C. S. Rickard

Archive for the ‘pricing’ Category

Amazon posted a response to the reaction of pulling MacMillan’s books. While I’m not convinced on what the price for e-books should be, I do think that the market should decide. What is expensive to one person, could be reasonable to another and cheap to someone else. A major fan of an author is more than willing to pay a few more dollars to read the e-book version when it’s released than waiting several months for the price to drop. The choice is theirs. Like everything else in a free market society, the price paid on newly released items are ALWAYS more expensive than the price on that same item months later. This happens in every industry, whether it’s books, cars, clothing, movies. It’s expected. Amazon makes it sound as if charging more for a new release is somehow duping the readers. If the readers don’t like the price, they don’t have to pay it. They can wait and buy it cheaper, like they do with every other item in every other industry. This is not about looking out for the customer, it’s about a threat to Amazon’s market share on e-books.

John Scalzi wrote an absolutely beautiful summary of this past weekend. I laughed from point 2 through the end. You’ve got to read it!

http://whatever.scalzi.com/2010/02/01/all-the-many-ways-amazon-so-very-failed-the-weekend/

Below is the quote from Publisher’s Weekly:

Amazon Answers: “Ultimately….We Will Have to Capitulate”

Could publishers have triumphed so quickly with their strategy to use Apple’s entry into the market to move to an agency model for selling ebooks? (Note that the etailer says “ultimately.” Immediately after posting this “announcement,” disabled Macmillan buy buttons had not been restored yet.) Early Sunday evening, The Amazon Kindle team has just posted this to a forum on their site:

Dear Customers:

Macmillan, one of the “big six” publishers, has clearly communicated to us that, regardless of our viewpoint, they are committed to switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers and most hardcover releases.

We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles. We want you to know that ultimately, however, we will have to capitulate and accept Macmillan’s terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books. Amazon customers will at that point decide for themselves whether they believe it’s reasonable to pay $14.99 for a bestselling e-book. We don’t believe that all of the major publishers will take the same route as Macmillan. And we know for sure that many independent presses and self-published authors will see this as an opportunity to provide attractively priced e-books as an alternative.

Kindle is a business for Amazon, and it is also a mission. We never expected it to be easy!

As reported previously here, other major publishers do in fact have plans for pursuing “the same route,” so this may be just the first chapter.

I have been an Amazon customer almost since they were on-line. I signed up for Amazon Prime membership the first month it was offered and have had it on automatic renewal ever since. I also own a kindle. Yesterday, however, I was shocked and angry at the bullish tactics Amazon used when MacMillan wanted to alter the pricing structure of its e-books. The New York Times has a summary of what happened here. Publisher’s Lunch carried a letter from MacMillan explaining what had happened.

Essentially, Amazon yanked all MacMillan books, which includes Tor, in both e-book and paper formats from their website. However, they do still allow third party vendors to sell these books through Amazon.

There has been a flurry of blogs and responses by authors as a result. Here are some of my favorites:

http://www.sfwa.org/2010/01/why-my-books-are-no-longer-available-on-amazon-com/
http://whatever.scalzi.com/2010/01/30/a-quick-note-on-ebook-pricing/
http://jaylake.livejournal.com/2042910.html
http://suricattus.livejournal.com/1200903.html
http://www.antipope.org/charlie/blog-static/2010/01/amazon-macmillan-an-outsiders.html

I think John Scalzi and Charlie Stross’ posts sum up my thoughts on this matter quite nicely.

In a free market society, Amazon has the right to pull or sell whatever they want. However, their goal has been to monopolize e-books and eventually force publishers to sell their books to Amazon on Amazon’s terms, not the other way around. From my understanding, all of their e-books priced at $9.99 are sold at a loss to them. They have been taking this financial hit to sell more kindles and garner the largest market share in that area. The kindle, unlike most other e-readers is DRM (restricted format). With enough market share, they could turn to the publishers and force them to lower their prices to meet Amazon’s model.

With Apple entering the picture, Amazon has a viable competitor where it really didn’t before. Whether you like Apple or not is irrelevant. The point is Apple has a huge following and is capable of bringing more pressure to bear on Amazon than Sony or B&N.

