A few months ago, Sony launched an e-book store in the UK and started promotionally discounting some bestsellers to just 20 pence (about 32 and 1/3 cents, US, as of 9/29). Amazon, with its Most Favored Nation pricing clause, immediately followed suit, leading some commentators to blame Amazon for evilly daring to discount e-books so cheaply until The Bookseller followed up and noticed they were actually just price matching someone else. The 20 pence promotion has proceeded apace, with authors and publishers being paid the full retail value of each 20 pence e-book sold.
Predictably, controversy surrounding the pricing promotion has continued as more books have been added, with publishers and advocacy associations complaining about the de-valuing of their e-books and the threat to copyright protection this somehow poses. Apparently this slippery slope will cause consumers to come to expect that every e-book must now cost only 20 pence from now on. (Consumers really ought to be annoyed at what publishers and authors clearly seem to think of their collective intelligence.)
Peter Shea, general manager for Sony Digital Reading Services, said the retailer recognised "that there is a concern about a perceived devaluation of ebooks", and that it chose the price point of 20p for some titles "as we see this as such a significant discount off list price that consumers can appreciate it is not the 'new price of ebooks'."
Meanwhile, on Forbes, Suw Charman-Anderson writes that the price war—and the larger issue of retailer discounting as a whole—is actually distracting publishers from their real problem, which is the lack of data they get from retailers. She links to a FutureBook post by Nick Harkaway stating the problem is not so much consumers getting used to paying less as it is the retailers having the reins in publishers’ relationship with consumers.
Harkaway feels that the publishers suffer from a case of myopia brought on by the distance between the inner workings of their industry and consumers:
I think - though I'm not sure - that the traditional industry is suffering somewhat from a perspective issue; because individual houses have made enormous internal infrastructural changes to meet the digital age, they feel strongly that they are doing a lot. The trouble is that none of these changes are really visible externally. Ebook pricing remains absurd, and the text is still often poorly laid out or botched. Ebook deals with authors remain contentious and retain the appearance of being a fiddle. The industry's digital engagement with the audience remains in most cases negligible. Fundamentally, publishing remains cut off in its silo. It's not true that the digital shift always brings disintermediation. Amazon and the rest are the ultimate mediators, so good at it that they sit astride the connection between publisher and purchaser so that neither can see the other - and the industry allows this to continue and indeed to intensify.
On Forbes, Charman-Anderson suggests that publishers need to hurry up and build out their own retail solutions so that they can have contact with the customers—and, more importantly, access to all the sales and other data those customers’ interaction with their store generates. It is possession of that data that has allowed Amazon to tailor its strategies so successfully—and Amazon’s reluctance to share that data with publishers increases its own power.
By having control of pricing in their own outlets, publishers could experiment with combining digital and print formats, or try other methods of bundling. Rather than trying to nobble Amazon’s pricing, publishers should try to outcompete it—at least as far as their own books are concerned.
This can’t be a bad idea. I know that Baen has done well ever since it started selling its own e-books direct to consumers, and so has O’Reilly. Baen doesn’t do much in the way of bundling (save for binding CDs full of e-books into certain of its hardcover releases), but it does release other offerings, such as entire series bundles from time to time or its higher-priced early-release “E-ARC” e-books. And O’Reilly bundles like crazy and hasn’t seen any decline in its business out of it. And both publishers are also DRM-free, and were so long before Tor got the idea.
But of course, they aren’t major big six publishers, and those are the ones who might most need to reach out to consumers directly to save themselves. However, publishing industry consultant Mike Shatzkin points out there is a problem with this idea—if a publisher discounts below MSRP, Amazon might insist that its discount should be based on the publisher’s sale price, rather than the suggested retail price. But presumably that could be hashed out in contracts.
In any event, publishers continuing to cry wolf over even the most blatant promotional sale prices for their e-books doesn’t speak well to publishers’ perception of their customers’ intelligence—or to their judgment in how to express it. Sooner or later, something’s got to give.