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Sony eBook Store drops price of bestseller; new Sony Reader models due on sale by end of August
August 4, 2009 | 5:28 pm
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By David Rothman
The Wall Street Journal and others are reporting what the blogosphere already knows—Sony’s plans to intro a $199 nontouch screen Reader and a deluxe $299 model with a touch screen. But here’s a new twist:
“Sony will also cut the prices on best-selling e-book titles in its online store to $9.99 from $11.99, this person said, which matches the discount price offered by Barnes & Noble Co.’s Fictionwise and Amazon for users of its Kindle e-book reader, this person said.”
USA Today says that “The Readers, which are due out by the end of August, will be sold at Best Buy, Borders, Costco, Staples, Target, Walmart, as well as Sony’s own SonySytle stores.”
Once again, groan, we hear that both the lower-level PRS-300 and the PRS-600 will lack wireless capability. Maybe a WiFi or cellular radio wrinkle by the holidays? Please. That’ll make a lot of elves very happy.
Returning to the price issue…
Now back to the question of e-book prices. The New York Times quotes one publisher as saying that the $9.99 is “the effective price of e-books” but “let’s just take a breath and see how long that lasts.” Answer: At least as long as a Amazon wants it to.
Remember, Amazon is in the gadget business, and if the lower price moves more Kindles and someday the K machines can carry washing machine ads, so be it—regardless of Jeff Bezos’s claims that the e-book hardware and other businesses are separate. Amazon is subsidizing those low prices. Could this mean that other parts of Sony or B&N subsidize e-books? Who knows? This could be like World War I, with protracted bloodletting in the trenches.
Glad tidings—for pirates
Because book-price gouges aren’t as easy now with the new competition, publishers are talking about delayed releases. Good luck, guys. Just whip up the crowd about the e-bestsellers to come and watch those pirate sites grow, DRM or not. People want their vampire novels and VIP bios now. What you gonna do, ban scanners and OCR software? As if DRM can’t be cracked anyway. The best anti-piracy precaution—and as a writer I’m not the biggest piracy fan—is a mix of fair prices and timely, convenient availability.
Related: Google News Roundup.
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Comments:
Just a reminder that it is only speculation that Amazon is subsidizing the $9.99 ebook price. While we hear this all the time, nobody really knows and it is certainly possible that Amazon has cut a deal with the publishers. This is not the gospel truth everybody seems to think it is.
A lot of new books that I would have liked for my Kindle released at $14+ for that device, so I have been checking them out at the library. I would have bought them for 9.99 which is my price point. People say wait 2 weeks and the price will come down. That is usually only the case when it ends up on the NY Times bestseller list. My reading does not all revolve around that list. If we ever do end up with 9.99 as the standard price for new releases, I will be buying more.
Paul, I’m sorry but it’s not just speculation that Amazon loses money on many $9.99 ebooks. It has been reported by multiple sources as a fact. A couple of examples:
“An Amazon spokesperson would not comment on the discount issue, but a number of publishers confirmed that Amazon pays the standard discount—which is, with some fluctuation among houses, about 50% off list price—for Kindle editions.” -Publishers Weekly
http://bit.ly/5wmet
“For the moment, say some publishers, Amazon is effectively subsidizing the $9.99 price tag for new book titles in digital form by paying publishers the same $13 it pays them for a new hardcover title with a list price of $26. It’s a classic “loss leader” situation.” -New York Times
http://bit.ly/JPMHP
Sorry, reporting from “sources” is still speculation in my book. Until Amazon gives us the figures then we will never know. What “a number of publishers” supposedly say isn’t a fact either. Why should they tell the truth and disadvantage themselves against their competition.
As far as I’m concerned it’s still rumor and speculation. Of course, that’s my training as a lawyer – but I’ve generally found that taking that attitude results in being right more often than being wrong.
“Paul, I’m sorry but it’s not just speculation that Amazon loses money on many $9.99 ebooks. It has been reported by multiple sources as a fact…”
Paul excellent counter! I for one have seen no real numbers validating this subsiding issue. The sources provided are absolutely shameless Mr. Pressman. Providing sources that have “skin in the game” in regards to higher e-book prices is a bit silly, wouldn’t you agree? One thing is certain and that is Amazon’s position is that 9.99 pricing is sustainable, due to the loss leader concept in which some books are sold at a loss while the vast majority are sold for a profit. This is not a revolutionary concept just ask Walmart. One of my favorite sayings is “that a lie told often enough becomes the truth.”
I’m trying to do less responding since it never ends well, but Sony and others admit on-the-record that they’re selling $9.99 titles at a loss. For example:
Retailers, though, generally pay publishers half of a hardcover book’s list price. So if a hardcover lists for $25, the e-book retailer is probably paying $12.50 for a product it might sell for less than $12. Sony declined to say whether it makes money on e-books overall, but says it sells only some at a loss, peddling many at much higher prices.
http://online.wsj.com/article/SB124744388627630253.html
“We all know that these companies are taking a loss and that’s not going to continue forever,” said Jonathan Karp, publisher and editor in chief at Twelve, an imprint of the Hachette Book Group. But he added that “$9.99 has now become the effective price for e-books in August of 2009. Let’s just take a breath and see how long this lasts.”
