It seems that even in the virtual world, price wars are a very real issue.
According to a story in the New York Times, Amazon has succumbed to pressure from large publishers—and the leverage of Apple—in allowing e-books to be sold at prices higher than $9.99 for the Kindle.
Not long ago, Kindle swiftly became a leader in the e-book category, both in terms of device sales, and thus, in dictating the way paperless versions of books would be sold. But with last week’s introduction of the Apple i-Pad, another serious contender entered the arena, giving publishers an alternative—and some leverage—in the way e-books will be sold.
Implications: In the world of near-exclusive supply, a provider is able to dictate the terms by which demands can be made and how they will be met. As soon as that exclusivity is gone, so is the leverage.
The world has seen what i-Pod and i-Tunes did to the music distribution business, and what the i-Phone did to the wireless business. Would you have bet against the i-Pad, if you were in Amazon’s shoes?
An aside: Isn’t it interesting that in music, Apple used its leverage to force prices down (most songs sell for 99¢), and that in music, it is using its leverage to push the price consumers will pay… up?
Mike Anderson
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