Part of O’Reilly’s Tools for Change mini-con, Oct 2009.
Is $9.99 the new “normal” for ebook pricing? Or is the sweet spot closer to $3.99, or $1.99, through the iTunes store? As the age of ebooks dawns, publishers are struggling to find pricing that works for their customers and their business models. It’s a time of transition fraught with challenges and opportunities.
Moderator: Joe Wikert (O’Reilly)
Speakers: Hugh McGuire (BookOven/LibriVox), Neelan Choksi (Lexcycle–Stanza), Trip Adler (Scribd), Tammy Nam (Scribd), Michael Tamblyn (Shortcovers)
JW introduced the speakers.
Correlation between pricing and uptake? Tamblyn: many variables around consumer comfort level.
Adler: price per unit can go as high as $5000; eventually the market will sort itself out.
Nam: sometimes prices vary unexpectedly and very quickly as sellers try to determine what consumers will take.
Tamblyn: there’s a capability gap between e- and print: can’t lend, must trust vendor re: future availability, etc., and then the consumer walks the value down from the print price point to something lower in terms of what consumer will tolerate. Straight text-to-epub conversions will probably always be seen as things that “should” be cheaper (no added value). Textbooks are an opportunity to go beyond print abilities, but for fiction one doesn’t generally want extra images, a walking tour, and so on.
McGuire: some interesting enhancements (Bunny Monroe [?] had author extras): needs to be a value the consumer wants to see, and balance that against production costs.
Tamblyn: but then you’re a multimedia producer instead of a textbook publisher or a fiction publisher, which is a slightly different thing.
Wikert: “augmented reality” is gaining some traction—look into it
McGuire: came into this set of markets via LibriVox.org, which makes free audiobooks from public-domain texts. Digital enables new kinds of interaction with text (e.g., consumer listening to a book that they might not have read off a page). Some new ways don’t particularly cost extra.
McGuire is big e-book reader, but often buys the printed version afterwards.
Wikert: how do we use video, e.g., to create a richer product? Not convinced we’re all ready to overhaul our production models.
McGuire: has experimented with some different models. Wants to see bundling: different formats sold together. But it’s also hard to see what the results are (and then to adjust to them).
Wikert: O’Reilly does some bundling: .mobi and .epub formats sold together, though print is separate, and consumers seem to like it.
Tamblyn: why not bundle electronic, print, and audio together? Can pick up same book where you left off as you move to car for commute, leave car for office coffee break. Much better experience for reader perspective for book to follow the reader around in different contexts.
McGuire: then also one finishes the book more quickly and can start another…. Time is the problem, more than price.
Wikert: convenience is also a big deal: Kindle / iPhone synchronizing.
Choksi: for each activity, have to look at genre, almost at individual title, to see what makes sense for that item. Lexcycle doesn’t do any retail on its own. Consider dynamic pricing: cheaper way of conveying content = paperback versus hardcover. For ebooks, little friction—perhaps initially priced at $50 because diehard fans want to read immediately; every few days it drops a bit, perhaps all the way down to free.
Wikert: has rewards program worked well?
Choksi: for that particular catalog [I missed an antecedent!], yes—I have $x rewards and need to spend it, and reminders from promotional e-mails reinforce it; works well for a particular segment of audience who’s interested in getting a particular price point.
Nam: Scribd uses dynamic pricing (calls it automated pricing)—sets price for you based on algorithms. Many set their own pricing, but when they’re more comfortable with automated pricing, they’ll probably switch. [Her connection had issues—missed the rest of what sounded v. interesting.]
Wikert: let’s talk about free things. Sometimes consumers grab them but don’t listen/read/play back.
McGuire: it’s approached as though it were a moral question; Cory Doctorow talks about advantage from having given away books early on, and people say it’s because he was little-known; now they say it’s because he has the notoriety of giving things away! As publishers become more comfortable with idea that giving some things away can generate more revenue overall, they’ll experiment more. “Free” will always drive a lot of interest; key is figuring out how to sustain that interest for a particular writer or publisher. The more you get people engaged in a project early on, the more buy-in you get (they have a stake in the project’s success and help to spread word of mouth).
Choksi: the publishers who started with free books on Stanza last year have continued to offer some. Not big-name authors but someone in the middle: offer first book in a series from backlist for free, to introduce audience to that author, and hope it drives sales of other books by that author. Often it’s made sales of subseq books jump tenfold. Seems to a case where “free” does have the desired effect.
Wikert: one wonders how sustainable that is.
Choksi: of course. Chris Anderson’s book talks about this, re: introducing to a particular author or series of books. This is the same model as in open-source software: monetization is directed towards the slice of audience that is willing to pay.
