Friday, July 13, 2012
97% Discount on ebooks is not Marketing but Madness
If we look at the bestseller lists from Amazon Kindle we may be somewhat confused and wonder if ebooks are going to be free in the future and if so wonder how authors, publishers and everyone is going to make any money from them? Its as if the children are running the chocolate factory.
Let’s step back and remember what publishers argued was their logic for bringing in their own price maintenance called ‘agency’. At the time Amazon was selling ebooks at $9.99 and that was said to be both a loss leader and unsustainable model. There was the famous Mexican stand off between Macmillan and Amazon and normal service was resumed under the cloak of agency.
Let’s now read the letters submitted to the DOJ, pro and against the agency. They are all about sustainable business, author royalties the market dominance of Amazon etc.
Let’s now look at the best seller Kindle lists on Amazon. If we ignore the free column which in itself raises many questions, but in the main is self published, we are left with the ‘paid for’ column which has prices set originally buy publishers. You would expect to see some lost leaders, new authors, new titles but would you expect to see Ken Follett, Peter James, Ricky Gervais, under these lists and selling books at under a £1 and in some cases for just 20p? Nine out of the top twenty best selling Kindle ebooks are a £1 or under and of these , six which are all in the top 13 are a mere 20p. These include four Macmillan authors. Peter James’s ‘Perfect People’ was listed at £7.99 in print, £7.16 in digital and is now offered at 20p, or as Amazon have calculated it, 97% discount! A price which includes VAT.
We are not aware who is driving this new wave of ebook summer pricing madness but whoever it is needs to be given a stiff course of social economics.
97% discount is just not worth getting out of bed for and is as good as giving the book away. Those marketers who will be writing their response before reading the rest of this piece will no doubt be using the words promotional, visibility, discoverability, attention grabbing and many more superlatives to justify their insanity.
The truth is that if we all did the same the industry would be finished. There is no coming back from zero and once the consumer is conditioned to paying zero then asking them to pay more is a challenge. Publishers are the first to point out the cost of producing digital material and the overheads that have to be born so how will they do this with zero coming in? Authors may earn out and be happy with print royalties today but as the net sales of digital zero start to come home,will they be so happy. Some will point out the joke that these ‘give aways’ come with DRM just to protect the property in case someone steals it. Hello – how many robbers do you think steal worthless property?
Publishing has always been a 80/20 game with a minority of titles making the majority of money and sales but with these charts there is a worrying change and although the 20% may still generate the volume they may not make the money.
Scarcity raises prices, but on a virtual shelf the only scarcity is in discovery, there are no rare ebooks but just ebooks you can’t find.
So we wanted to look at other platforms to find out if the madness was confined to Amazon.
We looked at Peter James’s ‘Perfect people’ published in November 2011 in paperback at £7.99 and available at Tesco £3.89 (52% off) WHS 5.99 (25% off) Play.com £5.88, Waterstones £5.19 and Foyles £7.99. We found the hardback at Sainsbury down from £18.99 to £13.99 (30% off). The ebook is a bit harder as it wasn’t on B&N, but it was on Kobo and its affiliate site WHS at £6.47 (19% off). So all a long way from the Amazon kindle price of 0.20p or 97% off.
Groupon and other discount voucher stores have grown a healthy business in spot discounting goods and services over the internet but even they can’t give you 97% off.