Also, MacMillan was willing to keep the old pricing model they had with Amazon. Their only caveat would be that they would not release the e-book version until several months after the hard copy version (meaning paper or hardback). In this way, the $9.99 e-book price would not divert from the revenue generated from a new release.

Amazon didn’t like it because doing so would allow people who wanted to buy the new release to pay full-price for the hard copy and not an immediate discounted price for an e-book.

This is no different than any other industry. It is not only accepted, but expected, that new releases will ALWAYS cost more than the same product purchased later on. You see this with movies, cars, televisions, everything.

Authors and publishers have a right to make a living as best they can. Amazon’s efforts thus far have been to turn books in the equivalent of drive-thru creations. Demeaning the time and talent it took to create the books.

Just as it’s their right to sell what they want. It’s my right to take my business elsewhere and it’s the publisher’s right not to give in to Amazon’s terms.

I gave Amazon the benefit of the doubt during the Amazon Fail fiasco (in which gay/lesbian books mysteriously vanished). While I didn’t approve of their method, I did understand their reason for removing copies of 1984 from kindles when that occurred. I’ve watched as publishers fretted of the lower and lower prices of new releases while Amazon, and later WalMart and Target, got into a pricing war. Like everyone else, I love to save money. However, one of the best ways to save money in a free economy is through competition. Let supply and demand set the price. If people think it’s too expensive, they won’t pay. But if they are never given the choice, then you’ll never know what the price could be. Amazon’s decision to drop MacMillan because they didn’t want to test the market by altering e-book pricing was the last straw. Amazon has lost my business. For those interested, I cancelled my Amazon Prime membership as well as the two pre-orders. Instead, I purchased them through my new account at Powells.com.

Nathan and Eric had great posts on the e-book price war that started this week.

I abhor WalMart. I never, ever shop there. I do like Target for common household items, but I don’t shop there for groceries or other ’specialty’ items, like books or DVDs. My big gripe with trying to cram something of everything into one place, is that you have to forgo variety. And I LOVE variety!

I have never bought a book from a Target, grocery store or anyplace other than a bookstore, whether brick and mortar or online. I wish I understood more of the implications of the pricing war, but my initial sense is that WalMart realized it didn’t offer the cheapest items in the area of books and decided to stick its feet in the pool. Of course, Amazon, being the big fish in that pool, retaliated in kind.

At present, the price reductions haven’t effected the profits to publishers or authors, but plenty of people worry that it will. Again, showing my ignorance in the business side of things, as long as there are multiple places through which to sell books, I don’t see how Amazon or WalMart have any bargaining power to try and force publishers to reduce their costs to match the below-profit prices these guys have been offering. My only hope is that it won’t last long enough to force the remaining independent booksellers out of business. I don’t see how they could compete at all in this type of environment. Of course, the fear is that WalMart or Amazon will force so many out of the field that they will then have that ability eventually.

Along those lines, the ABA sent a letter to the Department of Justice requesting an investigation into the pricing war. It will be interesting to see how this pans out.

With all of the focus on e-books and online purchases, there are still those naysayers that think e-books are a fad or won’t last long. And there are those on the opposite side touting the beauty of e-books to the doom of paperbacks. I think both are wrong. I love e-books, but I love paperbacks as well. I still buy both and see the value in both. I think they complement one another. I also think online sites like e-stores, author websites and blogs offer a wonderful marketing opportunity for both paper books and e-books.

There was also an article by LibraDigital regarding the marketing power of free online chapters. Here is an excerpt summarizing the results:

“We know that allowing readers to preview book chapters before buying has a positive impact on both print and eBook sales,” said Russell P. Reeder, President and CEO of LibreDigital, Inc. “In the case of one well-known book publisher, one in three people who browsed decided to purchase the book online. As a result, leading publishers are increasing their use of online previews when planning promotional campaigns for both new and existing book titles.”

I fully intend to offer my first chapter free online. Even before this article came out, I instinctively knew it would help, probably based on personal experience. This year I read first chapters offered on websites of authors I’d never read before, and ended up buying about 6 books as a result. Four of those were e-books, the other two were paperback.

I think paper books and e-books will both be around for a very long time.