-http://www.nytimes.com/2009/08/05/technology/personaltech/05sony.html
@Paul: From today’s New York Times article discussing the new Sony readers (http://www.nytimes.com/2009/08/05/technology/personaltech/05sony.html?_r=1&scp=2&sq=sony&st=cse):
“We all know that these companies are taking a loss and that’s not going to continue forever,” said Jonathan Karp, publisher and editor in chief at Twelve, an imprint of the Hachette Book Group. But he added that “$9.99 has now become the effective price for e-books in August of 2009. Let’s just take a breath and see how long this lasts.”
Karp seems to me to be areliable source, just as any witness would be in any court trial.
The article goes on to say:
Sony’s price cut on digital books and the new devices may not be enough to help it catch up to Amazon. One significant drawback to Sony’s new devices is that, unlike the Kindle, they cannot connect wirelessly to an e-book store. Owners of Sony Readers must plug their devices into a computer to buy and download books.
The new Readers also cannot access magazines or newspapers, and Sony has yet to develop a version of its reading software for other devices like the iPhone. Mr. Haber from Sony said that the company was working on developing all of these features.
Sarah Epps, an analyst at Forrester Research, said Sony had publicly indicated that the two new devices were part of a new suite of e-reading products it would introduce this year. She said it was a “reasonable assumption” that Sony would introduce another device in the fall that had wireless features.
That leads me to believe that these are the first of several readers from Sony we can expect to see this fall.
and a couple more from beyond just “publishers”
Amazon.com, which cut the Kindle’s price yesterday, pays publishers $12 to $13 for Kindle editions of books on the New York Times best-seller list, and typically sells them for $9.99, said Paul Aiken, executive director of the Authors Guild, a New York-based group providing legal support to writers.
-http://www.bloombergnews.com/apps/news?pid=20601204&sid=acG2.Nq6kU4A
Rich does a superficial analysis of the economics. She is accurate in saying that Amazon is taking a per-unit loss on many titles in the Kindle store because doing so a) helps them sell more devices and b) helps them “lock in” their Kindle audience.
Mike Shatzkin (book industry consultant/author)
-http://www.idealog.com/blog/fleshing-out-the-timess-ebook-story-of-may-17
i’m in the same camp as Mary, above.
what amazes me, is how limited publishers seem to be in their thinking. to release an e-book, they *upload a single file that already exists*. they use essentially the same blasted file to produce their print editions. so why don’t they want to keep the price at about ten bucks? if the publisher has paid out a large advance, they just need to sell more copies. *way* more people would be willing to pay $10 for a book than would be willing to pay $25. why sell a dozen copies of a book at $25 when one could sell 100 copies at $10? and if they could do it without risking that they’ll end up with a pile of remainder copies?
what *are* they thinking.
All I can say is I do hope Sony brings out a Wi-Fi/3G version of their reader + an iPhone app that allows me to read their books on my phone when the lighting is not optimal. And, that all this occurs up here in Canada without any geographical restrictions. Maybe Shortcovers will drop their pricing to $9.99 as well. Here’s hoping !!!
Why isn’t anybody thinking that maybe Amazon et al aren’t only trying to “lock in” consumers but publishers too? If e-books become ubiquitous the new “Big Three” (four if you include Google) can then simply say to individual publishers: “Accept less or we won’t stock your books.” If their market share is large enough, or if say Amazon, Sony and B&N make the same move without directly colluding, publisher clout will wither. In short, the $9.99 best-seller may be here to stay. Which is as it should be. With e-books, the old publishing model of best-sellers compensating for the otherwise ruinous costs of poor sellers and all those returns is obsolete. So the justification for publishers profiteering on their top title e-books no longer exists. It’s a new game guys, get used to it.
I don’t think the costs for ebooks should be considered the equivalent to costs for hardcovers. After all the ebook edition doesn’t change whether the dead tree edition is in hardcover, trade paper, or mass market. That being the case, the publishers should be able to provide the ebooks at a cost that will allow the bookstores to make a profit on the $9.99 price point. Otherwise they would never be able to profit on paperbacks, which normally cost significantly less than $9.99.
Now that’s not considering things like cannibalizing HC sales or lost revenue – but neither of those are strictly speaking the same as losing money on sales.
One wonders exactly how much a publisher does make on a hard copy sale when you take into consideration the current arrangements with book stores—that unsold copies may be returned for credit. Since a digital file does not incur printing or shipping costs, wouldn’t a publisher and author make a profit on expanded digital sales?
Thanks for your idea! I just buy one