David Pakman warns book publishers on pricing peril
Former eMusic boss David Pakman has penned a blog post warning book publishers not to repeat past mistakes of the music industry when it comes to setting the prices of e-books.
The post comes as Amazon faces a battle with leading publishers, who want to charge more for e-books than the flat $9.99 it’s been charging on the store for its Kindle e-reader. Hachette and Macmillan have already announced plans to switch to an ‘agency model’ where they control the prices.
Pakman says the publishers’ arguments for charging more for e-books are all about self-interest:
“They offer many unreasonable arguments against this: books are “worth” more, authors won’t make enough money, it’s bad for the industry, etc. These are not economic arguments, but are meant to maintain the status quo economics as long as possible. And it’s ultimately bad for them.”
He goes on to make the comparison with the music industry explicit:
“The music industry has held firm that music is “worth” $1 – $1.30 per song, regardless of the track. For 7 years, they would not experiment with pricing under $1… But is all music really worth $1 a song? No, it is not. We know hundreds of thousands of tracks have sold 10 or fewer units digitally. That is the market telling you something.”
And if that wasn’t clear enough, he finishes off the post with this stark warning:
“Trying to play hardball with the market ultimately won’t work. See the music industry whose sales are now $20B worldwide, down from $40B, and I think are going much closer to $10B – $12B before finding bottom.”
That said, it’s not as if the labels have ended up falling into line behind lower pricing. In fact, it’s the opposite: the major labels succeeded in convincing Apple to abandon its flat $0.99 price point for digital tracks in favour of variable pricing, including higher priced songs.
Tags: Amazon, David Pakman
February 6th, 2010 at 3:18 pm
They want to charge more than $9.99 for e-books? I very very rarely pay more than that for a _REAL_ book, and only then if it’s a favourite author and I want to get the hardback as soon as possible, or if it’s some huge technical non-fiction work. Normally I just wait until it’s down to about $7-$10 in paperback. For e-books I’m expecting to pay more like a dollar or two less now they don’t have to use so many trees/trucks/warehouses/etc.