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Prices of ebooks and related matters

February 24, 2009 by Mike Shatzkin Leave a Comment

A great conversation broke out on the blog for Bob Miller’s new Harper imprint, HarperStudio

I realized after I wrote a response that it summarized what might be useful thinking for publishers wrestling with the revenue potential of ebooks because it presents a frame, a way to think about it.  Because it starts at the beginning.

In the long run, money goes to scarcity. Another way of saying it goes to “value.”

I love booksellers, and I look for any way possible to support them (including allowing returns, although I think I’d go to an affadavit model for shared markdown instead in this day and age…). But I don’t see how a “bookstore” is any different from an “affiliate” when they sell an ebook. The book is actually being provided by a white-labeled archive. The bookseller doesn’t necessarily touch it. In the medium term, there will be only a small markup for retailers selling ebooks because they simply don’t add enough value selling them. In the physical world, where they pay the rent, lug the boxes around, and deal all day long with John Q Public, they earn a bigger piece of the pie.

Just like the web makes us all publlishers, in the ebook world we’ll all be booksellers too. Actually, in the Amazon (and BN.com) affiliate world, most of us are booksellers already! A “bookstore” will have aggregations of “books” by subject, but you can bet your bippy that ESPN.com (for example) will have an ebook “store” that they link to from stories, etc. all the time.

Decisions about price aren’t about fairness or equity, they’re about the market. I want to read books on my device. I choose a) from what’s available, b) what I like, and c) considering the price. I remember when I first got this ebook habit nearly 10 years ago, I paid $28 for an ebook bio of Grover Cleveland because (a) was very limited, so (b) got down near zero, and I was wanted to read something so I yielded on (c).

The ebook world is going to change enormously over the next several years. We’re still in a great period of proliferation: of formats, titles, concepts for the books, retailers, retailing “styles”, readers and devices. The Kindle and iPhone have a kind of dominance in the tiny market we have now; they may or may not be number one in what will be a much larger market three or five years from now.

One thing that concerns me (on behalf of publishers and authors, of which I is one) is the proliferation of “free” offers. It will shortly be possible for people to have a large (a) and a manageable (b) choosing among things for which the answer to (c) is zero. That will be when every publisher, untethered from cost in a promotional giveaway, starts using the “free” device all the time. Seth Godin or Michael Cader will create the website for ebooksforfree.com (I haven’t checked whether the URL is available) and get the publishers to POST their promotions on it. (Maybe they’ll get them to pay.) And I’ll shop there and won’t have any time to read purchased ebooks because I won’t get through all the free ones.

So my advice on pricing is “watch what’s out there.” EVERY DAY. And don’t think you need to stick with the same ebook price tomorrow that you had yesterday (yes, I know the problems of changing data in everybody’s system — start sussing that out.) Monitor the free offers. Know what the books most competitive with yours cost. Don’t impose a “strategy” until you’ve learned a lot through activity. Because the facts around the strategy will change before you implement it.

Two other important points to keep in mind.

1. Ebook distribution responsibility within the publishing houses has been the province of digerati. It needs to move to the sales department. When all the phone and device companies have their own app stores, and all the various developers have their own version of a book (the Stanza version and the Scrollmotion version will look quite different…), you will have to WORK the accounts. You’ll have to fight for merchandising and make decisions about coop spending. And you need to do that in conjunction with your p-book sales strategy. This is a big change that has to be made soon.

2. As Cader loves to point out, this isn’t 1% of the business yet. It’s peanuts. You can do whatever you want. You can’t get rich or go broke whether you price the ebook 50% too high or 50% too low. Try everything. You’ll never have a cheaper opportunity to experiment.

Since I wrote this, the cogent and canny Kassia has posted on the same subject. We agree a lot.

Filed Under: eBooks, General Trade Publishing, New Models, Publishing, Supply-Chain Tagged With: experimentation, HarperStudio blog, retail margins, value and scarcity

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Mike Shatzkin

Mike Shatzkin is the Founder & CEO of The Idea Logical Company and a widely-acknowledged thought leader about digital change in the book publishing industry. Read more.

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