The Stupid Reason the World's Biggest Book Publisher Is Avoiding the iPad Like the PlagueS

You'll notice a major book publisher is missing from this slide: Random House, the biggest one in the world, actually.

That's because it's afraid of an ebook price war, says the Financial Times.

Which is kinda strange, actually, since it's sitting pretty on the Kindle, and most of the other big publishers are clamoring to move from the Amazon model of selling ebooks to Apple's, precisely for that reason, despite serious retribution from Amazon.

To recap, under Apple's pricing scheme, publishers set the book's selling price, and Apple takes a 30 percent cut—which is known as the agency model. (Apple reportedly reserves some power to cut prices to match other retailers though.) Under Amazon's, Amazon pays a wholesale price—$7 or $9 or maybe $15, whatever the publisher sells it to Amazon for—and Amazon sells the book for whatever price it wants, which, in the case of many bestsellers, has been $9.99 (and sometimes Amazon even takes a loss to set that price). The reason the big publishers have been flipping to Apple's side, and asking Amazon to use that same pricing scheme—despite making less money per book under the agency model—is because they want to control their own pricing, and they're deeply afraid of $9.99 becoming what people consider the "standard" price of a book the same way that 99 cents is the standard price of a song.

So, it's pretty weird that Random House doesn't want to be on the iPad, when it would theoretically have more control over the price of its books, and like MacMillan, be able to use the competitive threat as leverage against Amazon to extract more favorable terms. It seems particularly backward when you consider just how radically some big publishers—like Penguin—are reconsidering what a "book" really is in the context of the iPad. This is how Penguin demoed their iPad books:

But I have the feeling when (or if, to be more conservative) the money starts pouring in, so will Random House titles. [FT]