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Saturday, September 17, 2011

Does E-Book Discount Strategy Threaten The Industry?

Can you imagine a book, once a best-selling title, being sold for less than a penny per page?  Such is the case with Amazon.com’s Groupon approach to e-book sales.

The online giant has run several one-day sales where a book’s price drops to a ridiculous price.  A recent sale showcased a one-time best-selling book for $1.49.  Why would Amazon do that?  It’s simple:

  • To make inexpensive books available on the Kindle to influence consumers to buy its reading device over its competitors.
  • To kill the competition.
  • To gain traffic to its site in the hopes shoppers, once there, will order more stuff.
  • To generate short-term cash flow at an accelerated pace.

Makes sense for Amazon, but why would a publisher agree to this?

·        Curiosity:  They want to see at what price point the sales floodgates will open.
·        Current sales are slow or waning and a boost is needed.
·        Larger sales at a lower price, even a ridiculous one, equal or exceed the normal sales flow at a higher price.
·        They believe some purchasers at the lower price would not have bought that title otherwise, and thus, represent found money.
·        To introduce an author to a wider readership in hopes of branding followers for the author’s next book.
·        To generate short-term cash flow at an accelerated pace.
·        To be able to boast of inflated sales numbers.

So if everyone is happy -- most of all, the consumer -- what’s wrong with this picture? Well, for starters, it could cannibalize print books and greatly injure the book-buying marketplace.

Here are the potential dangers online retailers and publishers will need to navigate through:

1.      Creating bad habits.  Soon consumers will come to expect these flash sales for more titles. What is the rare exception can become the norm.  There won’t be enough sales to justify the lower prices eventually.

2.      Paper books, already priced higher than e-books, won’t be able to compete with a digital version selling for less than a newspaper or cup of coffee. Fewer physical book sales lead to bookstores going under, which leads to fewer book sales.  Not good.

3.      Though consumers of books or anything should watch their wallets, even in good times, start to commoditize books and buy information and creativity by the pound, the industry is screwed.

4.      We mustn’t cheapen the works of our artists, both in price and in image.  Writers give enough away with free blogs, free downloads, free review copies, give-aways linked to media interviews and appearances, etc.

The question is this: Are the people buying books at a heavy discount only going to buy books based on low price points?  Will some of the people who buy the book at a discount but would otherwise buy it at a higher price, now hold out for these deep-discount sales in expectation they will buy every book like that?

Usually books, physical ones, get remaindered at low prices and are sold off to deep discount stores, dollar shops and used book stores, and the book goes out of print.  But now it will be interesting to see an e-book drop down in price and then pop way up to its normal price and not go out of print.

Only e-books can do this.  Physical books, if put on a huge sale, would create return problems.  If you bought a hardcover for $5 today, you’d return the $20 one.  But with e-books, there are no returns.

I bought a copy of Playboy this month for 60 cents.  Yes, I read it for the articles!  They did a special this month because they are celebrating 60 years.  Next month they’ll go back to normal pricing.  Does that make sense? Well, most issues are bought under subscriptions so the newsstand sales would have to grow significantly with increased ad revenue to off-set the lower price.  In any event, each issue is different so they can risk selling one for 60 cents when the next issue is new.  But I wonder about the book world using the deep e-book discount strategy and how it’ll impact the industry.

Look at other industries.  Are they healthier for offering deep sales on out-of-season stuff, such as car models, clothes, or furniture/  Maybe, we should look it Restaurant Week in NYC.  It used to be once a year that restaurants offered some cool discounts. Now it seems like Restaurant Week happens many times throughout the year.  Instead of introducing places to new customers they are slowly giving away the business.

Or are they? It remains to be seen.


Interview With Harvard Common Press Associate Publisher Adam Salomone

The Harvard Common Press has been in publishing for over 30 years now. The company was founded in 1976 on the common in Harvard, MA (which is how they got their name). Adam Salomone has been working with the company since 2007, having started in sales and publicity and working his way up to digital strategy and eventually to associate publisher.  They have about 120 titles; some of their better known are: The Nursing Mother’s Companion, a breastfeeding guide now in its 25th year of publication with over 1 million copies sold, Not Your Mother’s series of appliance books, Smoke & Spice, The Bread Lover’s Bread Machine, and The Ultimate Rice Cooker.  Adam’s interview is below:

  1. What type of books do you publish and what kinds of authors do you look for? We only publish in two verticals, cookbooks and books on pregnancy/childbirth. We’re very focused in that regard, which gives our publishing program enormous flexibility when exploring new partnership/revenue opportunities, both online and off, for our books and our authors.  In looking for authors, we always try to find those that are experts in their fields, but who can easily translate to home users (whether that’s home cooks or new parents, etc). When I say experts, I don’t mean celebrity chefs or people with huge platforms, rather we find that it’s far more important to find authors who have honed their craft, whether for cooking or parenting, over many years and can translate that knowledge intelligibly into a book.

  1. How do you promote and market your books? We use a mix of opportunities to do so, both online and off. Of course, traditional review copy mailings are still important, as well as outreach to print, radio and TV media, though the size of the review copy mailings has certainly been reduced as the ability to send digital copies becomes more widely accepted.  And of course, online has huge opportunities for us to market and promote our books and our authors. We feel very strongly that the author has to be readily engaged in the marketing process online, through their own activity on Facebook, Twitter and either food or parenting specific social networks. We also do a lot of our own outreach on a broad scale across these platforms, but find that having an author engaged can be effective because it adds a level of personal back and forth to any consumer interaction.

  1. What do authors need to do these days to push book sales? I would say being active online is the single biggest driver for book sales, mostly because that is how books/authors are found out about these days, people go online to find them. Whether this means that they have a blog, or are active on Facebook/Twitter, or use sites like FoodGawker or Tastespotting (or potentially a mix of everything), authors need to do as much as they can to promote themselves. Publishers can be really helpful in setting direction for these efforts, bringing attention to lesser known authors through these kinds of platforms, and supporting authors efforts with their own outreach, but the author needs to be actively involved.

  1. What do you love about being in book publishing? Certainly a mix of things...at Harvard Common Press, we think of ourselves as content curators, and that’s something that I particularly appreciate. I love being able to bring quality content to market, content that helps people live a healthier lifestyle or have a safe birth, or even just throw a great soiree. No matter the use case, I have a particularly appreciation for publishers’ roles in making content available across a variety of topics on broad scale. Of course, the internet does this as well, but there’s something to having curated content that can be really much more powerful.

  1. Where do you feel of the industry changes will lead us to? I think ultimately we will end up in a place where print runs will decrease, but not disappear. The digital evolution will allow for more advancement of multimedia content in ebooks, making them more valuable to consumers through the incorporation of video, audio, social sharing functionality, and more. Authors and publishers will also be able to use digital products to reach consumers instantaneously on whatever social platform their interacting, driving further value by delivering solutions to consumer questions/problems in a timely, relevant manner. There could also be a lot of innovation in the ebook first arena, allowing publishers to try out certain books online before going to print, as a way to test the market.  These are obviously just a few examples, and I think it goes without saying that the opportunities could indeed be endless.

Brian Feinblum’s views, opinions, and ideas expressed in this blog are his alone and not that of his employer. You can follow him on Twitter @theprexpert and email him at brianfeinblum@gmail.com. He feels more important when discussed in the third-person.

1 comment:

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