The TeleRead proposal for a well-stocked national digital library system could aid publishers by, among other things, driving down the cost of distributing even nonlibrary books. Publishers could use the same distribution system that libraries did with e-books, and in all cases within the system, readers could share the book files legally. The difference is that the publishers would charge readers, for access to entire encrypted books beyond sample chapters, rather than collecting fees from a national digital library fund. Library catalogues could be all-inclusive and point interested readers–who toggled in this option–to library and nonlibrary books alike. Yes, publishers could also run their distribution systems independently of TeleRead, including their own variants of the encryption-based approach. But through the TeleRead system, they would reduce costs per copy sold and greatly expand opportunities for books to find the right buyers.
But should we really worry about shaving the last nickel from the expense of spreading books around? Absolutely. Readers are ultra-sensitive to cost since most books are discretionary purchases. Low cost is good and “free” is even better. Want some interesting hints of the possibilities here? Well, you might extrapolate from details in a recent New York Times piece by Hal Varian, who cited a study by Judith A. Chevalier at the Yale School of Management and Austan Goolsbee of the University of Chicago Business School. The two professors found that when Amazon.com raised book prices by one percent, sales declined half a percent. Far worse, and probably of far greater significance, since Amazon is so extraordinary as a builder of customer relationships, Chevalier and Goolsbee determined that sales fell an amazing four percent at Barnes and Noble just from that one-percent increase. Imagine–a four-to-one ratio! While the study showed the damage to demand from price increases, we can easily envision the potential rise in book readership from decreases–ideally to $0, as would be the case with e-books qualifying for payments from a national digital library fund. Consider, if nothing else, the advantages that publishers would enjoy from the greater appeal of books to young readers, their future market, who would reap their own benefits, especially in school.
Again and again, we’ve been saying that books cost too much–not just our conclusion, but also that of Michael Cader of PublishersMarketplace.com. He’s already had fun, in his Friday newsletter, with the stats from the Varian column. Discussing a big conclusion of the professors, that relationship-building pays on the Web, Cader wrote: “It’s a decent theory, but you know what struck me more. Book buyers have lots of choices in how and where they shop, and are remarkably price sensitive, even to modest variations in price.” True! What’s more, in an era when books compete with videogames, DVDs and other purchases, people will be cost-conscious in determining whether to buy a book, period. The effect might not be as dramatic–consumers won’t use search engines to compare DVD possiblities with book possibilities, listed neatly by price–but it will be there just the same.
