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Summary:

The effect of Apple’s still speculative tablet on the electronics industry continues to amaze me. Not only has it prompted countless computer makers to join the fray and release their own slate devices, but now it’s affecting e-book pricing policies over at the biggest player in […]

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The effect of Apple’s still speculative tablet on the electronics industry continues to amaze me. Not only has it prompted countless computer makers to join the fray and release their own slate devices, but now it’s affecting e-book pricing policies over at the biggest player in that fledgling market.

Amazon announced today that it will now be offering a much more financially attractive deal for publishers providing content for its Kindle platform. Maybe it has just reached a profitability milestone in terms of the cost of Kindle unit construction that allows it to shift the burden away from content providers, but I’d hazard a guess the move has more to do with Apple’s impending announcement next week.

Why would I think that? Let’s look at the numbers. Up until now, Amazon’s profit-sharing model has been, shall we say, less than kind to the people who provide its digital books. The new model gives content providers 70 percent of the total revenue derived from sales, while Amazon would keep only 30 percent. Sound familiar? That’s exactly Apple’s formula for App Store revenue sharing. Under Amazon’s previous model, providers received just about half the cut they’ll now be getting. Pretty aggressive, if you ask me.

The deal isn’t automatic for every book sold through Amazon’s Kindle store, though. There are a few criteria providers have to meet. Here’s how it breaks down, according to AppleInsider:

  • The author or publisher-supplied list price must be between $2.99 and $9.99
  • This list price must be at least 20 percent below the lowest physical list price for the physical book
  • The title is made available for sale in all geographies for which the author or publisher has rights
  • The title will be included in a broad set of features in the Kindle Store, such as text-to-speech. This list of features will grow over time as Amazon continues to add more functionality to Kindle and the Kindle Store.
  • Under this royalty option, books must be offered at or below price parity with competition, including physical book prices. Amazon will provide tools to automate that process, and the 70 percent royalty will be calculated off the sales price.

Whether or not a war really is coming, Amazon clearly doesn’t want to be left behind. And the bottom line is that’s great news for us consumers. Amazon’s revenue-sharing model has been one of the major barriers to getting more content available for the platform, and now that they’re feeling the heat from Apple, be it real or imagined, the floodgates are open.

Related GigaOM Pro Research: Rumored Apple Tablet: Opportunities Too Big to Ignore

  1. Agree- competition is good. However I think Amazon will find themselves forever hobbled until they remove the content delivery charges to the publishers. In Apple’s model this is covered by the user- WiFi or 3G. My take- http://tastyslate.com/2010/01/20/amazon-hedges-ahead-of-pending-apple-event/

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  2. [...] more: Apple's Tablet is Good News for the e-Reader Market, Even if it Isn't Real Categorized in [...]

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  3. “The author or publisher-supplied list price must be between $2.99 and $9.99″

    It should read “between $0.99 and $9.99″. Open it up Amazon to a lower price point.

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