Here’s another one of those cases where publishers could stand to learn from the music industry. The Guardian reports that Universal and Sony Music have decided to start selling songs immediately after they go on the air.
Formerly, songs could get as much as six weeks of radio play, called “setting up” a record, before being released for sale to consumers. This would let songs debut on sales charts in high positions, by building demand. However, times have changed considerably since the days when the only way to hear music you didn’t own was over the radio.
Record label execs report finding that interest in the songs, as shown by Google and iTunes search frequency, actually peaked two weeks before the song became available for sale—meaning by the time it was on sale, potential customers were already bored with it (or had already pirated it).
Sony, which will start the "on air, on sale" policy simultaneously with Universal next month, agreed that the old approach was no longer relevant in an age where, according to a spokesman for the music major, "people want instant gratification".
Now if only the publishing industry would pay attention to this, instead of “windowing” the release of e-books for weeks or months after the print version comes out.
(Found via Ars Technica.)
Some of us have always published our electronic versions at or before publication of paper versions. Please remember that many publishers survive by practicing price discrimination. Buyers of hardback often don’t care about the hard cardboard, they care about the content (which is why you can often find old best-sellers remaindered for a few bucks). If these publishers publish electronically at the same time as they come out with hardbacks, they will almost certainly need to set high prices for electronic content if they want to achieve the same price discrimination goals. Hard cardboard allows easier price discrimination because publishers don’t have to lower list prices, simply come out with a soft cardboard cover which they can position as a different product. We can’t do this with eBooks.
If publishers can’t maintain price discrimination, I think you’ll see some dramatic changes, not all for the better, in the world of books.
I am not sure I see the validity of your comment Rob. Perhaps there is a significant difference between the big publishers and the small indies and you are only referring to the latter ?
It only stands up, surely, if we accept that the pricing of the publishers eBooks is based on cost plus a margin decided by the needs of the business. In truth I would suggest that the pricing by the big players of their eBooks is still based on high opportunity pricing derived from the prices they have managed to charge for the paper versions. Hence there is no shortfall to be compensated for if the hard back business shrinks.
I can see how your case would be true if a small publisher was publishing it’s eBooks, paperbacks and hardbacks and pricing each as part of a coherent strategy aimed at a cost plus margin basis. A drop in one format might well mandate an increase in the others. Are any of the small publishers operating such a strategy right now ?
As someone outside the industry it looks from the outside as if none of these companies is really straddling the digital-paper format in that way. I stand to be corrected of course and apologise if my knowledge is so limited.
It’s primarily, perhaps exclusively, the big publishers who use time elasticity to achieve their revenue goals. Small publishers have little opportunity to use these pricing models. Few people are waiting for the latest Rob Preece novel, while many are waiting for the next Stephen King or Nora Roberts. The entire hardback business model is based on premium pricing for those who are unwilling to wait for the mass market paperback. (Indeed, until recently, it was common for paperbacks to be offered by different publishers than the hardbacks).
To say that big publishers set their eBook prices based on their paper prices is true to an extent, but their paper prices are based on something and I assure you it isn’t the price of paper. Hardback publishers pay high advances and need to recover these through premium prices. You don’t have to buy their books–I certainly buy few hardbacks. But there clearly are those who are willing to pay the premium and that’s what their business is based on. To say they should release eBooks simultaneously with hardback, and also charge reasonable prices for those eBooks strikes at their very business model, which is why they’ve been reluctant to go that way. You can have cheap eBooks later, or expensive eBooks now, but getting cheap eBooks now means Stephen King doesn’t get his advance…which means he goes to another publisher.
Just to be clear, I publish eBooks first, paper second. I also set reasonable prices for my books. Stephen King is not waiting in line to publish with me.
Thanks for that Rob. Very valuable info. It appears that it marks the whole hardback business model as separate from the core publishing of paperbacks and now eBooks because it is based on the early release of a premium priced product which finances big advances. Understood.
If the publishers publish eBooks at the same time, I can see they would have to decide whether the big advances are history, or charge a much higher price for the eBooks to compensate for the drop in sales of the expensive hard backs in order to pay the advances. I get it.
If eBooks were to be published in parallel to the hardbacks, the eBooks of a new novel by a famous author, who gets a big advance, would need to be priced at $15-$20 for three months before dropping to $9, say.
The concern I would have, were I a publisher or eRetailer, is that the high price would be a driver for impatient readers to download illegal copies, and those sales would be lost by the time the price drops.
In the days of paper, exorbitant prices for hard backs didn’t carry any major risks. People either shelled out or waited. And the hardbacks acted as marketing tools. In the world of eBooks however, imho, price is going to be THE key driver and the risk level is high.
On that basis therefore it would appear that the whole hardback business model has no future.