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Posted Thursday, February 11, 2010 - 13:35 by Lauren in Industry News

From Publisher's Marketplace: Make eBooks Cheap, Or Grandpa Will Steal Them

It's tempting to dismiss today's NYT piece on ebook readers preference to pay less money for titles for the unsubstantial work that it is. But since it runs in the Times, some people will automatically take it seriously, despite the anecdotal reporting and absence of any data. (Not that none exists--but there's no mention here of recently-presented findings on price sensitivity from the BISG and Verso surveys, or Kobo's presentation that they sell almost as many ebooks at prices greater than $9.99 than they do at $9.99 itself, or the informal accounts of agents who have seen pricing data presented to them by Amazon. Or gosh, even the actual survey news of the week, in a "proprietary survey" from Goldman Sachs released Tuesday, which we'll get to shortly.)

So the Times story underscores a point we have been making recently, and will reinforce one more time today: publishing people who care about these pricing discussions need to get in the online forums and start issuing press releases and find other ways to address readers honestly about price. The price landscape, and shift to an agency model, is honestly baffling to most people and there are a lot of price myths out there. If this community is not more vocal and clear, you're unfortunately going to see a lot more pieces like this.

Among the myths and potential talking points:

* $9.99 never was the top e-book price; people pay more than that every day
Cite the Kobo data. Cite the surveys of Amazon's product line that have shown approximately 30 percent of all skus are priced above $9.99. The bestseller lists regularly include commercial titles above the $9.99 price point. Sony's store was built around prices $9.99; they only lowered some prices eventually to match Amazon.

Plus, international ebooks already cost more--$11.99 and up (because of the extra wireless charges.) Amazon has told the world that international Kindle broke all their sales records.

* The implicit, false promise of cheap e-books was made by the people who profit, at very nice margins, from selling the devices, not from publishers.
Please blame them if you feel deceived.

* Brand-new ebooks sold at $9.99 are generally sold at a loss by the retailer.
When a company with a $50 billion market cap can sell selected product at a loss and still make their biggest profits ever, you have to wonder about the bargain.

Publishers are hoping to protect smaller and local retailers and ensure that customers have a wide range of real bookstores and online ebookstores to choose from.

* People who can afford an ereading device can afford all proposed ebook prices
Of course they prefer to pay less, and they may even forgo purchases or gravitate to less expensive product. But whenever the owner of a $300 product says they "can't afford" to pay three dollars more for something, what they mean is "I really prefer not to."

* Publishers are lowering their ebook prices
You won't read this unless it gets prominently announced and explained. Most stories say publishers are raising prices. We in the trade know that publishers are preparing to lower their ebook prices by 50 percent or more, and reduce their own profit margins. But customers don't; they hear that publishers are raising prices.

* The new "top price" is going to be $12.99 more often than not
This is another point that is being lost, inside and outside the trade, since no one is supposed to talk about their Apple deals in too much detail. But if journalists and their readers understood this, the price differential would seem far less substantial.

* Surveys show many people will pay more than $9.99 for ebooks
As we've demonstrated, they do already. Many others say they will happily wait for a period of time until the price goes down. Very few say in surveys that if they don't like the price they will figure out to steal the ebook. Propogating that notion based on a Wharton professor seems rather irresponsible. These surveys should be more widely publicized, and supported.

* Goldman Sachs says ebook prices are not the biggest factor in purchasing a device--but expensive devices are an obstacle
In the survey we mentioned earlier, an amazing 100 percent of people owning or intending to buy an ereader said that "ease of storage/carrying" was the most important factor driving their purchase. "Lower prices on ebooks" was cited by 91 percent of people, followed closely by "ease of purchase of ebooks," cited by 87 percent. This isn't all about book prices.

But also, among the large group of people who do not intend to buy an ereading device, 80 percent cited the price of the device as the biggest obstacle to ownership. Why is the conversation about a few dollars on ebook prices, instead of hundreds of dollars for a device?
That's what most people "can't afford."

Also consider this. Goldman's data shows that 59 percent of ebook owners are spending less than $100 on ebooks. (This ratifies the Verso data, which shows ereader owners splitting their purchases between print and ebooks.)

* Publishers have rewarded and honored early ereader adopters with a lot of free book giveaways, and some very inexpensive price promotions
Probably too many, in fact. But the press articles and online forums never talk about this.

But if these things don't get said, forcefully and clearly, to the press, in forums, and directy to readers by authors and publishers, the messages won't get heard.

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