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Some believe that ebooks, and accompanying ebook readers like the Kindle, are the future of print publishing. But for now, it appears that publishers are more likely to see them as a potential industry-killer.

Case in point: two large publishers, Simon & Schuster and Hachette Book Group, announced the other day that they'd delay releasing ebook versions of some new books for four months after the hardcovers hit the shelves. The reason? It's one way to fight back against the lowly prices seen in the ebook market, where most bestsellers now cost less than $10.

Simon & Schuster CEO Carolyn Reidy sees the delay as a business necessity:

The right place for the e-book is after the hardcover but before the paperback. We believe some people will be disappointed. But with new [electronic] readers coming and sales booming, we need to do this now, before the installed base of e-book reading devices gets to a size where doing it would be impossible.

But not everyone agrees with Reidy and her fellow book publishing execs. One of those people is Seth Godin. He calls the move "lame-brained thinking on many levels, one involving teaching the market a lesson". His suggestion? Take advantage of dynamic pricing:

When you produce a physical good like a book, it's really hard to change the price over time, especially if there are retail stores involved. But changing the price on an electronic good is trivially easy.

So, for example, you could charge $24 for the Kindle edition for the first two weeks, then $15 for the next two weeks and then $9 for the year after that. Once it's a backlist classic, it could cost $2...

Or, thinking about how you might create launch excitement, you could reverse it. $2 the first day, $5 the first week, then $9 later. Better hurry!

The title of Godin's post is "The magic of dynamic pricing", and there's no doubt that book publishers could use a bit of magic right now as their industry, like so many others, struggles to adapt to a digital world. But is dynamic pricing really the magic Godin makes it out to be?

To be sure, there's a lot to like about the general model he suggests. There are an almost unlimited number of ways you can implement dynamic pricing models to incentivise a consumer to make a purchase. When done correctly, there's no harm to overall revenue, and you might even realize more total revenue than you would have with standard pricing.

But I'm not so sure dynamic pricing is all that it's cracked up to be. It can be hard to find the right model (and price points), meaning there's plenty of risk if you get it wrong. And it's not guaranteed to be a hit with consumers. After all, there's always someone who will be disappointed. If you purchased an ebook for $24 within the first two weeks after its release and didn't know that the price would drop to $15 after that, you might feel like you got the short end of the stick. Or if you see an ebook that's selling for $9 but that debuted at $2, you might wonder if it's really worth $9.

When you get right down to it, I don't think the battle over ebooks has as much to do with pricing as it has to do with value. What you can charge for anything -- physical or digital -- comes down to perceived value. If you think my physical widget is worth $25, you'll pay it. And if you think my digital widget is worth the same amount, you'll pay that too. Obviously, that's a bit of a simplification, but the point still stands: if you've got a pricing problem, chances are you really have a value problem.

In my opinion, book publishers should be concerned about the dirt cheap pricing of ebooks, and they should look to counter in some fashion. To do that effectively, however, they'll need to make sure that they're not protecting an arbitrary price point so much as they're defending the value of their product. Incidentally, dynamic pricing would most likely reaffirm to the consumer that book pricing is entirely arbitrary.

That's a message that you don't want to send when you're trying to assert the value of your product. In the case of books, if consumers don't think the value is there, no amount of dynamic pricing magic will 'save' the book publishing industry.

Photo credit: AGeekMom via Flickr.

Patricio Robles

Published 11 December, 2009 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2419 more posts from this author

Comments (4)



3 points here.

1st off, ebook readers are not a threat to the publishing industry. Think as it as the publishing industry evolving, whish it's done before the paperback arrived. In evolution, the strongest survive, the weakest either adjust, or fall off.

2. Releasing an e-book 3 months 4 months down the line is not a bad move at all. Infact this is nothing new, the movie industry does this with DVD sales, and it works. Since the shelf life of an actuall book is about 3 months, releasing an ebook book will bring new life to it.

3. Dynamic Pricing could also work, and it sounds interesting. This would be more strategic for the Publisher or Author that goes "direct to consumer". You don't want to piss off your distributors by implementing this strategy at all. That's what makes these huge publishers what they are, their relationships with the large chain distributors.

almost 7 years ago

Carlos Pronsato

Carlos Pronsato, Inventor at Pronsato

Magical is the wrong word to describe Dynamic Pricing. Magic assumes a trick behind the wonder. There is nothing tricky in wonders of DP, just the cold logic of the ancient practice of auctioning. I coined the term (dynamic pricing) in the "Professional Pricing Society" email forum to describe computer assisted dutch auctions.

almost 7 years ago



Of course temporarily renting an ebook is not the same as buying a physical book - the latter has certain rights.  So the comparison is not like-for-like even if you ignore the medium.

almost 7 years ago


Akash Sharma

I think publishers are not realizing that though the niche has got a bit small but still there are people who prefer books over eBooks no matter what the pricing is the essence of reading a hardcover book is amazing.

So if they try to focus on that particular group by providing great offers and understanding what a specific buyer is going to purchase and thus providing more options.Point is to keep the people happy who still have a love with books and they can spread the word further if they really love the way you are presenting the books and dynamic pricing does play an important part in it.

almost 7 years ago

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