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UK 20p eBook Sale Controversy Distracts from Retailer Control Issues

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.

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Peter September 28, 2012 um 9:45 pm

Publishers ' (and authors') opinion of readers' collective intelligence can plainly be seen in the crap they shovel at us in their press releases, apparently in the belief that we’ll actually buy their nonsense.

(Oh, and Baen actually does quite a bit of bundling with their monthly Webscriptions, which are generally 4-6 books at a slightly discounted price over buying them individually.)

Chris Meadows September 28, 2012 um 9:59 pm

I was referring specifically to print/digital bundling, selling the e-book version packaged along with the print version. But that’s a good point.

Tim Gray September 29, 2012 um 3:40 am

Online sellers of roleplaying games have been doing this for years (with PDFs). As a sector full of imaginative people who like tech, it’s generally well ahead in digital marketing.

Richard Herley September 29, 2012 um 3:00 am

"Publishers ‘ (and authors’) opinion …"

Not this author, Peter, and I don’t issue press releases! 🙂

One of the reasons I went independent was to get away from the arrogance and ineptitude: it affects authors even more than the readers.

Richard Adin September 29, 2012 um 4:21 am

Alas, although I could care less what publishers or authors think of me as a consumer (I do care a great deal what they think of me as an editor!), I do think there is some validity to the worry about consumer price expectations. Begin with Amazon’s discounting of new bestsellers to $9.99 — it wasn’t long before the blogosphere pronounced that price point as the expected price point. In fact, the loss of that price point under agency was the loudest rallying cry against agency. No one talked about the quality of the content; the talk was all about pricing.

My own experience in book buying also is supportive of validity of the worry. I do not imagine that I am the only reader who has gone from buying a number of books each year to buying nearly nil. Between the giveaways (i.e., freebies) and the $2.99 (and less) publisher special deals, I have amassed a TBR of more than 1500 ebooks — enough to keep me in reading for at least the next 10 years. Consequently, although I am interested in the J.K. Rowling book, Casual Vacancy, I won’t buy it. I will wait until it is available from the author or the publisher for $2.99 or less. If it never reaches that price point, I’ll never buy the book.

When I speak to friends with ereaders, especially those with Kindles, I hear my story repeated. One friend told me that she has so many free ebooks from Amazon that she has enough ebooks available to read through a reincarnated life without the purchase of any additional titles.

Based on what has been happening in the ebook industry as regards pricing, I and my friends expect ebooks to be sold for minimal prices. This has to be a worrisome trend for all publishers and ebooksellers.

fjtorres September 29, 2012 um 7:23 am

Perhaps if the Big Publishers were a bit less concerned about maintaining the price of the ebooks and a bit more about promoting/improving the *value* of their ebooks they’d be better positioned to justify their price points.
Because people *are* willing to pay more than $2.99 for ebooks. The $9.99 price point alone proves it. $6 for a good, traditionally-published SF or Fantasy ebook isn’t decried. Even $15 for some (early-access) editions is accepted as a reasonable proposition.
Lost in the whole "Amazon is devaluing books" outcry is that Amazon didn’t pick that price at random out of a hat; they picked it as a reasonable *promotional* price for ebooks that normally sold at $12.99 or higher.
The hue-and-cry over Agency pricing wasn’t about the loss of the $9.99 promotional price (which a lot of people still found too high to bear) but rather the loss of price competition (coupons, bundles, loyalty programs, etc) that Agency brought about, all of which were exemplified by the loss of the promotional benchmark. And then, to literally add insult to injury, the baseline price was *raised* and several publishers crowed about how much better it was now that they could raise the prices as high as they wished with nobody to nay-say them. (Penguin, in particular was quick to start playing with prices to see how high they could drive them.)
Amazon’s discounting of the so-called bestsellers was never the issue and the BPH’s focus on that shows exactly how disconnected from reality they are.
The real threat to BPH book pricing isn’t promotional discounts, it is new and small publishers doing ebook-first, ebook+POD, or even ebook only, and self-publishing of backlists by established writers. If mainstream buyers–the people to whom $9.99 represents an attractive promotional price–ever stop seeing $9.99 as a bargain, it won’t be because of the flood of indie-published ebooks but rather because of the example set by the resurrected backlist of titles from one-time bestsellers and other recognizable traditionally-published authors.
There is a big difference between price and value in consumer’s minds and the big publishers' *public* obsession with price is what is driving so many readers to focus on value and question the industry’s practices.

Puzzled September 30, 2012 um 4:54 am

I can just see the big publishers spending millions on websites to sell their books, over pricing the books, and then wondering why no one is buying books from them.

Having access to the customer data is useless if you have no customers. It is also useless if your customer base is skewed (if only price-insensitive people buy from you, you will think all people are price-insensitive).

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