E-book pricing hinges on customer perception of value
March 23, 2011 | 12:38 pm
Sattersten points out that the main issue at hand is consumer perception of value. Consumers see that everything else digital is cheaper than the physical equivalent, and think e-books vs. books should be the same way. He brings up the example of a print book that’s cheaper than an e-book, explaining “That creates a short circuit in customers’ brains. You don’t pay more for things that are more convenient. You pay less.”
And he addresses the issue of Amazon discounting, and attributes a motivation to Amazon that I hadn’t considered:
What’s interesting is that Amazon is actively discounting books in the 40% to 50% range, and in many cases putting the price of the print book very close to the price of the ebook. There can’t be any margin left at those prices. Amazon, having lost the ability to control ebook pricing, is saying to customers "ebooks and print books are the same." This drives more people to ebooks (who doesn’t want to download their book now?), sells more Kindles, and further cements their place in publishing’s future — both provider of new and destroyer of old (what bookstore can compete with 49% off?). Also, notice how Amazon is redefining short writings with their Singles program. Fewer words, lower prices and, most importantly, a new (not very good) term to attach to the new value proposition.
He also points out a fundamental pricing disconnect between traditionally published e-books at $9.99 to $19.99 being sold in the same store as self-published 99-cent e-books. “The wide range of pricing destroys pricing power.”
He suggests that one way publishers might cope with the new lower price point is to shorten e-book length, and try serializing e-books the way some game companies are now experimenting with serializing their games, splitting them up across two or more 99-cent applications.
I’m not so sure that’s necessarily the best idea from the perspective of a book reader. Seems to me that kind of thing was tried a few years back in paperback with The Green Mile, and if it had been successful then we’d probably have seen more of that kind of thing. We haven’t yet. On the other hand, being able to pay 99 cents for a chunk of a book would allow people to find out cheaply whether they want to continue reading enough to buy the whole thing.
Still, it would be nice if publishers would try to streamline and reduce inefficiency and bring prices down that way. Getting rid of the antediluvian system of unsold returns would be one way to start. (Of course, given the choice between lowering prices and sucking up extra profit, I’m not too sure publishers can find their way around a price-demand curve, but that could just be me.)