Blog Post

Apple: We have 20 percent of the U.S. ebook market

Stay on Top of Emerging Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

Apple (s AAPL) now holds about 20 percent of the U.S. ebook market, director Keith Moerer said in court Tuesday. Moerer was a government witness in U.S. vs. Apple, in which the Department of Justice accuses Apple of illegally colluding with book publishers to set ebook prices at the launch of the iBookstore in 2010.

Most estimates had placed Apple’s U.S. ebook market share at around 10 percent, with Amazon’s Kindle (s AMZN) at 50 to 60 percent and Barnes & Noble’s Nook (s BKS) at 25 percent. But Moerer said the iBookstore’s market share was 20 percent in the first few months after the iBookstore’s launch, Publishers Weekly reports,  and is about 20 percent now. (If this is true, the other retailers’ market shares would need to be adjusted downward, since Google (s GOOG) and Kobo likely hold 1 to 2 percent of the U.S. ebook market.) From PW:

“The government called the iBookstore ‘a failure,’ and charged that ‘Apple pricing was unfair to consumers,’ and that ‘Apple sold fewer books because of the higher price caps.’ Moerer challenged that characterization, ‘I disagree. Ebook sales grew 100 percent last year at the iBookstore and it had over 100 million customers.’ The government countered that ‘when you drop prices you sell more books,’ and Moerer said, ‘sometimes, yes.'”

In addition, Moerer said that Apple has not enforced the most favored nation (MFN) clause for ebooks since last year. And Publishers Marketplace reports that “from the beginning Apple enforced the MFN manually rather than in a fully-automated fashion, with employees checking prices one-by-one against other retailers. Thus they ‘tended to focus on the best sellers.'”

Macmillan CEO John Sargent also completed his testimony on Tuesday. Hachette CEO David Young takes the stand Wednesday, and will be followed by the government’s expert witnesses.

Apple SVP Eddy Cue is testifying on Thursday. The Financial Times profiles Cue and describes his role in the case here.

10 Responses to “Apple: We have 20 percent of the U.S. ebook market”

  1. We launched a new e-book venture two months ago, and 37% of sales are via Apple, which stunned me. Kindle has 50% and Nook 9%. Our brand (U.S. News & World Report) is known mostly in the U.S., these are very U.S.-oriented books, and they are graphically intensive (e.g. color photos, elaborate rankings tables), but I don’t whether any of that explains why our Apple numbers are so high.

  2. digpublishing

    To me APPLE stands out as the most successful publisher, its time the W3C get their act together and create a standard for easy payments, user authentication, rich media. Where standards fail, private companies make money, that’s just the way it is.

  3. These DOJ lawyers seem clueless about business. With one to two percent of the ebook market, Google and Kobo would be delighted to be failing as badly as Apple is at 20 percent. That ranks Apple alongside B&N and gives it at least a third the share of market-dominant Amazon. And if Apple’s alleged high prices are dooming it to fail, why does the DOJ need to pursue this lawsuit?

    In the real world, as opposed to DOJland, there are numerous reasons to get an ebook from either Amazon or Apple. Kindle ebooks can be read on almost any platform. Right now, iBooks can only be read on iDevices. On the other hand, my latest, Hospital Gowns and Other Embarrassments: A Teen Girls Guide to Hospitals, looks so much better in iBooks on my iPad than in the Kindle app, that I’m ashamed to suggest that anyone buy the latter.

    The real injustice being committed by both Amazon and Apple are those most favored nation clauses, which attempt to dictate what price an author can set for his ebooks. If these ebooks were the same on both platforms and the return was the same, that might make sense. But each uses a different ebook format, requiring a separate effort. And Amazon charges a per-purchase download fee, while Apple doesn’t.

    • WaltFrench

      Lots of good thinking in your note, but let me note… first, Apple’s behavior, if it’s actually an illegal conspiracy to limit consumers’ choices, is actually illegal (no duh). I personally haven’t seen evidence of it yet, but let the trial proceed. Second, the MFN clauses are that Apple is offered a given publishers’ books at no worse a price than is offered to other e-sellers. Individual titles are still at the discretion of the publisher, subject of course to contract deals with authors.

  4. David Thomas

    The government countered that ‘when you drop prices you sell more books,’ and Moerer said, ‘sometimes, yes.’”

    Moerer is more correct than the lawyer on this point. In economic terms, the marginal utility between 13.99 and 9.99 is dependent on the reference rate of the individual consumer. Given that iPad owners shelled out $500+ for the privilege, I’d estimate that the reference rate for many iPad holders is higher — many who probably were more influenced by the marginal utility between 26.99 and 13.99 when they bought an e-book. The extra $4? That’s a latte.

  5. I don’t see how Apple could have 20% when they launched the iBookstore without Random House (17% of the market), Scholastic (HUNGER GAMES) and many other independent publisher titles. Plus they don’t have the millions of Amazon self-published titles.

    It would be interesting to see how he came up with those numbers.