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Sony Drops Ebook and Reader Prices

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For a product category that has long had no legs, competition is finally heating up for electronic book readers. The latest salvo is from Sony, which had an early well-liked device called the Sony Reader. The company said it would match Amazon's $9.99 price for bestselling books sold in electronic form in the Kindle store.

Sony also said that, in late August 2009, it would release the Reader Pocket Edition ($199) and Reader Touch Edition ($299). The two new models replace previous readers - the 505 and 700 - priced at $269 and $399. The Amazon Kindle 2 costs $299, and the Kindle DX - which can show a letter-sized PDF without cropping - is $489.

Sony's news didn't carry with it any device that would feature built-in networking - at least, not yet. The inclusion of Wi-Fi seems like a no-brainer, and the New York Times quotes an analyst who suggests Sony clearly stated that more devices would follow later in the year.

Publishers worry about the new $9.99 price for bestsellers, even though both Sony and Amazon pay about 50 percent of the hardcover retail price for the electronic book edition. New hardcover titles with mass-market interest tend to retail for $25 to $30. The electronic book price doesn't drop until the book moves into a paperback edition.

That means that Amazon and Sony subsidize the price of each new bestseller by $2.50 to $5. In some countries, that kind of subsidy is illegal - selling below cost to gain market share - but not (at least so far) in the United States.

Publishers don't want to see an erosion in the price for which they are paid for hardcover books in any form, because this is where they make a large chunk of the money from popular new titles. As a result, the latest title from "The Da Vinci Code" author Dan Brown will not appear immediately in ebook form when the corresponding hardcover is released in September 2009.

Amazon and Sony hope to benefit from the disproportionate long tail of book interest, where older books for which the firms make relatively large positive profits generate a greater number of sales than in the bricks-and-mortar world. At least that's the theory.

The announcement slipped out when a retailer accidentally posted photos of the new devices too early.

For a thoughtful look from a paper-book worshipper, read Nicholson Baker's New Yorker article, "A New Page." Baker is a meticulous fiction writer and the author of a surprisingly prescient book on how digital preservationists destroy books in order to save them, "Double Fold."

 

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Comments about Sony Drops Ebook and Reader Prices
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Are you sure Amazon is subsidizing the cost of ebooks? I've read reports that Amazon is only paying publishers a fixed percentage of the price they sell ebooks at, with Amazon keeping 75%+ and the publisher getting the rest (and obviously the actual writer gets only a fraction of that).
Glenn Fleishman  2009-08-04 18:16
Depends on the publisher. The big publishers have only released parts of their lists to Amazon (which has fewer than 300,000 titles total), and still dictates pricing based on print books.

Publishers are reasonable in wanting to preserve margin, because that's the business they are in. But it'll eventually erode.