Can $4.99 e-bestsellers help ’save’ the book publishing industry?
"Books cost too much." That was one of the slogans of Crown Books, an aggressive price-combatant, which, however, went bankrupt in the end despite some glowing press reports. Was the real problem that its books didn’t cost enough? Or was Crown—the setting for the Jimmy Carter book signing shown in this photo—on the right path?
Former Wall Street analyst Henry Blodget might have disagreed with Crown on hardback prices—he thinks such p-books "should cost $25"—but these days he’s calling for a cost of "$4.99 for a first-run bestseller, downloadable to your Kindle, PC, or iPod–or simply readable on the Internet. The retailer keeps $1 or so, the author gets $1 or so, and the publisher takes home about $3. Some of that goes to marketing and some to overhead. And then you’re left with the typical publisher profit of less than $1 (no returns, manufacturing, or distribution costs).
More revenue in the end?
"But," he says, "here’s what happens: book sales suddenly go through the roof," because "you’ve made buying a book almost a no-never-mind. At $4.99, buying a book is like buying a couple of magazines: you can buy them on a whim and feel free to skim them. At $25, meanwhile, buying a book is like buying a two-pound guilt trip: Until you slog your way through it, you don’t deserve to buy another one.
"With a similar margin per book sold, cannibalization wouldn’t matter. If publishers really wanted to get aggressive, however, they could cut book prices to, say, $1.99, compress all the revenue splits, and watch sales truly explode. Especially when they made available the out-of-print catalogs."
Potter not a savior
Justifying his proposal, Blodget notes: "Despite Harry Potter selling 8.3 million copies in 24 hours, book publishers only sold 0.9% more books in 2007 than 2006—less than the country’s rate of population growth."
So, gang, whether you’re a book pro or outside the industry, what do you think?
Related: BooksForABuck owner: The lowdown on our business model and The e-book pricing debate: ‘Why are their books so cheap?’, as well as as E vs. P Prices: How heavily to discount e-books?
Technorati Tags: Henry Blodget,Crown Books
May 31st, 2008 at 1:51 pm
DANIEL UDEN COMMENT, MAY 31: For this kind low end selling you need the marginal cost of production and distribution to go way below low, and in todays market with 10 different deliberatly incompatible formats and resellers trying to squeze the market you get way to much time consumption in the negotiation and preperation to get it off the ground without the demand for huge sales thats just not posible until we get a market where most consumers used computers as a kid.
The focus on e-book readers over browser based subscription services is probably also an hinder.