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Monday, October 28, 2013

Will You Be Responsible for Killing Publishing?


I recently blogged about how the Netflix model will kill book publishing and unfortunately, not enough readers agreed with me.  I must have failed to somehow state what should be obvious: such monthly discount programs are the cheese on a very deadly mouse trap.

When someone says go buy all of the dresses or cups of coffee or bottles of wine that you want for the price equivalency of just one of those items, you’d understand how the industries could survive, right?  Answer: They couldn’t.

Books are no different.

Even Netflix is not a good analogy.  It recycles content for the most part.  For instance, Netflix doesn’t have anything new (except for one or two original series).  It shows a movie that already was shown somewhere else.  Further, that movie got to make money by playing in theaters or being seen on commercial TV.  But when you bundle masses of books and tell readers to go ahead and take all of them for a fraction of their cover price, you create an impoverished industry.

So do I think it’s wrong for competing forces to discount its product or service?  Absolutely not. 

Many businesses will offer deals, such as these:

All-you-can eat breakfast buffets are still popular in Las Vegas.  One may wonder why someone would take a loss on a meal.  Well, it’s simple.  It’s called a loss leader.  They hope their loss will lead you to them.  They hope you’ll end up staying at the hotel housing the restaurant.  Or even better, that you’ll gamble there.  They hope the great lure of a free meal will secure word-of-mouth advertising.  In the end, they make a nice profit.

Amazon will sell e-books for peanuts because it just wants you to buy their e-device/tablet AND to use that to shop for other, higher ticket items.  It also wants to juice its stock price and consumers have a liking towards a company that charges pennies for things others charge the market value for.  Amazon wins.

When restaurants and businesses use Groupon to get new customers, it pays a price for it.  Usually, the business sells a full-price item to Groupon for 75% off and the consumer saves 50%.  The business usually breaks even or maybe takes a small loss-but it uses this to introduce its products, services or food to new customers—or to win back old ones that had not visited in a while.  The business wins in the long run.

So, as you can see, many businesses benefit from their discounted pricing arrangements.  But in the world of book publishing, words by the pound is an industry-destroyer.

Pandora or Spotify or Netflix may or may not pay-off for the music and film industries, but a monthly book-reading fee is a doomsday device for the book world.

Why?

·         Book stores lose business and will then go out of business.
·         Printed books get snubbed for the preferential e-pricing, this speeding up the extinction of print.
·         Publishers lose because their profits become capped—and then they dwindle.
·         Authors lose because their royalties take a hit.

The problem is that consumers feel like they win when a bunch of discounted services fight each other and offer the most books at the lowest price.  And, as readers, they do win—if you judge victory purely by economics.  They lose when the quality of books suffer.  They lose when publishers go under or when authors start writing fewer books.  They lose when they hurt the creative arts industry that they love.

Some may say that the book industry started this model many decades ago when it had Book-of-the-Month Club.  But the comparison falls short.

The club deal was temporary—you get a few books (not all you can eat) for a limited time for a few pennies—but then the full-price kicks in and consumers actually end up overpaying.  The book selection is very limited and often they are not brand new titles.  Today, subscription services are looking to start the show. 

Safari Books Online has been successful for the past dozen years selling business and technology books, a more specialized area, via subscription.  It has a number of tiered plans starting at $28/month.  They have a catalog of 32,000 books.  They may be okay, but what do you do with Oyster and its 100,000 trade books, where users have unlimited access for a paltry $9.95/month—or the equivalent of two trips to Starbucks.

Scribd tops that with a $9/month offering its tens of thousands of books—unlimited access.  The selection, for now, includes Harper Collins' backlist plus indie house titles.

E-Reatah offers 90,000 titles but thankfully limits use to two books per month, depending on the plan.  It has tiered plans starting at $15/month.  They still threaten the written word economy, but offend me the least.

The thing I hate more than these give-it-all-away plans is authors and publishers literally giving books away.  Too many are giving away free downloads of  entire books, desperately hoping they will find new readers who will love a discovered author so much that they will suddenly buy their books.

It works, at times, exactly as they hoped.  But the bigger industry issue is that we are training consumers to look for FREE books or to feed off these minimally-priced monthly plans.  By doing so we have gotten consumers used to paying little or nothing for a book.  The industry is suffering from deflation, and putting itself in line for a book depression.

The library is the great economic equalizer.  If you’re poor or on a limited income, use the library to gain access to books.  I love the library.  But the marketplace mustn’t turn itself into a bazaar or a swapshop flea market.

What it comes down to is this:

1.      The monthly pricing plans take away from individual book sales and instead groups books together—good and bad, old and new.

2.      It takes away from publisher and author identities.

3.      It reduces how we see books -- they will be commoditized.

4.      It will limit price growth for single books.

5.      It will be the final nail to B&N and many bookstores.

6.      It will reduce the quality of books produced. It will lead to a decrease in the number of titles published. It will cause publishers to shut down. It will lead to fewer authors getting published.

7.      These unlimited plans—coupled with free books—will not allow any time for those who may want to buy a book not on the plan.  They simply lack mind capacity or time of day to read any more.

It’s bad enough Amazon undercuts the entire industry but the real bomb would be to allow the Netflixation of the book industry to soar.

Any questions?  Any doubts?  I implore the major publishers to avoid participating in their own demise.  If you truly love books and hold the written word n high regard, you will not support a pricing plan that makes books irrelevant.

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Brian Feinblum’s views, opinions, and ideas expressed in this blog are his alone and not that of his employer, the nation’s largest book promoter. You can follow him on Twitter @theprexpert and email him at brianfeinblum@gmail.com. He feels more important when discussed in the third-person. This is copyrighted by BookMarketingBuzzBlog © 2013

3 comments:

  1. I had no idea what Netflix was planning. Life is certainly changing and not always in a good way. I know of many people that no longer have a satellite or cable provider, they are going with Hulu or another comparable to watch shows on a computer. Many people have dropped land-lines in favor of just a cell phone. Now, book stores and books are in peril because of Netflex. I read some books on my Google Nexus. I prefer a "real" book. I'm old school, I actually like the smell of books and turning the pages is a joy. Of course my bookshelves are over flowing. I plan to post about this "Netflix" crisis on my blog.

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    1. I don't think Netflix is moving into bookselling -- this post is talking about publishers adopting the Netflix business model.

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  2. These are pedestrian insights. Using Vegas buffets as an analogy is false because buffets aren't cheap anymore.Gaming can't carry the whole resort anymore and I lived in Vegas from 1987 until 1996, working mostly as a dice dealer. I was back in 2011, and nothing was cheap anymore. There may have been a few room deals but nothing like it was in the past. They over built there. You shouldn't use analogies about something you know nothing about. That's lazy thinking.
    And finally--me no care. I don't care what happens to hard print. I had some paid periodical credits, I was self published, I am now published by a small start up and I'll tell you this: I haven't broken even yet.My book twice broke the Kindle top 100. I was on the Smashwords top ten for over a month. My book shortlisted in the SFU/Anvil Press 1st Book Contest.iIt has a good cover, it has a good title. it is a well written, unique and well proofed and edited book. And when it's all said and done, I couldn't have picked a worse time to try and move a book. Sick of writers, sick of this business, sick of the internet. If Michael Signorelli has to move to Trenton NJ, I don't care.

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