Analyst: Amazon’s e-book market share could plummet

Marco Tabini
17 February, 2010
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Sorry, Amazon, we have some bad news for you. Pressure from new entrants could cause Amazon’s share of the e-book market to drop from its current 90-percent mark to 15 percent, says one analyst. According to a Wall Street Journal article, a report by Credit Suisse’s Spencer Wang singles out the iPad as a major contributor to Amazon’s woes. Wang cites the agency-style business model that Apple intends to offer to publishers—which diverges considerably from Amazon’s approach of imposing a strict pricing structure on the electronic books it sells through its online Kindle store—as a major factor in his research.

The different approach in revenue-sharing strategies, he concludes, will force Amazon to raise its wholesale prices in an effort to provide publishers with a deal comparable to Apple’s, thus eroding the Seattle-based retailer’s competitive advantage in the marketplace.

Coupled with Google’s expected (but unconfirmed) entry into the tablet market, Wang forecasts that the three major players will each capture a different slice of the e-book business, with Amazon ending up the clear loser.

Amazon’s e-book business model has come under significant criticism in the past few weeks, with at least one high-profile public squabble with publisher MacMillan generating considerable media scrutiny. In response to Apple’s impending release of the iPad, Amazon has announced a more generous fee structure for Kindle publishers, as well as the release of an SDK to allow third-party providers to create applications that could run on the e-book reader.

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