E-Book Price Differentials Confusing for Consumers

Here is a link to a Telegraph blog lamenting the pricing structure of ebooks and that there does not appear to be obvious price competition between the formats  and e-readers offered by Kindle and iPad. 

This is something I have blogged on earlier this year and the potential for a captive audience tied to one device being stuck with higher prices than those offered to owners of similar but different devices.  The blog claims that Apple’s iBooks are more expensive – it takes the example of Sebastian Junger’s War. ‘On amazon.co.uk, the hardback is available for £8.49. On iBooks, the ebook costs £9.99...on amazon.com’s Kindle store, it’s available for $11.74, which I make to be about £7.80’.  At least the author takes some solace in the availability of a Kindle app for the iPad allowing access to what he says would be lower priced books but read on the iPad.

Other laments which must be puzzling many potential and actual users of e-readers and ebooks:

·         How could an ebook cost more than the real physical print version of a book?

·         Why should there be such price differentials between Kindle and iBooks?

·         Why can’t it be made easier to share ebooks?

The Times to charge for onine content later this year

The Times and The Sunday Times will start charging for online content later this year. Readers will be offered a week’s subscription for £2, or a day’s access for £1, to two new sites, www.thetimes.co.uk and www.sundaytimes.co.uk.  Existing subscribers to the print editions will be given free online access. International pricing has been set at $2/€1.5 a day or $4/€3 for a week.  Last August Rupert Murdoch announced plans to charge for all the newspapers’ websites. This move was referred to as a ‘defining moment for journalism..’ presumably because bold steps are required to attempt to reverse what has become the accepted model of free online news and to charge a fee for the ‘value’ it represents.

Times Online — which includes The Times and The Sunday Times — has c. 20 million monthly unique visitors. The print edition of The Times has 1.7 million readers and The Sunday Times has 3.2 million readers.

Newspaper publishers are desperate for new business models to compensate for declining ad revenues. In January The New York Times said that it would charge for access to its website and The Financial Times and The Wall Street Journal already have online subscription models.    The New York Times plans to introduce a ‘metred’ model where a reader is charged after accessing a set number  of free articles every month.

The Guardian said it will not charge for online access while certain papers, such as London's Evening Standard has abandoned readership revenue and made print editions free.

The NYT's publisher, Arthur Sulzberger, agreed that the strategy is not without risk: "This is a bet, to a certain degree, in where we think the web is going."  But like many newspapers, the New York Times is in the midst of a financial storm. Its parent company, the New York Times Company, owns 15 papers, including the International Herald Tribune and the Boston Globe, and sustained a loss of $70m in the nine months to September last.  It recently accepted a $250m loan from Carlos Slim, the Mexican billionaire, to strenghten its balance sheet.

For publishers, internet charges are a dilemma.  Online promotions are likely to fall dramatically with the advent of paid for subscriptions, which may make newspaper websites less appealing to advertisers.

The New York Times has experienced difficulties with paid for online access in the past -  some of their well known columnists objected on the grounds that many readers, especially in developing countries, would not be able to afford to read their important content.

Critics, including Arianna Huffington of the Huffington Post, believe charges to access online content will not work because there is already so much free content available in cyberspace. She said last year: "Unless you're selling porn, and especially very weird porn‚ online subscriptions are a dead loss."

The iPad, the Kindle and the Future of Digital Publishing

Reading books on the iPad

Apple’s iPad is giving ebook downloads a huge boost – 300,000 iPads were sold on the first day of its launch and more than 250,000 books were downloaded.  Apple’s Steve Jobs said "iPad users, on average, downloaded more than three apps and close to one book within hours of unpacking their new iPad."  The iPad will be available in UK at the end of April and there is huge speculation as to its impact on the ebook and e-reader markets.

Pricing models and agreements with publishers are known unknowns right now and not all publishers will have digital content available via Amazon unless they can reach agreement with the online retailer. On the positive side for ebook buyers, some commentators say the expected intense competition between Apple’s iBookstore and Amazon might help keep prices down, though this may not logically follow as not many people are expected to own both an iPad and the Kindle – the strong competition may help improve the performance of e-readers but  may in the short term help the alter the price points of ebooks  - it may be of more commercial benefit to publishers.   

Apple’s store currently offers  c. 90,000 titles (30,000 of which are available free of charge) whereas the Kindle has about 450,000 – this imbalance will change over the coming year.  The key point among all these figures is that the volume of e-reader sales (including the iPad) and ebooks for sale would strongly suggest a good future for digital publishing.

British Library ebook project

More than 65,000 19th-century works of fiction from the British Library’s collection are to be made available for free to the public. Amazon Kindle users will be able to read well known works by writers such as Charles Dickens, Jane Austen and Thomas Hardy, as well as works by thousands of less famous authors.  The library’s ebook project is another important event in the book world where the influence and longer term effects of ebooks on the publishing market is an unknown quantity. It is funded by Microsoft. Other online services, such as Google Books, offer out-of-copyright works for free; users of the British Library service will be able to read from pages in the original books in the library’s collection.  Most downloadable books on the Kindle are by contemporary authors because they are the most profitable for publishers. The jury is still out on what to charge for out of copyright works.  The British Library ebooks will be free of charge and will include works by Dickens and Hardy.  It will also be possible to purchase printed copies from Amazon which will have the original typeface and illustrations. Whether this will ‘revolutionise access the world’s greatest library resources’ as the library’s chief executive claimed is another matter – it may be that the real value is not in the availability of works which are already easily accessible at low or zero cost through other means – local libraries, bookshops, people’s own bookshelves – but in the digital versions of those works which are rare, or to which access in the British  Library is difficult for researchers outside the UK.  The library intends to continue its digitisation scheme by scanning books out of copyright from the early 20th century.

