New Kindle price model may present quandary to competitors
September 28, 2011 | 7:33 pm
Yesterday, perhaps hoping to stage a preemptive strike on Amazon, Barnes & Noble announced a new cooperative venture with self-publisher Lulu.com, which is supposed to make it easier for Lulu customers to get their books published as Nook e-books. However, given that B&N was already partnering with Lulu on self-publishing e-books, it is entirely unclear how it was harder before and how it will be easier now.
And this bright bundle of glittering generalities does not seem to have helped in the end. Barnes & Noble’s stock was down by as much as 13% after Amazon’s Kindle announcement today, before recovering and finishing at only about 7% down for the day. I imagine any really smart day-traders would have started shorting it last night and stopped a couple hours after the announcement. (Wish I were a smart day-trader.)
The already-embattled bookstore chain really didn’t need this kind of stock hit, but on the other hand it will probably get back some of its own whenever it is ready to announce the new Nooks and Nook Colors it is rumored to have waiting in the wings. But the critical question that B&N, and for that matter Kobo, should be asking themselves is whether they can compete with Amazon on price anymore.
Already I’ve spotted an otherwise-savvy commentator—eBookNewser’s Donna Dilworth—innocently making the apples-to-oranges comparison and wondering whether B&N and Kobo would now have to lower their prices to compete. And that will only be the first of many such comparisons, driven no doubt by Amazon’s own marketing and advertising machine that will be happy to compare Amazon’s “$99 Kindle Touch” to Kobo’s $129 Kobo Touch or B&N’s $139 Nook—when in fact the price of an ad-free Kindle will still be that same $139.
Until and unless they can implement their own “special offers” programs to make up the difference, B&N, Kobo, and for that matter all of the other third-party also-rans like Sony, Astak, etc. are going to be unable to reach the new price goalposts now that Amazon has moved them.
These competitors can certainly try to get the truth out in their own advertising that the Kindle’s price is being subsidized by ads, and that when you compare the ad-free prices they’re the same—but the more complicated the message, the more likely it will go right over the average person’s head. And you just can’t get much simpler than “$79, $99, $149 Kindle,” especially when people who’ve tried them don’t seem to find the ads all that intrusive.
So what will happen? Will competitors find ways to make e-readers cheaper without the ads? Will advertising programs that you pay extra not to have become the default state for all (successful) e-readers? Overall, this simple price emphasis change could have a greater effect on the e-reader market than all the new features and models Amazon introduced combined.