Thursday, February 18, 2010

The E-book Price War Isn’t Over Yet

We have focused a great deal, both in this blog and in recent editions of the PPS Monthly Member Newsletter, on the unprecedented pricing challenges faced by pricers in the EBook industry.

From our January Newsletter:
The transition of traditional media to electronic delivery presents pricers with new challenges concerning customer price sensitivity and product adoption. Publishers in the EBook industry are currently navigating these challenges and attempting to hone in on profitable pricing strategies.

The publishing industry is right to be concerned over $9.99 price tags for bestselling e-books. One price has the potential to disrupt the current publishing model, as well as change how books are marketed and priced in the future. The good news is that pricing techniques can be used to effectively manage this transition.

And our November Newsletter:
"As yet there are no established standards for eBook sales. So can publishers and bookstores in the initial phase of the market develop on a Greenfield site? As much as possible should be done so that eBooks, in addition to bringing joy to the reader, also earn money. Publishers and retailers must not repeat the many pricing mistakes made with traditional books in the past. Precedents for creating revenue opportunities in the online sector are, unfortunately, not always successful. On launch, many newspaper and magazine publishers missed the opportunity to establish prices for their online editions. The resulting consequence is that now consumers widely consider information on the internet today to be free. Further, similarities can be drawn to the digital music platform and music downloads to portable devices."

An article today at gave an interesting update (and outsider's perspective on the ongoing price war, which I thought would be interesting for pricers following this developing case study in new product pricing:
As Apple announced its iPad and iBookstore, there was a shift of momentum in the book publishing industry. Amazon’s strategy for selling e-books on the Kindle was to sell them at a discounted price, such as $9.99, but Apple, somewhat surprisingly, announced higher book prices for titles bought through the iBookstore.

Soon, however, the big publishers such as Macmillan pressured Amazon into letting them sell books through an agency pricing model, which essentially means more money to them, but higher book prices – $12.99 or $14.99 – for the end users.

Read the full story here.

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