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E-Book Prices Ratchet Up

The Amazon model of selling e-books for $9.99 is being challenged by publishers, who are setting tiered pricing for digital books.
"We don’t like the Amazon model of selling everything at $9.99. ... We think it really devalues books and it hurts all the retailers of the hard cover books," Murdoch said during News Corp. earnings call with financial analysts. Excerpts from the call were printed on The Wall Street Journal's All Things Digital blog.

Murdoch did not say how much HarperCollins would be charging for e-books.

"There will be prices very much less than the printed copies of books but still will not be fixed in a way that Amazon has been doing it," he said. "It appears that Amazon is now ready to sit down with us again and renegotiate pricing."

Publishers got their opening to change e-book pricing with Apple's introduction of the iPad tablet computer. Publishers plan to use tiered-pricing in offering e-books on Apple's online bookstore. Publishers lining up to support the iPad include HarperCollins, Hachette, Penguin, Macmillan and Simon & Shuster. More publishers are expected to join.

In taking control of pricing early in the emerging e-book market, publishers apparently have learned from the mistakes of record companies that let Apple set a 99-cent cap for songs sold on its iTunes store. The model led to Apple becoming the largest music seller in the United States by selling tunes for its market-leading iPod music player.

Apple's clout made it difficult for record companies to introduce tiered-pricing on iTunes. Apple gave in last year, only after intense pressure.

Following Apple's strategy, Amazon has used the $9.99 pricing model to become a leading e-book seller through the success of its Kindle reader. The thin, lightweight gadget accounts for about 60% of the e-reader market, according to some analyst estimates.