Marketplace Scratch Pad

The e-book wars

Scott Jagow Feb 1, 2010

It appears the digital story of 2010 will be the pricing of e-books. This weekend’s battle between publisher Macmillan and Amazon is only the beginning.

Just a couple of days after removing MacMillan’s book collection from its website, Amazon reversed course and said it had no choice but to go along with MacMillan’s pricing model — $12.99 to $14.99 for new release books. Amazon had previously kept prices below $10. While Amazon will make more per book with the new model, the higher prices could have a dramatic impact on sales volume. From Fiction Matters:

At Digital Book World last week, Verso Digital gave a presentation on eBook penetration and pricing and found some interesting statistics. In a break down of their study, with all other things being equal, 2 out of every 3 customers would be willing to pay under $10 for an eBook. However, once the price crossed the $10.00 threshold, the pool of potential customers begins to atrophy at alarming rates. At the $13.99 to $14.99 price point, what was once 2 out of 3 becomes 1 out of 5.

But people will still want their e-books, yes? The format is only getting more popular. So where will these readers unwilling to pay $15 go? Fiction Matters says they’ll go to the book pirates:

…publishers are forgetting about the mistakes of the music industry when it first tried to get into the digital sales game. That mistake is that volume is the name of the game, and that customers have a very strong say and an even stronger alternative. If vendors don’t listen to customers in the two primary areas of concern – pricing and convenience – the customers will forgo a little convenience in order to forgo all of the price.

While the eBook is tipping towards mainstream acceptance, publishers are pricing it into pirate gold.

But Wired suggests the content providers are simply fighting the good fight:

Last decade was all about tech companies eliminating brick-and-mortar middlemen; this decade could see content owners get the last laugh, leveraging creative monopolies to wrest control from Amazon, iTunes, and other innovators.

From the success of Hulu, ESPN360, and (most likely) Vevo, to the record labels’ control over pricing in the iTunes and Amazon MP3 music stores, to Macmillan’s publishing business, to the New York Times’ metered access, the companies with the copyrights have succeeded in grabbing control over distribution from tech start-ups who created the market for these digital goods.

Dear Author says publishers trying to force prices on Amazon should come as no surprise:

I think one of the most fascinating things that I’ve learned in 2009 is that the reader is not the customer of the publisher. It is the trade. It is the reseller. Because we readers are not the customers, publishers don’t make consumer based decisions. They make reseller based decisions…

The question is, of course, who will be the market leaders of this evolving industry. My opinion? It’s the publishers who start to recognize that in this new market, the customer is the reader and not the trade.

It doesn’t appear MacMillan is thinking that way. Where do you come down on this? Are publishers just asking for piracy to take over? Or, as this reader told the Wall Street Journal, is Amazon the bad guy?

Doug Miller, a 45-year-old information-technology consultant in Indianapolis, owns two Kindles and dozens of Amazon e-books, but was so frustrated by the removal of Macmillan books that he has put his e-book purchases on hold indefinitely.
“It was Amazon that was acting monopolistic. That seriously damages my trust in them,” he said. “I’m very leery of further investing in any e-book platform until I see some sort of standardization. In the meantime I’ll buy paper books–but probably not from Amazon.”

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