Apple's Agency Model 'Good in Theory' But Jury Still Out, Says Analyst

Simba also has intelligence showing the slight decrease in the average price of bestselling e-book titles over the last 18 months or so, but we're not sure if price-conscious consumers are causing this or simply the glut of free e-books is just dragging the average price down.

INSIDER: Do you see evidence of Amazon's $9.99 e-book pricing affecting book buyers' perception of what books should cost?

NORRIS: Yes. We did a poll recently of Kindle owners and they are far more likely to agree that print books are overpriced rather than electronic books. We also have access to national survey data and have been able to compare the population of adults who consider themselves to be Internet addicts or at least very tech savvy with everyone else. The tech-savvy or Internet people are a lot more likely than the average person to consume electronic books, and the former displays some characteristics which suggest they are price sensitive.

But the thing is, a consumer's ideal world or ideal perception isn't the issue here. There are a lot of consumers out there who buy a car and pay more than they think they should have paid. But like a book, if a car is marketed the right way, and has the reputation of a quality product, there comes a point when the consumer desire wins out over whatever 'am-I-paying-too-much?' questions they might have.

INSIDER: What are the implications of the new "agency model," and Apple's latest entry into the book-selling business with its new iBook Store?

NORRIS: Apple's model sounds good in theory but I want to see how it works in practice—there's always a difference in what we hope something will do and what it actually does. The thing that I like right off that bat is that it finally made Amazon defensive on its self-serving $9.99 pricing model and empowered smart publishers like [Macmillan CEO] John Sargent to call Amazon's bluff. An entity saying they know how much a book or e-book should cost is pure nonsense. The market makes that call, not some company trying to buy its market share one loss-leader at a time.