Is ebook pricing really a key to sales? We’re about to find out…

Posted by Mike Shatzkin on June 9, 2009 at 9:42 am · Under General Trade Publishing, New Models, Publishing, Supply-Chain, eBooks


For those of you who missed the “Stay Ahead of the Shift” speech at BEA, we posted a link to the slides, but over this coming weekend we’ll do even better. From Friday morning, June 12 until Monday morning, June 15, we will post a link to a video of the entire speech! It is available now on PublishersMarketplace to subscribers only; we are able to offer this link through the generosity of Michael Cader to allow non-subscribers to Marketplace to see the speech. If you weren’t there, I hope you’ll take advantage of the opportunity.

Although there is more mystery than information about ScrollMotion’s new “million book title” offering through Apple’s App store (what are these titles? where are they coming from?), two things are clear.

1. By offering a catalog that sits in the ebooks they’re selling you, they are making shopping considerably easier than any other ebook vendor besides Amazon, and maybe even easier than Amazon does for Kindle.

2. Their prices are going to be high, not attempting anything like the deep discounting of Amazon that others are striving to match but, instead, often pricing the ebook higher than the print version.

I don’t take too seriously one oft-raised objection to ScrollMotion. Because each book carries the application, each book you buy for your iPhone will appear as an icon on your screen and take up a bit more of your capacity than the other books (Kindle, Stanza) that have a resident application and only deliver the content itself each time you acquire a new title. Most people will have no problem with the idea that after they read a book, they should delete it from their screen to avoid visual and digital clutter.

What has not been mentioned in the press I’ve seen following this week’s announcement is that Scroll Motion also has some significant advantages in presentation and functionality. They have a split screen capability to enable illustration or graphics on the top while text continues to appear in the bottom. They can synchronize it so that the pictures change in synch with the text movement. So they can do illustrated books better than anybody else. And they have copy-and-paste, notes and extracts, and emailing ability straight from the app.

These capabilities open up the world of textbooks to Scrollmotion, which may be part of the secret to getting such a huge cache of titles. If they actually get anywhere near a million titles (and the first question I was asked by an executive at a competing ebook platform is “what’s the trick behind that claim?”), they will have the most robust offering in ebooks. That’s huge and it is a big component of what propelled Kindle to the front of the ebook parade when it came out. But Kindle also had two other strong gales at their back: a huge book-buying audience at Amazon and very enticing pricing.

What actually concerns me most about Scroll Motion is margin, and I think the pricing reflects the challenges to margin. With Apple taking a 30% brokerage fee off the top of all sales, the publishers have to split the remaining 70% with Scroll Motion. I don’t know what the deal is, but let’s assume it is “50-50″: Scroll Motion and the publisher split the post-Apple swag in half. That would leave the publisher working on 35% of the actual selling price. 

Readers of this blog know that I have been advocating that publishers seize control and move things in precisely the opposite direction by reducing the “discount off retail” they offer to virtual intermediaries. Doing that is a critical if publishers are going to offer the public attractive (and, increasingly, expected) ebook pricing and maintain some semblance of adequate margin going forward.

If I’m right about that, then publishers may be taking a huge step in the wrong direction with Scroll Motion, advertising to other intermediaries that they can afford to live on a miniscule percentage of the consumer’s ebook dollar.

Many of the digerati I know would predict that Scroll Motion’s offering will fall on its face. The app thing is not digitally elegant and the prices are insane. I am not so sure they won’t succeed because I’ve always thought choice of titles, quality of merchandising, and ease of purchase were the most important components of an ebook offering and they are promising to be stellar on all those fronts.

Another book and ebook merchandising topic I’ve been discussing lately on a listserv is whether the retailers are missing a bet not enabling “affiliate” fees to be paid for email referrals in addition to web clicks. We did some research here and of the many online booksellers we check found that only Abe Books (owned by Amazon) overtlyt extends an offer of this kind: if you put one of their widgets in an email, they’ll capture the clickthrus and pay a 7% commission on sales. (Perhaps that can be done with some other widget at some other retailer, but nobody else we checked suggests it.)

It seemed like a slam dunk to us that a retailer offering to spiff customers for an email recommendation that results in a sale would be a winner. It would produce incremental sales and increase customer loyalty. I was, frankly, surprised by pushback on a listserv that suggested that it would result in too much unwanted spam. I am holding fast to my opinion that this is a good idea (nothing can be proven without somebody with reach and scale trying it, of course) but I’m also interested in yours.


