Random House Holding Out From iBookstore Amid Fears of Price Wars
Financial Times reports that Random House, the world's largest book publisher, has yet to sign on to Apple's iBookstore and may not do so before the iPad's April 3rd launch as it weighs fears that Apple's agency model for eBook pricing will result in a price war, eroding publisher profits.
Markus Dohle, Random House chief executive, did not exclude the possibility of reaching a deal before the iPad goes on sale on April 3, but said he was treading carefully, as Apple's pricing regime could erode established publishing practices.
Rather than allowing retailers to set their own pricing for books, Apple is building on its existing App Store model to allow publishers to set retail sales prices, with Apple taking a 30% cut of revenue. Apple has argued that the change will allow publishers to create more sustainable business models than the current system of relying on the willingness of distributors such as Amazon to sell content at little profit or even a loss, and a number of major publishers have accepted Apple's proposed tradeoff in view of their long-term viability. Random House, however, remains unconvinced and is still working with its authors and agents to assess the potential impact of a shift to Apple's agency model.