Monthly Archives: June 2012

One way to sell ebooks

Make them really cheap. These guys have figured out a way. Check it out:

At OnlyIndie.com, every new book starts at $0. The first 15 downloads are free and every download after that is a penny more, up to a maximum of $7.98, a number chosen by the site’s founders in response to what they see as too-high e-book prices at other retailers. If a book isn’t downloaded for 24 hours, its price begins to slowly drop per an algorithm designed to take 100 days to bring the price back to $0.

…Gajda, 31, and his two co-founders reach out to authors personally to ask them to put their books up for sale on the site. Each book is vetted by hand. The company wants authors to feel as if they are being attended to personally and has no immediate plans to scale the business quickly.

Hat tip to Jeremy Greenfield for the pointer, and more on this later.

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Why ebooks have to be different from print books

In an earlier post, I made the claim that ebooks must present a different experience for the user than pbooks in order to continue growing on the market. It might be obvious, but I want to tell you why I made that claim. I think this table says it well:

(source)

People aren’t saying they don’t enjoy ebook content, they just aren’t seeing why they should switch over. They have to buy an expensive device, they’re not sure about reading from a screen–why not just get the regular old book? It’s not going to be easy to change that status quo. Publisher’s need to segregate the ebook market from the pbook market so that they face less elastic demand, allowing them more control over pricing. Two different products have two different demand curves and may charge different prices. The key is to separate them. They are currently being mashed together.

Just look at the responses in the survey–ebooks are compared against a standard of pbooks. Pbooks aren’t going to go away anytime soon, so ebooks have to offer something new. Publishers have to change the game. My previous post outlines one possible direction that could go in. But c’mon, books are centuries old, ereaders are cutting-edge. There should be no comparison. Whoever segregates the markets between ebooks and pbooks will be able to reap the benefits of price discrimination.

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Who says print books are becoming obsolete?

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Remember your customer

My thoughts on the Apple/Amazon/Big 6 business model clash:

If publishers successfully force agency pricing  on Amazon (which appears to be happening), it will certainly be to the detriment of consumers. Publishers will raise prices in the name of reasserting the “true value” of their works, and less people will buy ebooks. Simple supply and demand.

Amazon selling ebooks at $9.99 (below cost) benefits consumers at the expense of competing retailers and weakens publisher’s control over pricing. Yet if Amazon’s strategy proves sustainable (that is, if Amazon can offset losses on bestsellers by raising prices of other ebooks), it will almost certainly lead to increased sales in the long run for publishers. Again, lower price=higher quantity demanded.

Then again, if Amazon’s model proves unsustainable, it will be just that. Nonetheless, in the short term, the strategy is akin to putting money directly into consumers pockets, while publishers are still getting paid for their titles. Amazon is accepting the losses intentionally and with full responsibility. What’s the problem with a little free money, folks?

Some people say this is predatory pricing–after Amazon drives all competitors out of the market they will raise prices and reap monopoly profits. Since there appears to be no long-term barriers to entry in the ebook retail market, I don’t give this threat much credit. If Amazon were to attempt this, a new competitor would enter the market after prices were raised and Amazon would be forced to keep predating, suffering even more losses.

I opine that publishers want to move to the new agency model so they can collectively raise prices. If there is monopoly power to be had, it is from collusion between the Big 6 conspiring to raise prices and lower output–the polar opposite of Amazon’s strategy. This would increase profits and lessen the likelihood of DRM breach.

But it is important to remember that the reason any business exists is to serve the customer. Ultimately, the most successful business will be that which best serves the needs of their customers. Ebook retailers have two “customer” groups: publishers (who consume retail services) and readers (who consume the end product). Apple is appealing to the former, Amazon is appealing to the latter. Because readers are the be-all-end-all customers, Amazon’s model should (if it could be proven sustainable) win the day.

For those of you pointing the finger at Amazon, shouting “monopoly!”, you should remember your customer. In the end, the better business is that which better serves the customer.

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User’s Rights

What will the future of ebooks be? I don’t know, but this seems at least plausible:

From ebooks: trading digital rights, not files (by Frédéric Filloux):

The true revolution will be a shift from a files transaction system to a rights transaction system.

Filloux envisions a future system where the reader pays for access rights to “contents [which] are transparently stored on a caching system”, rather than an actual file transfer from retailer to reader. For publishers, this might abate risk of piracy because it eliminates the actual file transfer that carries so much risk.

But more, it benefits consumers because their ebooks now have potential to become much more than the digital version of a printed book–Filloux envisions purchasing rights to content “intelligent enough to adapt to my reading conditions of the moment: type and capability of the device, processing speed, network configuration”, etc. Essentially, the ebook becomes a living, breathing format where content is continually updated and customized, and individual use-rights are purchased for a specified time period. It’s all in the article.

Does the technology exist? That’s a question for software developers.

If what Filloux describes is indeed possible, it could be applied to a library setting. The library purchases rights to certain content from a publisher or retailer, then temporarily transfers them to the library-goer. When the library-goers’ rights expire, they must renew. But it’s not equivalent to handing someone a file and saying “please don’t share”–it’s more like giving someone an admission ticket to a digital event. So the issue is IDing the proper user instead of protecting the file. Filloux proposes a solution:

“Dealing with rights means, first and foremost, being able to certify the ID of the person who paid for it. In this field, telcos are well-placed, especially mobile carriers. They own the customer relationship, the contract, the billing arrangements. In addition, carriers know how to track the digital subscriber in order to adjust connectivity to the device currently used and to the location of the moment. Put another way, a mobile carrier can assume the role of a trusted digital locker and thus become accountable for the management of piracy problems”

If that’s a scenario that plays out, we will probably see an important alliance arise between the ebook industry and the telecommunications industry, and libraries might be able to carve themselves out a niche in that relationship.

In either case, this idea presents a whole new experience for the user–which I think is key to boosting ebook sales. According to this post 41% of survey respondents (the modal respondant) were unwilling to adopt ebooks because they are unwilling to abandon the ‘paper experience’. So the solution is that the ebook has to be seen by consumers as something completely different from a print book. And the idea that the book can change according to user’s circumstance is just the way to differentiate them.

From a college student’s perspective, if the proper actors who see the profit take action, I for one will gladly step up and purchase rights to an etextbook that won’t be made completely obsolete in three months when they come out with a new edition. I am liking the idea already… And then I can re-sell those rights–they may even appreciate while I own them!

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