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  • Keith Fahlgren
    What is Scrollmotion doing to deserve your estimated 35%? That cut seems insane given that Apple is handling the money.
  • ScrollMotion is providing the ebook platform and technology, the connection to Apple, and the merchandising. Maybe they're not getting 50% of the remaining 70%. But I think that's the deal they'd try for.
  • I'm with you on the bit about the prices being kryptonite, but I think what's interesting is the data being given to Apple. Apple will know who has installed the software, what books they purchased, the ages of those books, average numbers of titles purchased per month, etc. It's a huge tactical advantage for Apple should they choose to move from a third-party eBook seller to a first party - integrating eBooks into the true iTunes Store.
  • Bradley, first of all, I'm not taking a position on whether the pricing is kryptonite. If they can maintain an advantage in title selection and ease of purchase, they could mitigate the damaging effects of overpricing. We will have to see.

    Apple will get a lot of data, but Amazon has it too. So will Google (Google's data will be even better because they're "connected" so they can see things about reading patterns, etc. at a more granular level.) B&N will have data of this kind as well. I'm not sure Apple will get anything they would use in the way you suggest. My own hunch is that this is as close to an ebook play as Apple themselves are going to make. (And that's based on no information, so your guess is certainly as good as mine.)
  • I think Apple's making a cautious step - they are now able to collect data (and profit) without having to make the direct investment in acquiring IP rights, physical materials, and infrastructure that both Amazon and Google had to. It's toll booth guerrilla warfare.
  • Bradley, that wouldn't be my guess but it is a legitimate one. We'll see how this plays out.
  • The ScrollMotion approach has its obvious disadvantages:
    - While the ability to buy within a purchased ScrollMotion book is a nice feature, it is still annoying to have each book as a separate application
    - As you state the purchase price will cause them to lose most e-book buyers (who like mass market purchasers in airports) are very impulse driven (Amazon knows this to be true).

    Where I think ScrollMotion has an advantage is with a 'deluxe' e-book model, similar to the deluxe editions offered by musicians, where downloads (or even CDs) are sold at a higher cost with any range of content.

    Most e-readers have not made the leap to being able to accommodate video or audio content. And even the idea of having multiple links out of the book (as everyone discusses as the first line of enhancements along with directors cuts) is spotty at best right now. I think ScrollMotion is in a better spot to make a deluxe e-book model work (as is RH UK with their new iPhone apps based around their enhanced e-books). Which might make sense if authors keep having to handle their own marketing more and more these days. If authors are dealing directly with a company like Scroll Motion, then the splits work in the author's (and ScrollMotion's) favor. And it becomes a valuable platform for an author to keep pushing out further content.

    But at the price, this type of e-book is not for everyone. Like Deluxe editions of albums, it's for die-hard fans. But the average e-reader will go for the standard e-edition (PDF for the computer, Kindle, Sony, etc.) because to them, the enhancements are not worth the extra cost. The standard e-book is worth the impulse purchase price.
  • Apparently (see previous comment) the separate app thing will go away.

    I couldn't agree more about the "deluxe" thing. I thought that ScrollMotion should have focused on that. I also told them that title selection trumps all. If they were taking any advice from me, the latter seems to have won out over the former.
  • Mike,
    Thanks very much for the link. Just one quibble with your post. The current Scrollmotion app requires a unique instance on your iPhone home screen for each book but that's no longer going to be the case for the new version they were demonstrating at WWDC yesterday, which includes a virtual book shelf feature. I also think people have pretty mixed views about whether the features and usability of Scrollmotion's ereader are -- on balance -- better or worse than competing ereaders. Finally, some of the capabilities Scrollmotion showed off that you praise above, like cut and paste and direct email, cannot be done in current iPhone apps, only in up and coming, not-yet released iPhone OS 3.0 apps. So it's quite likely that other ereaders will be including similar features in their apps once 3.0 is available.
    -Aaron
  • Aaron, thanks so much for the correction and clarification. The one piece of ScrollMotion that I didn't mention but I think fits your the skepticism about features that you express is the page-for-page correlation to the print book. ScrollMotion matches (very close) print book pagination but they do it by forcing you to both scroll down each page AND turn the page when you're done. Personally, I think this is nuts -- a distraction most of the time and almost never of any functional value. They do it because they figured it out and they can do it. During a brief period when (to steal an old line about the Communist economies) "I pretended to be consulting to them and they pretended they might pay me" I urged them to, at least, make the page-for-page thing optional. They wouldn't hear of it, although I'll bet they crowd hectors them into it eventually.
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