I’m sure that you’ve all heard about the spat between publisher Macmillan and Amazon over the past week, and it was all about e-book pricing. It seems Macmillian’s deal with the Apple’s new e-book service possibly prompted the whole thing, but to tell you the truth I don’t want to get int the middle of it. What I do want to bring to light is the current transformation that’s happening in the book industry, already happened in the music business, and also continues to evolve with movies, TV, and other digital downloadable content.
The first thing that you learn in business is to be dynamic. The consumer landscape changes on a daily basis, and businesses need to be sensitive to where the trends are leading and try to jump ahead. Apple does a great job with this, as does McDonalds, Walmart, Amazon, and more recently Ford and Hyundai. But in any of the artistic fields whether music, literature, or the performing arts, artists tend to look at the marketplace as static–what will be will be. Changes are scary, because it may mean reduced work, or fees, or royalties.
But that doesn’t have to be the case. New technologies can help change things for the better by making it easier to distribute content to the consumer. iTunes and digital music have made it much easier to release albums. Before it was a complicated supply chain, and the fan had to get in his or her car, drive to the record store and hope the album was in stock. I can’t tell you the number of times I would go to Tower Records looking for something, only to have to order it anyway. Just from the perspective of saving time and energy, MP3s are a great thing; CDs are heavy, and moving them takes fuel.
The exact same analogy can be used for books. How many times have you gone to the bookstore only to see they didn’t have what you needed? Lots of times I bet. With e-books and a decent e-book reader it’s click and bam! And books are heavy. A case of hardcover books can weigh almost fifty pounds. Trade paperbacks are better. Mass markets can be light, but holding one open for a long period of time sure gets my fingers tired.
Say you want to go on a long flight. Carrying a slew of books along with your laptop and other junk is heavy. Lugging it through the airport can be back-breaking. Just as the iPod and other MP3 players saved people from having to tote around a book of CDs, e-books allow readers to carry a whole library on one small device.
I know we’ve all heard about the benefits of e-books before, but we can’t deny the benefits to consumers. With the Kindle and the iPad, e-book readers are coming into their own. E-books are a better, faster, and cheaper way to get the content to a reader. And in business better, faster, and cheaper always wins out. I bet as e-book readers improve and the costs come down, you’ll see a lot more people buying books, just because it’s much more convenient.
Now, where does this leave authors? The digital marketplace will allow a faster time to market, and that can be a good thing. The bad thing is pricing. Hardcover book scan cost $25 and up–less if you grab one at a discount store. Selling 10,000 books at $25 is a lot better that 10,000 at $9. Depending on royalty models that pie slice for the author will be a lot less with a $9 e-book. The simple solution here is just to sell more books at $9. Surely at the lesser price, more people will be willing to buy. That’s true, but how many? That’s the marketing conundrum.
Publishers will have to adjust their marketing models to get more folks to download their e-books. This will mean offering some content for free, special offers, exclusive deals, virtual clubs, and heavy use of social networking to create buzz. The money saved on physical book distribution will be directed in part to the new marketing models.
How all of it will work depends on the consumer. The consumer creates the marketplace and ultimately the marketplace will decide the price for e-books–not publishers, booksellers, authors, or anyone else in the supply chain. I can take a house and price it at $3 million, but if the market is not willing to support it, then it won’t sell. An overpriced book or movie or album will have the same fate. The world operates on a market economy, and the market has to support the prices through consumer demand.
So in order to support fair prices, publishers must focus on value. In their marketing they must communicate to their consumers the value of their books. This coupled with a strong push to create buzz as I noted above can drive sales volumes to support prices that then support fair author royalties and advances.
But at the end of the day it’s John Q. Public who will decide the price for e-books through his spending practices. It’s the obligation of the publisher to understand Mr. Public, market to him effectively, and develop a strong strategy to survive in a changing landscape. Those that do find the balance will thrive, and their authors will be happy. Those that do not will be doomed.
Bottom line here is that it’s all changing, but even though it’s scary, it’s a fantastic opportunity. The brass ring is coming around and those who reach out and grab it can do incredibly well. Instability breeds possibility, which afford those who are willing to accept the change and embrace it an exciting chance to be on the forefront of a monumental and historical shift in the publishing business. I think that’s pretty cool.
