Apple's Strategy with Its iBookstore

At the Apple iPad launch event a few weeks ago, Steve Jobs displayed innovations to the world of e-reader devices, as well as the new iBookstore. What attracted a lot of attention was the price point. Apple talked about a $14.99 list price for books while Amazon, the leader in e-readers with its popular Kindle, has been trying to hold the line at $9.99.

Within days of the iPad launch event, Amazon got into a dispute with publisher, Macmillan, over the $14.99 price. Amazon pulled all of the Macmillan content from its site as part of the dispute. However, just a few days later, Amazon announced that it had reached an agreement with Macmillan to return those titles to the Amazon e-book store. Under the new deal, Macmillan will set the price for each e-book with Amazon collecting a 30% commission. Observers expect the publisher-set model to become the new pricing model for all publishers moving forward.