More on TechnologyTell: Gadget News | Apple News
Oxford U. Press exec on E vs. P prices: Depends on the kind of reading
September 30, 2007 | 1:42 pm
|
By David Rothman
Is E or P more valuable for immersing yourself in a good novel or biography? And how about reference tools and scholarly collections where you may hop from item to item? Are the pricing issues different?
Evan Schnittman, an Oxford University Press executive, who handles rights and bizdev issues, offers some thoughtful observations in the never-ending debate on pricing and related matters.
In a nutshell, with my extrapolating and perhaps oversimplifying a bit, he says in a just-posted TeleBlog comment:
–Yes, P is more valuable than E for immersive reading when, for example, you pig out on a good novel for hours at a time. So prices should reflect this? And e-books of King or Mailer should cost less than paper editions? Probably.
–But E offers the most value for “reference or scholarly/scientific publications where discoverability, linkability, and extractive reading is the norm.”
Should prices be higher for reference/scholarly publications in e-format, then? Or simply the same? And under what circumstances? Should they reflect, for example, the number of links involved? Or the time needed to insert them, especially with research factored in? I’d welcome further discussion from him and others on this.
Worth pondering even if you disagree
Keep in mind that Oxford U. Press, yes, is especially heavy on reference and scholarly works—as, in fact, one of the oldest and most respected publishers in the world in these areas. So Evan is hardly writing as a disinterested observer. That said, his comments are well worth pondering even if you disagree.
My big complaint about the publishers reading the TeleBlog is that they don’t speak up enough to provide their own special perspectives, as Evan laudably did. The main part of the TeleBlog, not just the comment section, is open to informed and reasonable opinions, whether or not Robert Nagle and I agree with them. Our main goal is truth-seeking, and it helps vastly when people of different beliefs, and with different experiences and business priorities, speak up.
My take on Evan’s main point
As for Evan’s main point—that you can’t just generalize about E vs. P prices—I totally agree. It’s the individual cases that are tricky, and not just on this matter of reference works vs. narrative ones and the rest. Some publishers would argue that releasing a novel simultaneously in E and P will harm the latter, and that therefore the prices should be the same. I’d disagree, and as I interpret Evan’s comments, he might well share my opinion. But then again. At any rate, I hope Evan can find time to return to this topic in more detail in formal posts here and perhaps in Oxford U Press’s own fine blog.
So, folks, what’s your take on the above? Join the debate.
|
Previous
SUBSCRIBE TO RSS
Comments:
Many thanks to Evan Schnittman for sharing his cogent thoughts about pricing e-books on this blog. Schnittman contends that “different products have different value in E vs P”. (E refers to electronic texts and P refers to paper texts.) In the domain of “reference or scholarly/scientific publications” he suggests that “the E experience is a far more valuable one than P.” Therefore electronic texts should not be cheaper than paper texts in that domain. I apologize if this summary is an oversimplification. If the summary is accurate then I think that it provides significant insight into the thought processes of some publishers.
The rationale outlined above for setting prices appears to rest on a reasonable heuristic, but it is severely flawed in my opinion. Contrasting a new product to existing products and attempting to assess comparative value is a good first step. However, consider the experience of the publisher of Encyclopedia Britannica. Since an encyclopedia is a reference work one might argue based on the reasoning above that the electronic version on CD-ROM or DVD should be sold at a significantly higher price-point than the multi-volume paper version.
Unfortunately, the Britannica publisher suffered an enormous economic shock because it was unprepared for the transition to electronic references. Britannica charged from $1,500 to $2,200 for the paper version of the encyclopedia in the 1980s. In the 1990s Britannica released a CD-ROM version for $995. By 1996 the price of the CD-ROM was $200. (Price information is from Wikipedia.) Electronic encyclopedias are now sold at a small fraction of the price that multi-volume paper editions once obtained. One reason for the downward price pressure was probably the creation of an encyclopedia called Encarta by Microsoft that was sold at a much lower price than traditional prestige encyclopedias. In recent years Wikipedia presents another challenge to companies that are trying to sell encyclopedias. Note that I am not asserting that Britannica, Encarta, and Wikipedia are of equivalent quality/coverage and completely substitutable. Indeed I do not believe that is true, but I do believe that a market environment forces a price interconnection/linkage.
A product such as e-books interlocks with several fast-changing technologies, e.g., communication networks, digital memory, computers and LCD screens. In the technological sphere price setting is often a very different exercise. Imagine a company like Intel attempting to set a price for a new chip that runs twice as fast as the previous model. Since the new chip is twice as fast and fits in the same space one might argue based on a “value approach” that the price should be double plus a premium. But the corporate chiefs at Intel know that price pressure acts relentlessly downward on computer chips. They know that they must continuously improve the price-performance ratio.
