On the morning of January 27th—an aeon ago, in tech time—Steve Jobs was to appear at the Yerba Buena Center for the Arts, in downtown San Francisco, to unveil Apple's new device, the iPad. Although speculation about the device had been intense, few in the audience knew yet what it was called or exactly what it would do, and there was a feeling of expectation in the room worthy of the line outside the grotto at Lourdes. Hundreds of journalists and invited guests, including Al Gore, Yo-Yo Ma, and Robert Iger, the C.E.O. of Disney, milled around the theatre, waiting for Jobs to appear. The sound system had been playing a medley of Bob Dylan songs; it went quiet as the lights came up onstage and Jobs walked out, to the crowd's applause.
In the weeks before, the book industry had been full of unaccustomed optimism; in some publishing circles, the device had been referred to as "the Jesus tablet." The industry was desperate for a savior. Between 2002 and 2008, annual sales had grown just 1.6 per cent, and profit margins were shrinking. Like other struggling businesses, publishers had slashed expenditures, laying off editors and publicists and taking fewer chances on unknown writers.
The industry's great hope was that the iPad would bring electronic books to the masses—and help make them profitable. E-books are booming. Although they account for only an estimated three to five per cent of the market, their sales increased a hundred and seventy-seven per cent in 2009, and it was projected that they would eventually account for between twenty-five and fifty per cent of all books sold. But publishers were concerned that lower prices would decimate their profits. Amazon had been buying many e-books from publishers for about thirteen dollars and selling them for $9.99, taking a loss on each book in order to gain market share and encourage sales of its electronic reading device, the Kindle. By the end of last year, Amazon accounted for an estimated eighty per cent of all electronic-book sales, and $9.99 seemed to be established as the price of an e-book. Publishers were panicked. David Young, the chairman and C.E.O. of Hachette Book Group USA, said, "The big concern—and it's a massive concern—is the $9.99 pricing point. If it's allowed to take hold in the consumer's mind that a book is worth ten bucks, to my mind it's game over for this business."
At the Yerba Buena Center, it took a while for Jobs to mention books, and when he did he said that "Amazon has done a great job" with its Kindle. "We're going to stand on their shoulders and go a little bit farther." It would probably have been more accurate to say that Jobs planned to stand on Amazon's neck and press down hard, with publishers applauding. The decision to enter publishing was a reversal for Jobs, who two years ago said that the book business was unsalvageable. "It doesn't matter how good or bad the product is, the fact is that people don't read anymore," he said. "Forty per cent of the people in the U.S. read one book or less last year." But if reading books was low on the list of things that the iPad could do, it was nonetheless on the list, which meant that Amazon had become a competitor. "There's a lot of heat between Apple and Amazon and Google," an adviser to Jobs said. "Steve expresses contempt for everyone—unless he's controlling them." An Apple insider said, "He thinks Amazon is stupid, and made a terrible mistake insisting that books should be priced at $9.99."
Read more: http://www.newyorker.com/reporting/2010/04/26/100426fa_fact_auletta#ixzz0r6t9HNSW