January 22, 2010

Delaying e-books: Does it work?


Some just released results from the Book Industry Study Group (BSIG) survey of “consumer attitudes toward e-book reading” confirm what some of America’s largest publishers have predicted and feared: that a majority of e-book consumers will currently choose a lower priced e-book over its print counterpart, even given the current problems with e-readers. With some 20 percent of e-book savvy consumers having stopped purchasing print books in the past twelve months (according to the study), it’s a huge issue for the entire business since only one player currently appears willing to deeply discount e-books: Amazon, which sells most new trade tiles as $9.99 e-books, despite the fact that the company loses money on many such sales.

The risks here are manifold, but the central fear is that of monopsony, control of a market by a single buyer. Under the current system Amazon would potentially be able to dictate prices (pushing wholesale rates below $9.99), build a near-monopoly market share, and—in a true innovation in Amazon’s selling of cheap e-books—make money. And there are of course other risks: parts of the book industry could disintegrate as a result of the quick rise of Amazon as a mega e-book retailer, leaving big publishers without their tried and true methods for creating print blockbusters.

But the large publishers’ chief strategy for preventing such a disaster, delaying of some e-books until months after their print release, a step taken by Simon and Schuster, HarperCollins, Macmillian, Penguin, and Hachette—fails to account for something else altogether: that some consumers are very willing to wait. “Some 30 percent” of those surveyed in the BISG study said they “would wait up to three months to purchase the e-book edition of a book by their favorite author.” Some consumers have always opted to delay buying (paperback releases are the obvious example, but think also of second run movies, as well as cable release windows, video rentals, and bargain bin LPs). But here consumers have said that they are willing to wait three months, even for books by their favorite writers. One wonders how long such consumers would be willing to wait for these books.

The new BISG survey (though now only partially available, and only as a press release) points to a serious problem with the big publishers’ current moves to disrupt the trend toward cheap new releases. It seems, for one, that delaying isn’t working—customers are simply waiting. (Some critics of the delay tactics have even taken to bullying, as we wrote here.) And it seems also that consumers really are fleeing toward e-readers as well as reading new books on their computers, despite the lack of some high-profile new releases.

So what’s the next move? It doesn’t seem like there’s much of a plan. But with recent reports of ongoing publisher negotiations with Apple over distribution via its forthcoming tablet, maybe the delaying tactics are the main attraction for now, and it’s the Apple gamechanger that New York’s biggest publishers have been waiting for. Some sign of this is breaking news that Amazon, in a move widely assumed to be in reaction to publisher dealings with Apple, is now offering much better terms to publishers on e-book sales. (They have also announced that they will allow developers to create apps for Kindle.) Publishers will now get about 70 percent of the sale price (about what Apple is said to be offering) but only if the book retails for between $2.99 and $9.99. The move confirms that Amazon wants to set price, but it also shows that the company feels threatened.

Kelly Burdick is the executive editor of Melville House.