New York: Amazon.com is at it again. To the consternation of much of the book industry, the online giant is again offering digital titles for less than major publishers think books are worth. And this time, the price is zero.
If you own an Amazon Kindle, as opposed to just using the Kindle app on another device, and you also belong to the company's $79 (Dh290)-a-year Amazon Prime service, you can now "borrow" one digital book a month from the new Amazon Lending Library for free. You can keep the book as long as you want, but you can have only one at a time.
The new service worries Wall Street, too, because it increases Amazon's out-of-pocket costs. The company is paying wholesale prices for some of the books in the lending library. For others, such as the titles from Lonely Planet travel guides, it is paying a flat fee for a group of books over a period of time. (It will report sales figures on individual titles back to those publishers.)
Beyond short-term earnings, however, the lending library is just the latest innovation to raise big questions about the whole publishing ecosystem.
In an environment where books are increasingly digital, what's the most effective way to create value for readers, for authors and for intermediaries? And — the biggest question — which intermediaries will survive the transition?
Big Six worried
The lending library doesn't include any books from the Big Six US publishers — Random House, Simon & Schuster, HarperCollins, Macmillan Publishers, Penguin Books. and Hachette — because Amazon can't control what it charges for their digital books. They are undoubtedly relieved to be excluded. But the pricing control they value so highly reflects rigid arrangements they may come to regret.
Amazon used to pay publishers a wholesale price for e- books, just as it does for physical copies. It set whatever price it thought best for its overall business, even if that meant losing money on an individual title in order to boost traffic or sell more Kindles. It could adjust prices up or down to reflect new information or offer special promotions. Its standard price was $9.99, which was often less than it paid for each copy. Major publishers thought that was too low, but most couldn't do anything about it.
Then came the iPad and the accompanying iBooks store.