Now imagine a company that sells hard-drive memory units and suppose that the new model has double the memory capacity and is able to access data more quickly. The company executives know that the price will be rapidly discounted from double the price of the old model. Similar pressures confront communication companies since the bandwidth of communication channels continues to grow. In summary, the “comparative value approach” to setting prices does not work cross-temporarily in the technological sphere.
Can e-book prices really fall dramatically? Can the value provided by e-book publishers and authors really grow substantially? Yes, it can because the current e-book market is based on an ill-considered and impoverishing notion of artificial scarcity. Consider a book that is sold to ten-thousand people for $10 each. The same amount of money would be raised if the book is available to one-million people who each pay one dime. Indeed the same money would be raised from one-billion people who each pay one-hundredth of a cent. Publishers and authors should strive for ultra-wide e-book availability in my opinion by constructing very large libraries and charging low access fees. See the comments on the article entitled E vs. P prices: How heavily to discount e-books? for some ideas concerning alternative approaches to the current e-book market.
It seems to me that while Garson O’Toole’s argument is cogent and well stated, it misses the key issue and uses an example that perhaps, supports my point rather than refutes it. Value is what is at stake here. Not the value of print, not the value of electronic – but the value of content. Britannica has learned a terrible lesson over the past decade and that lesson is that their content has become less valuable – and more tellingly – they have learned that their content was only as valuable as the package it came in.
Looking at Britannica’s history you see that their success was made through door to door (amongst many other) sales efforts that emphasized the educational value and prestige of owning the world’s greatest encyclopedia. What middle and upper middle class parent would turn down such a resource for their kids – especially one that looked so wonderful on thier living room bookshelves? Britannica’s ear for a sales angle was pitch-perfect by marrying education and “classy” furniture.
In the era of electronic media, Britannica was able to offer far, far more content – in a variety of forms (audio, video, etc) and deliver that content in a smaller, neater, and more compact form – the CD-Rom. Who could argue with the notion that the value of the product was enhanced by the CD-Rom’s capabilities and therefore pricing should logically follow the print price – if not higher. As what happened is well documented – Microsoft releases Encarta at $200 and gives away a version to Office buyers. Britannica’s effort to sell based on prestige and the educational value of the product sets them into a tailspin – and their troubles are only starting. Now Wikipedia comes to the market and not only delivers a magnitude more in entries, it further proves that consumers simply didn’t value Britannica primarily for its content. Free and somewhat unreliable content has clearly won the day over what Britannica offered.
So applying this lesson to ebooks, I believe that it’s the inherent value of the content that will drive pricing, not the package. If it means anything to have the Oxford imprimatur on a reference book or scholarly monograph, then it will drive the value. If it turns out that libraries and consumers have been buying these books for years because we have done such an excellent job of selling and packaging our products then our e prices will fall dramatically. The reality is that a combination of brand, content, and author pool has driven our product value and nothing should change as a result of the change from p to e.
Going back to Britannica for a moment – they are now trying to compete with free content. The value of their content was never as great as they imagined when the CD-Rom era began and now they must compete with a free product and how do they do it? They go back to basics and start pointing out the value of their content, authors, and vetting process. They cannot compete in the business of content scope, nor can they derive value from their packaging or sales pitch. They must slog it out in the value of content game – and its tough going against the ubiquity of Wikipedia.
The lesson for me is that Britannica learned the hard way that one cannot lose sight of the true value of the content. If the world finds the content you are selling to be unique and of great value then the world will pay accordingly. Pricing e-content is just the same as pricing p-content – value based. Artificial scarcity doesn’t drive prices in books, content value does.
“should prices be”
Yes, please, let prices be. We’ve shed the shackles of communism in most of the world; please lets not bring it back, no matter how liberal you are.
Branko (if he’s indeed in Deep Irony Mode): Even libraries and patrons pay A Price. Writers, editors and publishers do, too, when they shop for groceries or get their cavities filled. Many and probably most of the best-selling novels, are written by professional writers. Same for many of the better niche books in The Long Tail.
As for nonfiction, we’ve gone through this discussion before. I’d hate to see all nonfiction writers at the mercy of universities, foundations, etc., when they were seeking advances.
I continue to be obstinately in favor of mixed business models. In some cases, yes, great works will happen just because people feel compelled to write them. But it is dangerous to stake the whole future of the book industry–which produces plumbing manuals, not just Genius Works or reprints of public domain works–on “free.”
OK. Keep at it, whether you were ironic or not. Debates like this are a good part of the reason why the TeleBlog exists.
Thanks,
David
Free? Who’s talking about free? All I’m saying is that the market sets the price, and that talking about what a price should be is silly. E-book prices already are what they should be.
Branko re prices:Thanks for the clarification. I was thinking you might be approaching this from a different perspective. D
[...] Schnittman on Teleread. How do you think e-books should be [...]