Authors asserting digital rights cause publishers to panic

The growth in sales of ebooks and the devices you need to read them, ebook readers, has taken many people by surprise and it’s affecting all areas of the market: publishers grappling with new technology, business models, marketing strategies, versions and supply chains; tech companies looking for a lead in the eReader space; booksellers looking ways of staying in business, dreaming up new services and products to compete with Amazon and other large etailers; and last but not least, authors. This last group now find themselves negotiating with their publishers over how much they should be paid for ebook sales, and indeed if the publishers of authors' print editions even have any rights to the sales of ebook versions.

At the end of last year Arthur Klebanoff, CEO and founder of ebook business RosettaBooks secured a deal with Amazon whereby the online bookseller acquired the exclusive digital rights to Stephen Covey’s bestselling titles The 7 Habits of Highly Effective People, and Principle-Centered Leadership. This agreement means that Simon & Schuster, the original print publisher of the books, has been left out of the equation, leading to speculation that other publishers may also lose revenue from critical backlist titles in digital formats. The move has lead some publishers to contact literary agents to assert their rights over digital versions of backlist titles. Agents and authors have fired back, referencing a court ruling 2001 finding in favour of the author as owner of the rights (at least of those books published pre-digital).

The Amazon deal gives Covey 50% royalties from ebook download sales – til now a publisher’s standard digital rights deal gave authors 25% or less, so this is a big departure from the norm and is causing some publishers to panic. This development raises questions about authors’ loyalty to publishers, and whether authors and agents believe they’ll be better served by dedicated and expert ebooks channels. This issue seems to be causing more trouble in the US than the UK market where it's said publishers are happy to renegotiate digital rights and authors are prepared to stick with their existing publishers.

The question of branding is also relevant to this argument – how much does a well established author rely on the publisher’s brand to market and sell a book? Answer: probably not very much. But if the publisher has nurtured and developed that author over a period of time, contributing to his or her success in many ways, then should the publisher not share in the continued success of that author’s work – even if in different format? And will lesser known authors stand a better chance of being marketed and achieving sales via a traditional well established publishing brand, whether in print or ebook formats? Quite possibly..

These are some of the thorny questions being asked in an industry going through change...

Warnings against Kindlemania...

Christmas Day ‘09 saw ebooks outstripping sales of print books on Amazon.com as eager recipients of the Kindle went shopping online for content (books..) - John Naughton’s Networker column in The Observer warns that the current exuberance about the Kindle (and eReaders generally) may be irrational - he refers to a study of people's use of paper to understand which uses might conceivably be eliminated by electronics, and which might not - he says the Myth of the Paperless Office should be 'required reading for anyone showing the early symptoms of Kindlemania' ! By the way, it's available in print and, according to Amazon.com, Kindle format.

While Amazon has a head start with its ebook reader and ebooks aplently on offer, Apple is expected to be hot on the Kindle’s heels this year with the Tablet eReader device – aka iPad, iSlate, iTab... Naughton expects Amazon and its Kindle to be the next target for what he calls Apple’s ‘distinctive brand of creative destruction’ and predicts Apple’s superior product development and design to come out on top in the long run.

eBook Survey Findings - The Bookseller's Digital Conference

Some interesting responses below to a survey conducted for the The Bookseller’s Digital Conference Futurebook in December ’09.

These provide some more pointers on where the industry thinks pricing is going - it concluded that cheaper ebooks and an Apple ebook reader / ereader will be the key factors driving digital publishing forward – these two points appear to be mainstream now, never mind that the latter point relies on the supposition that Apple will bring out an e-reader.. even if it does.. improvements to iPhones and iPods might mean that we’re using these devices for reading as much as for music, browsing and communications. An Apple eReader would help capture a market of readers with a dedicated content channel while expecting those readers/consumers eventually to end up using one device for multiple purposes.

Another finding worth commenting on is the expectation that high street bookshops in their current guise have the most to lose, but that they have the opportunity to exploit the shift in the market by changing their role to that of a service provider to owners of eReaders and continuing to promote reading, authors, events..and yes, even selling a few printed books too.

Key findings of the survey:

· More than 88% of respondents thought bookshops would lose out from the growth in digital sales, while 55% said they did not support the revised Google Settlement.
· 44% had read a digital book but only 19% had purchased one. 30%said that e-books should be same price as a paperback book, or cheaper (53.6%).
· Parity pricing of print / ebooks was seen as a hindrance to ebooks sales growth.
· Low priced e-books could devalue other editions (and the work that goes into writing, editing and producing a book).
· The dilemma: consumer expects to pay less for a digital product – like a downloaded album.
· The publishing industry would undergo huge changes with the emergence of new digital products. More than 67% said that book trade professionals should re-skill to take advantage of digital media.
· High street bookshops have most to lose from the increased use of digital content but there are potential gains for all by making reading more accessible and through appeal to younger audiences - ie mobile.
· High street bookshops should provide range of services for readers - technology, some printed books (e.g. children's books, maps, art books), advice, author readings, seminars, learning centres, event hosts, etc
· Quality of content will suffer – more does not mean better.
· Importance of interoperable e-book formats and devices.
· Mobile phones: despite the emergence of mobile phone apps, 42% said that most people would read e-books on a dedicated e-reader in the future.
· Apple would emerge as leader in the e-reader market, with Amazon second, with Sony third.
· Google Settlement still a problem - 55% did not support the revised Settlement, and 58% thought this version would be approved anyway by the US court.
· By 2025 16% said that more than half of sales would be from digital content, and just 5% said the electronic market would be less than 10% of total sales.

More than 50% of the respondents were publishers, the rest booksellers, librarians, agents and authors.