images.jpegPublishing consultant Mike Shatzkin made an interesting observation yesterday in an exchange that he and I had on his IdeaLog blog:

We should long remember that in the Spring and early Summer of 2010, prices of ebooks actually went *up*. I don’t think we’ll look back five years from now and see that as a frequent occurrence.

He and I agree that rising ebook prices probably won’t be “a frequent occurrence” over the next five years. But even though he was basing the comment in part on my data showing that the number of Kindle store bestsellers priced above $10 had grown by over 50 percent in the last few weeks, I have to admit that I am still wondering if it is really true that ebook prices are going up.

The latest head-scratching moment came with today’s release of April book sales numbers by the Association of American Publishers (AAP):

E-book sales jumped up 127.4 percent for the month ($27.4 million), reflecting an increase of 217.3 percent for the year-to-date.

That sounds impressive, but here at Kindle Nation we try to make a point of looking inside and behind the numbers, and pardon me for a little sarcasm in the first of these, but two tweets I posted earlier this afternoon kind of sum up why I’m scratching my head:

WindwalkerHere: Where’s the iPad bounce here? Don’t higher prices help sales? RT @sarahw 2010 AAP e-book sales: Jan $31.9M Feb $28.9M Mar $28.5M Apr $27.4M
WindwalkerHere: Things that make you go hmm. $27.5M AAP Apr ebook sales #; at 11-22% mkt share iBooks got $3-6M for 2.5 million units? Lots of freebies, eh?

You would think that it’s a sign that ebook prices are going up when the number of Kindle Store bestsellers climbs over $10 climbs from 17 on May 22 to 26 on June 14, but there are other signs here that the average price paid for ebooks may even be headed in the other, i.e., downward, direction.

Let’s try to line up the data points here:

The agency price-fixing model and its concomitant higher ebook prices took effect April 1.

The iPad was released on April 3 and sold a million units in April and another million in May.

Steve Jobs announced that there were 5 million ebooks downloaded from the iBooks Store by early June, or about 2.5 ebooks per iPad.

Jobs said in early June that iBooks had Apple’s five largest iBooks vendor publishers showed iBooks to have a 22% share of their total ebook sales, which we extrapolated might mean that Apple had approximately 10 to 12 percent of the total ebook market.

Given the popularity of the iPad and its iBooks and Kindle apps, I am surprised that total ebook sales actually declined from $28.5 million in March to $27.4 million in April.

If iBooks had 12% of the total ebook market in April, that would translate into about $3 million of the ebook sales tracked by AAP.

If, to make a very rough guesstimate, 1.5 million of those first 5 million iBooks downloads (for April and May) came in April, then the average retail price paid for an iBooks download in April would have been about $2. To come at the same equation from a different direction, if iBooks received the aforementioned $3 million in revenue from 300,000 paid books that had an average price of $10, that would mean (for the purposes of this illustrative model) that 1.2 million of the ebooks downloaded in April from the iBooks store, or about 80 percent, were free.

All of this, of course, is highly speculative, and it is unlikely that the principals will give us hard numbers with which to fine-tune the analysis. But if any of this interests you, and you try to work your way with me through the numbers that we do have, I’ll be surprised if you are not also left wondering whether ebook prices, at the most meaningful level of the average price paid for actual transactions, are going up or down.

So, with all of this, what do I make of the data I presented yesterday showing that the number of high-priced books in the Kindle Store bestseller list is increasing significantly? I’m still scratching my head, to tell you the truth, but I’ll make three observations:

We do know that the overall number of titles in the Kindle Store is growing dramatically month over month, and that the Kindle Store is long-tail heaven for its search and browse infrastructure and, well, it’s highly efficient use of shelf space. Consequently I would not be surprised to find that the overall sales footprint of the top 100 paid bestsellers in the Kindle Store is in a steady state of decline relative to the sales footprint of the total Kindle catalog of over 600,000 titles, due in part to the higher prices of many bestsellers.

Ebook buyers and readers are certainly driven by content and quality and continue to show willingness to buy some books at higher price points, but if the more general patterns involve greater customer price-consciousness, it’s an ominous sign for the agency model publishers. Given the huge availability of free books for the Kindle, the iPad, the Nook, and all the other Kindle-compatible devices, as well as hundreds of thousands of titles priced below $9.99, it seems likely that customers are also feeling more and more empowered to assert their own views of reasonable pricing on the marketplace.

The bottom line, I think, is that authors, publishers, and retailers will find ways to increase ebook sales, and price competition is likely to be restored to the ebook marketplace well within the five-year time frame mentioned by Mike Shatzkin.

Editor’s Note: the above is reprinted, with permission, from Stephen Windwalker’s Kindle Nation Daily. PB


  1. Let’s see, now: we’re seeing steady year-to-year growth in (tracked) ebook sales revenue and a steady month-tomonth *decline* in ebook sales revenue going back to january.

    Three possibilities come to mind:
    1- ebooks are developing seasonality (which should show a spike in May-june)
    2- ebook sales volume is migrating towards lower priced books and the year-to-year growth is going to slow down and should show up in the year-to-year numbers for next february.
    3- ebook sales are migrating to non-tracked vendors in recent months, possibly because customers are looking for alternatives to price-fixed books. Again, tracked year-to-year sales growth should start showing a decline by next spring.
    4- higher prices are leading to lower ebook sales volume, not just lower priced sales. Which is the intent of the price fixers; slow ebook sales overall. Of course, there is no guarantee that a slowdown of ebook sales is going to be universal (it might be limited to the offerings of the Price-Fix-Five) or that a slowdown of ebook sales means a slowdown of ebook adoption; it might mean a migration of (formerly) paying customers to libraries, public domain repositories, or (gulp!) pirate editions.

    Too many options, too little data.
    But also: too many ways Price-fixing blows up on its supporters and two few ways (if any) the get their desired result.

    I think its going to take a couple of quarters to see how the wind is really blowing. Of course, if RH keeps posting 40% higher sales vs the price fixers…


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