Macmillan trying to sell readers 'hardcover' ebooks
John Siracusa drew my attention to an article by Macmillan CEO John Sargent on the agency model, availability and price, in which he says that the company actually plans to keep their hardcover/paperback separation even while selling ebooks. While new hardcover ebooks will sell for $14.99 and $12.99 ("a tremendous discount from the price of the printed hardcover books"), the company will aim to sell "ebook editions of paperback new releases" for as low as $6.99. As Siracusa goes on to say, "now let us all sit back and ponder the concept of 'paperback' and 'hardcover' ebooks."
Macmillan is sticking with an old pricing scheme even in a brand new marketplace. Just what exactly makes the difference between a "hardcover ebook" and a "paperback ebook"? Read on to find out.
The first question is: "Why would someone buy a hardcover book?" I can only think of three reasons (Are there other reasons? There may be, I just can't think of any):
You're a big fan of {insert author's name here} and want to read his/her newest book as soon as it comes out.
You're a collector and prefer the perceived increased "value" of a hardcover.
You like the slightly bigger print/additional whitespace that you often get with a hardcover compared to a paperback.
Second question: Which of those reasons also apply to ebooks?
Certainly #1 applies. There's no faster way to get a book than to download it (assuming both are available on the same day, something else that Macmillan says they will be doing from now on).
On the other hand, #2 certainly does not apply. There's no perceived value of a "first edition" ebook. You're not going to display it on your bookshelf and of course you can't bring it to a book signing. You also can't loan it to your friend or donate it to the library.
What about #3? I assume all ebook readers offer variable font sizing, it seems like one of the most obvious features they could offer. In fact, you can probably make the print larger than the printed hardcover. #3 seems like a reason to prefer an ebook instead of a hardcover.
Third question: When was the last time you paid "list price" for a book? Macmillan says "printed hardcover books...generally range from $28.00 to $24.00." That's what I mean by "list price." I bet very few people ever pay that price. Brick & mortar bookstores have traditionally sold them for much less. It seems like Borders/Barnes & Noble have a "25% off" sticker for every new book that comes out.
I'll tell you when the last time I paid "list price": I wanted to get a signed copy of the latest Hodgman book, and the only way to do that was to order it from Politics & Prose who were only too happy to sell me a signed copy for the full list price, plus shipping. I think I paid about $30 for a book I could have ordered from Amazon for about $12-15.
I'm going to guess you haven't paid "list price" for many books since you first found out about Amazon.com.
Macmillan seems to have done to Amazon what the music industry eventually did to Apple and the iTunes store. Apple created the iTunes store and sold songs for 99¢, doing the most to effect music sales since Napster was first released. Over 10 billion songs have been downloaded legally since (not to mention all those sold through Amazon, etc.).
The music industry absolutely loved it... and wanted to change more per song. They eventually leveraged Amazon.com's MP3 store against Apple to force Apple to allow for variable pricing. $1.29 for "popular", 99¢ for "less popular" and 69¢ for some mythical level of songs, presumably ones no one wants to buy at all, i.e. "Let the Eagle Soar" by John Ashcroft.
(Aside: Almost 5 years later "Price as Signal" by Joel Spolsky remains the smartest thing I've read about what variable pricing means to the music business and why they wanted it.)
The music industry eventually got its way. They are now selling songs for $1.29 on iTunes, and guess what?! Higher prices mean slower sales. I know! Who would have guessed?!
Amazon created the Kindle and sold books for $9.99. The book industry absolutely loved it... and wanted to charge more per book. Publishers also didn't want the Kindle to be able to read books aloud because, well, obviously that was going to hurt audiobook sales, and where's the fun in not being able to charge someone multiple times for the same content?! Do you think they've learned nothing from George Lucas? Ironically, Amazon was leveraged by the announcement of Apple's iPad (turnabout is fair play). Apple, which fought long and hard for standardized pricing for music, easily accepted variable pricing for books.
Is this really all that different than Apple releasing the iPhone for $600 and then dropping the price to $400?
Yes and no.
Obviously Apple realized that it could profit by selling iPhones for more initially and then could boost sales by dropping the price after the early adopters had spent their money. In that sense it's much like someone who is going to buy the new Christopher Moore book the day that it comes out.
One difference is that book publishers are dangling by a hairy financial thread, whereas Apple has enough money to buy Canada and turn it into Steve Jobs' summer house.
Apple was also the only company in the world selling the iPhone, and even $600 was a "competitive" price. Those who bought when it came out were able to use it on a daily basis for two months before the price dropped to $400. Those who buy an ebook when it first comes out get to read it once and then, well, keep it in case they ever decide to read it again. While book publishers are the only ones selling particular books by particular authors, there are scads of other publishers, a seemingly endless supply of writers, and this thing called "the Interwebnet" which is offering people plenty to read, for free.
When you are buying a hardcover book, you're getting something which is clearly different than a paperback. It's also easy to argue that you are getting something better than a paperback (despite the fact that some people might prefer paperbacks to hardcover). That's why a hardcover is worth more than a paperback.
Why is an ebook worth more than the same ebook, months later? It isn't.
The most logical thing for ebook users to do is put a note in their calendars to remind them to buy the book in six months instead of when it comes out. It's not as if they will have trouble finding anything to read in the meantime.
The nearest comparison that I can make is to apps that I've purchased from the App Store. I've purchased several which later dropped their price significantly, e.g. $10 to $4, $5 to $3, etc. The "actual dollar amount" may not seem like that much, but percentage-wise, it's a big cut. The effect that it has had on me is pretty simple: I now wait before buying a new app. Not only do I get to hear other people review it (since there are still no "demo" versions available) but I also get to see if the price drops. Net result? Fewer impulse buys, and almost certainly fewer purchases overall.
It seems to me that is exactly what book publishers don't want to do: give people a reason to wait longer to buy books and a reason to resist impulse purchases. I'm sure publishing executives are worried about ebook sales cannibalizing more profitable hardcover sales, but I wonder if these aren't two separate markets. People who want to buy ebooks have made a conscious decision to not purchase physical books.
Macmillan seems to want to go about business using the same rules and models that have been in place: "buy early, pay more." But part of that equation has always been "buy early, pay more, get something better." Charging more for the same ebook completely misses the third part of that equation.
