Financial Times reports that Random House is cautiously assessing the market shifts that are being introduced by the iPad release. In short, Random House fears that the iPad/iBookstore represents a potential risk for their profit marings as it is likely going to bring prices down which may cut into profits.
The publishing executives are well aware of the impact that iTunes had on music industry and are fearing that the iBookstore may affect publishing in a similar way (Random is owned by Bertelsmann which also used to own BMG, a music powerhouse that still suffers financial shocks due to sales erosion and decreasing profit margins).
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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, Appleas 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.
