These publishers, who requested anonymity because their discussions with Google are confidential, said Google had relaxed its plans to allow customers to print or cut and paste.

“Google has always been open to working with publishers as part of Google Editions, in terms of supporting an open and competitive e-book market,” said Daniel Clancy, director of Google Books.

How e-books are sold — and for how much — has been a crucial topic of debate among publishers and retailers for the last two years, as digital books have taken off. Led by Amazon.com’s Kindle electronic reading device, the e-book market is growing at a fast clip, fueled partly by cheap digital editions. Amazon and several other retailers now offer new releases and best sellers for $9.99, far less than the typical $26 cover price on hardcovers.

Publishers have been fretting that such pricing has devalued books in the minds of consumers and have been looking for ways to regain control of what readers pay. When Apple unveiled its iPad, it said it had agreements with five of the country’s six largest publishers. Under those agreements, publishers would set e-book prices — within limits — so that new releases of most general fiction and nonfiction would sell for $12.99 to $14.99. Apple will act as an agent of the publishers — a set-up known in the publishing world as the agency model — and take a 30 percent cut of each sale, leaving the rest for publishers to split with authors.
Motoko Rich's full piece at NYT.