Sunday, December 13, 2009

So What's Wrong With $9.99?

When you are uncertain you often decide to hold back and watch what is happening around you. When you feel comfortable, you then step up to the plate and commit. The strategy makes sense in uncertain times and now appears to be one being adopted by the larger publishing houses towards the release of their e-book versions. However this raises many questions. Is this is the right time to hold back? What damage does it do to consumer confidence? What exactly are publisher uncertain about? How will they recognize when the time is right?

Hachette, Simon & Schuster, HarperCollins have all declared their concerns about the ebook becoming a cheap channel and the emergence of the ‘Amazonian’ $9.99 eprice point. They have all declared a slowdown in the ebook programs and adopted a cautious approach to the launching of new titles onto the market. Other publishers are not declaring their hand, but also adopting a cautious approach.

The reality is that the power in the digital channel is clearly shifting away from the publisher and moving upstream to the author and downstream to the consumer. Retailers have always had power on aspects such as pricing and they should, as it is they who are closest to the consumer and understand the market.

So does this new caution make sense today? Will starving the market wrestle control back to the publishers, or will it further erode their position, drive sales elsewhere and hasten the wider adoption of a digital price point?

Today consumers being expected to spend a considerable amount of money of devices that offer little by themselves, are black and white in a coloured world, are heavily restricted by DRM (Digital Rights Management) and most importantly have a limited life expectancy. Why on earth should they pay more than the cost of a cheap paperback for a digital title? Why should they pay more for a copy that has more restricted rights than the book? Why should they pay a high ticket for the same exact content in a digital rendition? Consumers aren’t thick and treating them as such can backfire.

Remember the introduction of CD music in the UK and how many perceived the labels were milking the market with their high pricing? That fiasco contributed to the wide adoption of P2P and the emerging freeconomy. Remember that iTunes moment wasn't about just the service it was about changing the model to a fixed price per track.

Today all media sectors are having to face the reality of cheaper, if not free content. Consumers know that it costs less to produce, distribute and manage, so not passing those savings to them isn’t going to wash.

The genie isn’t going back into this bottle. If we look at Google Editions, the emerging Apple model and importantly the streaming and advertising subsidized model being adopted in other sectors, we recognise that business models will change.

Readers who buy the hardback, buy it because they want it now and they probably value the hardback. To buy the ebook they must first buy a device and secondly, they must want that title digitally. Assuming ebooks sold cheap are going to kill off more expensive physical renditions isn’t a reason not to release them, but a reason to make them different.

How will publishers promote the delayed ebook release? Will they spend serious money on it, or merely slip it out the back door and expect it to sell by itself? We are in a start-up market where holding your nerve and foot on the accelerator are important. Picking up the sticks, bat and ball and saying that you aren’t playing because it isn’t fair may appear a bit naïve to some.

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