Nam: experiment with backlist book 15+ years old. [bah, connection too broken]
Tamblyn: retail is several things, and free is several kinds of inducement / gateway. When they have a great new free title, aggregate sales go up because consumers return; seems to work better on newer titles, not things deep in the public domain. Looking at how conversion works—some see it as a platform for consuming free content, full stop, and others gain a comfort zone and continue to becoming paying customers. Another aspect of “free” is sample size—first three chapters, e.g., like flipping through printed pages in physical bookshop—so what’s the “right” sample to offer, should it be a random chapter in the middle, etc.
Wikert: likes when author gets to help set sample as well, re: good will and well-chosen pieces. [Possibly I garbled that.]
Tamblyn: yes, and publishers are trying to be more flexible re: rights grants they get from authors.
McGuire: another value of “free”—LibriVox has never spent money on marketing. Look at Web infrastructure: people are likely to link to things that’re free, which boosts Google page rank on results and general visibility.
Choksi: a balancing view: crucial perhaps to charge something so that the end user values the item more (e.g. video downloads), but to keep consumer’s cost low so that piracy doesn’t take over.
Wikert: has a lot of free iPhone apps—and they go unused. If there’s a price associated, the customer often feels more of an engagement factor.
Choksi: also, for movie studios (video dl again), it’s possible to establish relationships with customers directly. Might be a model.
Wikert: what kind of experimentation has each panelist done, or seen, that ties print content with electronic content?
McGuire: access to both print and audio, or both print and e-text, means finishing sooner. Issue again of maximizing use of consumer’s time.
Nam: we’ll see more unexpected experiments, e.g. authors going from e-text to hardcover print-on-demand, or giving chapters away individually and packaging it later for a fee. Inversions. People who aren’t well known can generate audience based on niche interests, then gain leverage for a print deal.
Tamblyn: bundling has useful implications for time-sensitive content—release faster so that consumer can read analysis of something nearly in real time: print can’t keep up, but e-text and audio can if served digitally. It doesn’t work for all kinds of content, of course.
Choksi: tried an ill-conceived experiment w/ Obama book, heavy promotion around time of inauguration; sales were low, and user feedback said that Obama was such a part of history that they wanted a physical book on their shelves. Added option to buy a print version, and uptake of that was low, too…. Most users on Stanza want to read things on Stanza. Every failed experiment is a lesson learned. With some genres, bundle would make sense, esp. anything work-related (legal, software industry)—ability to look things up—as long as pricing levels can be worked out.
Wikert: back to dynamic pricing. Tricky in print world online, almost impossible in brick/mortar space. Are prices fairly stable on panelists’ services, or is there a lot of movement? Lessons learned?
Nam: most pricing is set by authors, as noted previously, but she expects them to take advantage of the community eventually. Don’t have data to share at this time, but fluctuates based on popularity, other similar things being sold at the same time, holiday / three-day weekend event. Some authors don’t understand general pricing models; because Scribd’s automatic pricing is community-keyed, what they’d recommend might be very different from those models. There’s some very wide pricing variance.
Wikert: Q&A from attendees. How do you monetize mobile use?
Tamblyn: with mobile, user finds smaller pockets in which to read a full-length book—commute, lunch, 10 p.m. to midnight. Best to let user discover as easily as possible the next book to start.
McGuire: how many printed books do people buy and not read? Would the # drop for electronic books if test snippets are easier to get?
Choksi: user POV (self): about the same, since ebooks are much easier to obtain (i.e., balances out), so it’s much like impulse airport purchase before a flight one sleeps through.
Nam: interesting opportunity to provide metrics back to producers. Lots of people looked at Chris Anderson’s free book—250,000 hits—but avg duration was under ten minutes; a few commented that they’d go and buy a physical copy to read through.
Tamblyn: more likely to return to a book he stopped reading if multiple formats are following him around (versus printed book that sat on nighttable and moved to shelf).
Wikert: another q from audience: iTunes model of buying pieces of book, not whole thing at once: does that have potential, or is it something more for the music world?
Tamblyn: Shortcovers sees that user would rather buy whole thing—chapters aren’t like songs (whereas radio plays songs, not albums).
McGuire: yes, but academic context with textbook / course-packs is divisible.
Nam: agreed that certain books / types thereof can be sliced up more readily. Thrillers might be sliceable, e.g.
Wikert: difficulty of secondhand / used ebooks: can’t pass a book on to someone else and recoup part of purchase cost. Do panelists see a future in which such a market (secondhand) could exist?
Choksi: paying attention to music startups with secondhand .mp3 files to see how they emerge. Also, sharing a book with one or two other people (rec rather than something you want to get rid of)—we’ll see some experimentation. Do you license an ebook or own it?—implications for whether user can sell it on. Ebooks are in their teen years, and they and their models will continue to develop. Possibly there’ll be one price point for an item one cannot sell on, and a higher price point for a transferable version of the same item.
Wikert: consider situation in which a student takes really good notes in a class using a certain textbook, and can sell it on to someone else with the notes included—interesting to tie the student into the revenue stream at that point.