How Apple and Amazon Are Screwing You on Ebooks

Last Updated Aug 4, 2010 4:51 PM EDT

I've been cleaning my house to prepare it for sale, and the biggest headache (so far) has been my collection of books. Over the years, I have amassed thousands. Even though I love each volume--I'm a writer, after all--I realize that I haven't looked at most of them in eons; some are so dusty, dirty and swollen with moisture from the perpetual damp here in the Connecticut woods that they are unreadable; others are dated. Who wants a tome about the Middle East crisis published in 1987? So I have been sorting and tossing and trying to figure out if any are worth keeping or donating to the library--all the while lamenting the huge amounts of money I've spent.

My takeaway from all this: When I am done with the stack of reading now on my bedside table, I am buying a Kindle (or an iPad) and downloading from the Internet. Not only will I save space but also a ton of money.

But Amazon and Apple, two of the largest distributors of ebooks, have conspired with the biggest ebook publishers--Hachette, HarperCollins, MacMillan, Penquin and Simon & Schuster--to keep prices high. Publishers have inked pacts granting Amazon and Apple "most favored nation" status. Under the contracts, competitors would be unable to sell for less unless Apple and Amazon get the same price.

Richard Blumenthal, my state's attorney general, seems to be the only one around taking umbrage at this consumer outrage. Only a few days ago, he fired off letters to both Amazon and Apple requesting that they address Connecticut's concerns. While he notes that "most favored nation" clauses are not in and of themselves illegal under anti-trust laws, they aren't exactly legal either, especially when they seem to be "encouraging coordinated pricing and discouraging discounting." Another Blumenthal concern: "These agreements among publishers appear to have already resulted in uniform prices for many of the most popular ebooks--potentially depriving consumers of competitive prices." Blumenthal's office says it has received no response from either Apple or Amazon.

To prove its point, the Connecticut A.G.'s office surveyed ebook prices for selections from the New York Times Bestseller list and found that they were all pretty much the same from one outlet to another. And you can easily see that for yourself, at least, if you shop on Amazon. Star Island by Carl Hiaasen costs $14.55 hardcover and $9.99 for the Kindle edition; Angelina: An Unauthorized Biography by Andrew Morton runs $14.57 hardcover and $12.99 for the Kindle edition; Super Sad True Love Story: A Novel by Gary Shteyngart costs $14.29 hardcover and $9.99 in Kindle. In fact, the difference between the cost of the Kindle edition and the hardcover book was generally only a couple of dollars; in some cases, the Kindle edition is more expensive. What Apple charges for ebooks is a mystery. Unless you own the iPad and have downloaded its iBook app, you have no idea how much its books cost. That lack of transparency made me decided right here and now to avoid the iPad unless its price drops to, uh, maybe $49.95.

Meanwhile, $9.99 seems like a helluva lot of dough to spend for a book that requires the publisher to spend not a single penny for paper, printing, shipping or warehousing. If writers received, say, 75 percent of the take, I'd be all for the high price. But in fact, royalties on ebooks are only about 25 percent of net receipts--or about 7.5 percent of the book's price. So maybe $5 would be a more consumer-friendly price for downloaded books.

This overpricing has left me in a dilemma. I don't want to overpay for ebooks, but I also don't want to have to keep shelves for all the tomes I bring home.

Fortunately, there is a solution--a distributor from whom you can take books at no charge without being encumbered with them for life. It's called the public library.