Random House fears iPad price war #yam
Random House fears iPad price war
By Gerrit Wiesmann in Berlin
Published: March 23 2010 23:46 | Last updated: March 23 2010 23:46
Random House, the world’s largest book publisher by sales, could keep its books from Apple’s iPad when it goes on sale next month, as the Bertelsmann unit fears the effects of the tablet device on the pricing of electronic books.
Random House’s five big rivals – Macmillan, Simon & Schuster, Hachette, Harper-Collins and Penguin – are understood to have signed up to iBookstore, the retail website where e-books will be sold for the iPad.
But the absence of the book market leader would prove a blow to Apple. 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.
Until now, old-fashioned bookshops and internet retailers such as Amazon have bought books from publishers at discount trade prices, then marked them up to profit through sales to readers.
But, building on a pricing model established for existing gadgets, Apple wants publishers to set the prices paid by iBookstore users – and to give a 30 per cent share of resulting sales to the computer company.
Mr Dohle said the iPad and iBookstore spelled “changes, in particular for our stakeholders”, which would require the publisher to consult further with its authors and their agents.
Hartmut Ostrowski, Bertelsmann chief executive, used the German media group’s annual press conference to stress that the iPad and other devices, such as the Sony Reader, were there to stay, and were influencing the media sector “like nothing else”.
Bertelsmann said that it had dipped into a loss last year. The global economic crisis hammered its advertising revenues and forced the group to write down the value of assets.
The company recorded a net loss, after pay-outs to minority shareholders in joint ventures, of €82m ($110.7m), compared with a profit of €142m in 2008, as sales fell 5.4 per cent to €16.2bn.
Restructuring costs and asset revaluations wiped €730m from operating profit of €1.4bn – down from €1.6bn in 2008 – and interest and tax payments cut earnings yet further to render a group net profit of €35m.
The performance of the group, which also owns RTL TV and G+J, the magazine publisher, was bolstered by €1bn of cost cuts. Total debt declined 9 per cent to €6bn.
Thomas Rabe, chief financial officer, said Bertelsmann expected the world economy to stabilise this year. As a result, the company forecast stable sales and operating profit, and net profit of about €400m-€500m.
Mr Rabe confirmed Bertelsmann’s possible interest in EMI Music Publishing assets, through its own publishing joint venture with Kohlberg Kravis Roberts, BMG Rights Management.
“We don’t know if or when EMI will be put on the market.
“But if it were to be put on the market, we’d take a look at it,” he said.
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