Digital Directions: The iPad Impact
Apple will instead employ the "agency model" for e-book delivery on the iPad, in which publishers can set the sales price and Apple gets a 30-percent cut. The significance of the agency model is that the publisher and the consumer can engage in a more direct market dialog to establish e-book price points driven by the dynamics of the marketplace, not set arbitrarily by an intermediary. This may assist the evolution of a greater diversity of e-book offerings, supporting a variety of price points.
Seemingly triggered by the iPad launch, both Macmillan and Hachette have indicated their intent to adopt the agency model with e-book trading partners, including Amazon. This likely signals the end of the wholesale model as an industry standard for e-books.
Is the iPad a Kindle-killer? Hardly. Kindle is not necessarily tied to electronic ink or the wholesale model. The Kindle device and program can adapt, and this process—painful though it may be—has already started, as evidenced by Amazon's Toucho acquisition and apparent rapprochement with Macmillan.
Further, there is nothing particularly proprietary to Apple about good-quality touch screens and agency model content distribution. With any luck, there will be a variety of devices and services available to consumers. However, what Apple has shown time and time again is that it has a unique ability to take existing technologies and seamlessly integrate hardware, software, interface design and transaction services to create uniquely compelling user experiences. That is the iPad's real edge, and that is why it will succeed as a product. Along with the Kindle.
The real significance of the iPad moment is not about new earth-shattering technologies contained in the device, or anything proprietary to Apple, but the sweeping away of electronic ink and the wholesale model from the e-book marketplace. This benefited the publishing industry, perhaps as much as it did Apple.