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B&N Raises Prices on "Hot Summer Books" Sale – Dashes Hopes of Ever Seeing a Real eBook Price War

nook itunesB&N launched a sale last week in their UK Nook Store and it appears to have come to an abrupt end made a significant shift today.

The Bookseller beat me to the story, and they reported that:

On Nook, And The Mountains Echoed has risen to a price of £8.75, while Dead Man’s Time has risen to £7.79. Only four books remain at 99p, down from a list of dozens, with Hilary Boyd’s Thursdays in the Park (Quercus) and Paul Finch’s Sacrifice (HarperCollins) still listed as part of the offer.

When the sale launched last week 40 titles were priced at £0.99 or less, and now only 7 titles are priced that low (counting titles priced for even less than 99 pence). All the other ebooks are now selling at a higher price, including some that are priced only a slight discount from regular retail.

I am not surprised to see this. When I covered the Overstock/Amazon paper book price war last week I noted that we probably wouldn’t see a similar price war in ebooks:

And thanks to the settlement between the US govt and the 5 publishers who conspired with Apple, we’re probably never going to see a similar price war in ebooks.  Remember, the settlement agreement included a clause that Amazon could discount ebooks from one of the settling publishers up to the point that their marginal cost hit zero for the ebooks from that publisher.  That means that Amazon could at best offer an average of a 30% discount on ebooks published by the Big 6/5.

A friend sent me an email and called me on the manner in which I wrote that post. Here’s something I wrote to him (I wish I had thought to post it publicly):

If Amazon expanded this week’s paper book sale to ebooks they would have to balance out each best seller marked down to 50% with (WAG) 5 or more non-bestsellers. Those books would lose their current 10% to 15% discount, driving their sales down. And as the sale went on even more ebooks would have to go to full retail as the best sellers spiked in popularity.

The price war might even stop suddenly should Amazon realize that they are coming to close to violating the marginal cost rule.

B&N just pulled back on the great sale they were offering in the UK. It’s not clear that they raised prices in order to keep from violating the marginal cost clause of their contracts with publishers, but it is not impossible.

Of course, I am assuming that B&N’s contracts include this clause. I don’t actually know for sure because that a type of detail that is not commonly shared. But as we look at the steep discounts and the abruptness with which they were removed, I think I am right.

If nothing else, today’s price increases showed that anyone who called the UK sale a price war was simply wrong. For one thing, a sale on 40 ebooks does not a price war make. And for another, B&N surrendered after a week (giving Amazon the opportunity to raise their own prices and stop hemorrhaging money).

Based on the abrupt end of changes to this sale, I don’t ever expect to see a real price war in ebooks. B&N couldn’t even sustain a sale for more than a week, so there’s little hope that a sale on ebooks might be scaled up to being a real price war.

Just about the only way that will happen is Amazon or one of their competitors starts a run on the prices of indie ebooks. Given that those tend to average a lower price that ebooks from a legacy publisher, there isn’t much of a margin for truly steep discounts.

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Fbone August 5, 2013 um 1:04 pm

I believe it was a publisher (HarperCollins?) sale to coincide with a UK literacy campaign. B&N was just the first to start lowering the prices. There was a media blitz about it mostly for those in the UK but I did see internet ads announcing it.

Nate Hoffelder August 5, 2013 um 1:13 pm

The only recent literacy campaign for the UK which I can find was back in May. I’m not sure this was related.

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