Tuesday, October 06, 2009

eBook Pricing Remians 'A Dog's Dinner' - All Over The Floor

Mark Coker the founder of Smashwords wrote a provocative piece in the Hugffington Post this week entitled ‘Why we need $4 Books’. This raised once more the emotive issue of pricing and sent many to the barricades to defend their respective positions.

Mark’s position is that most books are too expensive which puts their future at risk as they compete with cheaper alternative media. He suggests co-operation across the chain should bring down the cost and rejuvenate the market. He says much more in the support of his theory and suggests that the ebook is a low cost format and therefore the ‘white knight’ riding over the hill to save us all from obsolescence.

What is disturbing is that there is a great difference between geographies, sectors and even title to title and by applying a general brush Cocker hits accord with some and is dismissed by others as naive. The process from manuscript to production, costs money and irrespective of the balance of the renditions sold, each in fact share a great deal of cost. Many cross subsidize each rendition and also factor into the cost used, remaindered, white sales and punts. To say that ebooks cost little, so give them away as mass market paperback, may be right for pulp fiction, but is not for all genre or even all fiction.

The argument that low price generates volume is also questionable. Low cost offers volume by taking market share not necessarily growing the market. If the market is growing only marginally today then it’s fair to assume that Amazon’s growth has come more from taking market share than market growth. The argument the low price creates growth is very questionable and it is usually down to other factors such as availability, accessibility, consumer demand. Price is only part of the mix and it isn’t a driver by itself.

So who controls price today? In the markets without regulation RRP (recommended retail price) is set by the publisher and from this discount determines the price bought with the price sold free to be set be the seller. So using this model we have to ask who sets Mark’s ambitious $4 price point. Is it the RRP, the wholesale price or is it down the retailer? Then we have the inconsistency of tax and we soon have a minefield. We also need to ask what the author thinks and what the impact this has on their royalties.

In a nutshell the article continues to reinforce the view that epricing is all over the floor.

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