Thursday, October 22, 2009

Pricing Winners and Channel Losers

The US digital edition of Stephen King's "Under the Dome," a new 1,088 page novel, will be released 1 month after the hardback and carry a hefty elist price of US$35. How the likes of Amazon respond with their $9.99 ebook best selling price point will be interesting to watch but it shows once again that some publishers do not see ebooks as different and view them as part of a scheduled release strategy.Today Amazon have the hardback on sale at $9 offering a staggering 74% discount or $26 off list. So why not release the ebook at the same time?

The real shame is that King is the one of the leading ebook exponents and pioneers and now finds himself back in the box. The other reality we have is a clear hardback price war in the US with the supermarkets lining up against each other and Amazon and all trying to create a low price perception ironically centred around the $10 mark. The clear losers on these new frontlist bestselling hardbacks and ebooks are all the retailers who can’t bear the cost of the fight and have to stand by and watch it from the side as each blow gets swung.

The publisher is able to put any price on the jacket but this becomes more and more meaningless in this discounted market and the emerging price points set the consumer trend. The publisher is ok as they can factor the discount, the consumer is great as they win a better deal, the author is fine unless they are on net receipts and these flow through special sales clauses and the channel potentially just gets rolled over in the battle.

The only way the existing channel can respond is to become booksellers and stop being merchandised. Many already have started, but many continue to sell ‘consignment stock’ at uncompetitive prices and expect to survive in what is clearly going to be a painful cull.

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