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Will B&N’s e-book prices hurt Nook sales in the long term?
November 11, 2009 | 11:21 am
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By David Rothman
The Nook is going gangbusters, with deliveries for many customers delayed while Barnes & Noble catches up.
But long term, will price differences with Amazon hurt B&N?
Some readers are up in arms over B&N’s e-books not being inexpensive enough for them, and there’s talk of buying Kindles instead.
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Comments:
I think B&N is taking too much abuse here on behalf of their partners-in-crime; Adobe and the BPHs. They should just come out and tell people that the higher book prices are the cost of protecting them from an Amazon monopoly.
Its not their fault Amazon owns all the ip and infrastructure behind their ebook store and doesn’t have to pay the Adobe tax. Its not their fault they have all those B&M storefronts to amortize. Odds are, they’re making less profit off the books than Amazon.
Sears has the same problem competing with Walmart.
Life is tough.
And then you die.
Ebook pricing isn’t quite that serious though.
If you don’t like B&N pricing buy elsewhere.
Or don’t buy. If they could match Amazon they would.
They haven’t so they obviously can’t and trying would only make things worse. Beating up on a dying horse serves no purpose here.
Besides, if Nook is really going gangbusters that means there are enough people who don’t care about the prices to keep B&N in business, right?
I purchased a Kindle DX instead of the Nook. I had a Nook pre-ordered but then I searched their site for books to purchase.
Higher prices and fewer books with Barnes & Noble made Kindle the only sensible option for me. I could live with a small price difference but if the content isn’t available at all, that is a problem.
@Felix:
I think you jump to an unsupportable conclusion when you say there are enough people who don’t care about prices. What we really need to know — and do not know — is how many people are aware of the pricing difference. Most people I speak to about ebooks think that ebooks cost less than half the price of a paperback. I suspect many nook owners will get a shock when they start shopping books at B&N.
B&N could have easily avoided all this negativity. All it had to do was give the member discount on the nook and let members buy ebooks at a discount. An increasing amount of the negativity is focused on the combination of denying the member discount plus the higher costs. There is no “sweetner” in the mix.
And to compound the problem, B&N is now offering the member price to all buyers, at least through November 30 and possibly beyond. So what B&N is telling its loyal members who put out $25 for a membership is that we are fools. Not a smart corporate move.
For its own business reasons, Amazon has chosen to offer eBooks at a discount to suggested retail. Apparently BN has not made the same business decision. Whether Amazon will be able to continue offering these discounts in the future is something only time will tell but it is difficult to imagine them continuing to offer best-sellers at a loss indefinitely. With my own books, normally offered at a list price of only $3.99, Amazon offers a modest but sustainable (I think) discount. That works out well for buyers, the publisher and Amazon.
Sure, let’s let BN know we want discounts, but don’t expect them to lose money on every best-seller just because Amazon does.
Rob Preece
Publisher
@Rich Adin: I was asking a question. With a bit of snark on top. Not making an assumption.
In reality, “Nook going gangbusters” doesn’t mean much without numbers to back it up. At this stage we would hardly expect them to say they’re not moving as fast as expected, would we? Considering how limited production is at the moment they would *have* to be on back order.
Nonetheless, there appear to be a fair amount of people out there determined *not* to buy ebooks from amazon under any conditions. Whether that is enough to build a business on (“we’re not amazon! so what if our prices are 20% higher, on average!”) is something we’ll have to wait and see.
As for the assumption that Amazon sells ebooks at a loss, that is just a smokescreen. Whatever acounting tricks (or back-end efficiencies) they use to report profits out of Kindle sales has no bearing on the fact that they *are* on average 20% cheaper. (Does anybody know what the adobe drm tax amounts to? I doubt its 20% but who knows…?) To the ebook buying customer *that* is the fact that can’t be smokescreened away. To a customer base already expecting sub-paperback pricing (and not all that thrilled by even Amazon’s baseline of $9.99) the burden of proof falls (unfairly, most likely) on B&N.
Hence the whining.
And that’s all it is; whining, because the buyers have no leverage with B&N and B&N has no room to manuever here. All sound and fury and all that.
Realistically, all they have going for them is “we’re not Amazon, we support adobe epub.”
Me, I’m just curious to see how far that takes them.
Could be far, who knows?
Doubt it, though…
I do think that B&N will need to bring down it’s prices in order to compete (and I’m sure they will level out with Amazon in the long run), but the price changes really need to come from the publishers. As has been noted, Amazon’s taking a loss a many of their eBooks (which I’ve noted repeatedly on the B&N forum).
Of course, we shouldn’t ignore the number of cases where B&N *beats* Amazon’s prices:
http://bookclubs.barnesandnoble.com/t5/eBooks-Help-Board/Gasp-Updated-price-comparisons/m-p/408752#U408752
BTW, if Amazon is engaging in predatory ebook pricing, why not sic the FTC on them?
The current administration is wide open to going after big business and there’s plenty of small ebook sellers being hurt by Amazon’s pricing.
Why not drop the dime on them?
Just asking.
Ebooks aside, Barnes & Noble has had consistently higher prices than Amazon for years. The company does not seem interested in a price war, and I don’t blame them. That could change I suppose, but B&N has the physical store presense that some people like, which differentiates them from Amazon.
I think just as important as pricing is availability. B&N and their subsidiaries are missing a number of ebooks that are available on the Kindle, and the loss of Overdrive as one of B&N’s providers is not a good sign.
“BTW, if Amazon is engaging in predatory ebook pricing, why not sic the FTC on them?…”
No it is not, its actually getting the best deal for its customers.
@Alex s; I’d tend to agree.
Until somebody calls in the feds or provides documented proof of what Amazon pays for their books (not just BPH claims) the known facts are that Amazon’s operating costs for both pbook and ebook sales *are* demonstrably lower than their competitors. All else being equal, they’d still have the upper hand.
As far as I’m concerned, the burden of proof falls on those claiming misbehavior.
B&N’s problem is, as I’ve said before, the same as Blockbuster’s; their brick-n-mortar stores that are such an asset when it comes to moving pbooks are a major liability in selling ebooks. As a significant portion of the customer base moves to ebooks that burden of the pbook infrastructure becomes more cost center than profit center.
Amazon would have the same problem *if* all they sold was books. But the same logistics facilities that move pbooks can just as easily move software, electronics, or clothes so they don’t have to worry about fixed costs killing a declining business.
Until B&N can figure out how to deal with their fixed infrastructure costs during the ebook transition they are going to be at a distinct competitive disadvantage.