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Slate on Book Industry Napsterization

Picture 1 Slate's Jack Shafer suggests publishers will bring about a Napster effect if they force Amazon to raise ebook prices.  I found myself agreeing with Shafer on some aspects of his article while totally disagreeing with him on others, so let's look at it piece by piece.

He starts off by making it sound as though all publishers oppose Amazon's typical $9.99 Kindle book price.  We don't, or at least I don't.  There's no question that if $9.99 is the new pricing ceiling for ebooks it will have a profound impact on the industry, but that could be a very good thing.  As I've said many times before, quickie conversions of print content to econtent isn't the model of the future.  That's not adding value.  That's simply squeezing every last penny out of the intellectual property.  And as long as DRM is part of the formula customers may feel the e-version has even fewer benefits than the print version.

The cannibalization issue is real in some publisher's minds and it can't be ignored.  That's why I was disappointed but not surprised by Sourcebooks recent decision to delay the ebook version of one of their upcoming titles.  It's an interesting contrast though: Here I am trying to find new and innovative ways to use e-platforms to get content out before the print product and Sourcebooks is doing the opposite.

I wonder if Sourcebooks has ever thought about the Kindle customer.  I haven't bought a single print book since I got my Kindle over a year ago.  I refuse to buy print books for myself, mostly because I want to get the most out of my $360 device investment.  Every Kindle owner isn't as rigid as I am on this but I wonder how many are.  I'm the type of customer Sourcebooks is at best delaying income from and at worst walking away from.

Shafer is right to note that gadgets are the key reason book publishing hasn't been Napsterized yet.  Sure, there's been plenty of piracy in our industry for many, many years, but it's never rivaled the music industry's problem.  I'd also argue that the 3rd-generation Kindle, the DX model, still isn't even as sexy as the original iPod.  It will be interesting to see if Apple ever comes out with that "media pad" device, also known as the "iPad", which could completely change the playing field.

Many of us try to pinpoint where the publishing industry is on the iPod timeline, but Shafer makes a good point with this statement: "the electronic-book market finds itself roughly in the same place the market for MP3s was in 1999, the year after the release of the first portable MP3 player."  So for the ebook world, 2009 is really 2 B.i. (Before iPod), but imagine what the world might look like when we get to 5 or 10 A.i.

The quote by Forrester Research analyst Sarah Rotman Epps is painfully true: "Publishers are in denial about the economics of digital content."  The $20 or $25 hardcover novel is likely to face a $9.99 ebook pricing ceiling going forward.  Deal with it.  Figure out ways to build franchises around these products so that the book sale is not the only income stream.  At the same time, start thinking about how the book needs to evolve.  Ebooks don't have the same constraints as print books.  Publishers and authors, what value can be added to your products in e-format that you've been unable to add in print format?

Comments

John Wilker

I'm as rigid as you. My amazon wishlist still has plenty of dead tree books in it, but that's mostly my long term shopping list so i just click over to kindle when finally ready to buy.

I haven't had my Kindle as long (bought the 2, in April) but I don't buy any books now that aren't Kindle books.

It'll be interesting to see where sourcebooks is in 1-2 years. See how this ani e-book thing has paid off for them.

Bret

This is a curious discussion, and interesting that Amazon has gotten it to be about the publisher, rather than itself. The market is content plus delivery equals solution, and when we saw it created the with music, Apple was the one who got it right the best first time, so to speak. They were fortunate in pairing the delivery mechanism with the delivery device, and establishing themselves as the market leader.

But it doesn't have to be that way, although Amazon is trying. Where Amazon is different than Apple is that they were (are?) a physical delivery service that got into digital delivery, and by extension technology. Apple was a technology company that got into delivery. It was more of a natural step for Apple than it has been (is?) for Amazon, for a number of reasons. The least of these should not be missed that Apple already had experience in software, DRM, and licensing for their core competencies, whereas Amazon really did not; the extent of their experience in those areas was limited to protecting the publisher and their own business while delivering books through an online outlet, and the technology required to do that.

With what Amazon is trying to do is turning the prior relationship upside down - it is literally a distributor trying to set price on a publisher's content. Normally, that's fine, so long as it is anything above $X, being the wholesale price, or lower than that at their own loss or in conjunction with the publisher. But, Amazon is dictating price so create a uniform experience and, surprise, increase their own profits. It is an extreme irregularity for agents and resellers to have that power over the producers. Furthermore, Amazon is trying to artificially set the price as a best guess as to what the market wants - who knows if $9.99 is the actual price point the market would choose? Finally, they are leveraging their power as a distributor of physical print to jump-start their digital print efforts, which is a little abrasive and could be counterproductive in the end.

Compare this to what is coming, as Slate indicates, about agnostic devices that can accept content from a number of sources. A device made by an expert device maker to the needs of the market will be the first step (think ipod). Then, a content aggregator, working in partnership with publishers, will be necessary (think itunes). The combination of these two for be a best in class reader that enjoys wide free-market adoption, partnered with a content delivery service that makes the business model work for publishers, will end up dominating the marketshare. Just because it all happened the first time around with Apple doesn't dictate that it must with this medium. To be sure, since we all have the experience of that that trip, the end result will likely be different this time around.

Joe Wikert

Well-said, Bret!

Carolyn Jewel

Regarding what content can be added in ebooks:

Buy links to the author's backlist, buy links to related books (if you liked this, you might like X) Links to more about the author(s). Video content (author interviews, book trailers), full color illustrations (gray is SO boring!) Additional artwork, particularly for fiction, actually -- better maps in Fantasy novels, the possibilities are really pretty endless.

Additional short content, such as a short story or related articles about the subject matter. Coupons for money off on your next purchase from this publisher with links.

For tech books in particular, downloadable updates and errata corrections.

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