Some eBook industry 'leaders' are starting to sound exactly like the music industry 5 years ago

I just read this very interesting piece in PaidContent.org (one of my favorite sites): "Steve Haber, president of Sony’s Digital Reading Business Division... at the MediaBistro eBook Summit... decried the emphasis on the $9.99 price point for e-books. “The $9.99 price point is not a money-maker,” he said. “Certain bestsellers are sold at that price for retail, competitive reasons. But you need to have a range. You could go from $10 to $20 even to $100 for an e-book. There’s no sweet spot and it’s certainly not $9.99. When you walk into a bookstore and there are a range of prices. It should be the same for an e-book store.” Haber went on to defend the use of DRM, which he doesn’t see going away for awhile. “You need an orderly process to sell books and DRM makes that possible, mainly because it allows content creators and distributors to make money from that content"

Ouch. Have you not learned anything from happened in digital music during the past 10 years - where have you been hiding? Let me summarize it for you:

DRM is a total - and much discussed - nuisance and significant deterrent to legal consumer behavior, and it does ZERO to prevent sharing of copyrighted content online. DRM just turns users that have legal, fair and honest intentions into guinea pigs for digital rights protection schemes thought up by people who still have their emails printed for them. Wake up: protection is in the business model - not in technology. I may even concede that DRM may work in some (but increasingly rare) cases, but for books and for music...? No chance. Imho, you have to be kidding if you think these kinds of remote-controlled-rights schemes will make you any money in the future. In my opinion, anyone that still talks about DRM being a chief part of their eBook strategy should consider taking a longer vacation, and do some serious reading and thinking (sure... you could start with my own new book "Friction is Fiction" - ask me for the free PDF if needed; )

Face it: the price point for digital books has to be lower - much lower - than the price point for a real i.e. dead-tree, printed, shipped, physical book. Just because you can't seem to figure out how to reduce your costs across the board, start to add significant value in new areas and still turn a profit, that does not mean consumers will massively adopt eBook-reading at those price points (Kindle etc) or even above (as seems to be suggested above).

This looks like a very lame 
rerun of the classic and most disturbing mistakes of the music industry: the incumbent market leaders really thought they could actually increase their margin as well as their ability to control the usage (!) when selling music online, i.e. have much lower distribution and marketing costs, keep the artists down to the same old, tiny percentage, and - yes ! - increase the prices on a per-track basis.

Ask yourself this simple question: what would have happened if a download had been priced at $0.20 or even 10 cents per track (or even, yes, a flat-rate), instead of $1 - would anyone still have bothered to try and download it for free, somewhere else? Could the value of those active, engaged and happy buyers be captured, and then be extended to other things you can sell them? Clearly, the answer is YES. 

This is my message to the eBook industry and the publishers: do not head into the ill-fated direction of wanting to sell digital content for the same price as the physical content (or even above...ouch) - it is a pipe-dream!

Instead, make eBooks drastically cheaper, offer unique bundles and compilations, add new values all the time (cross-media anyone?), invent new packages (think mobile), and stop focusing on just selling UNITS. Flip the pricing logic before it flips you: lower prices, infinitely more engaged and legal users, and new Generatives on top!

Finally, here is something that wasn't touched on at Paid Content but that is crucial: If you think that the traditional deals with the authors will carry over into the eBook environment you are deeply mistaken. Witness what happened with Random House's eBook initiative, here. The authors (and their agents!) will need to be brought in as PARTNERS not minor players, as they have been in the past. Accept, adapt and move forward.

 

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Comments

[neilperkin]

Well said Gerd. Can't believe we're about to witness a rehash of the music scenario. On a (kind of) related note - have you seen this conceptualised digital magazine that I posted about here...
http://bit.ly/7YYzqf
Looks interesting IMHO...

[Gerd Leonhard]

yes... very cool as well!

[Geoffrey Kidd]

In other words, Sony wants to continue the arms race that DRM usage started between movie, music, and book lovers and the producers and distributors of such. And when a businessman says "orderly" anything, he's really saying "guarantee my profits."

Anybody want to guess why I haven't bought anything from Sony in years?

[Gerd Leonhard]

yes... you do have a point))

[Runthistown]

I think you're wrong about this about DRM & e-books...

UNLIKE MUSIC, e-books have not been consistently and freely available for free w/o DRM like music was as MP3's from the late 90's-now. The music biz missed the boat on protecting MP3's and then decided 5 years later that they were going to assign DRM to it and by that time it was obviously too late. Everyone was accustomed to getting music for free as mp3's and so consumer behavior stuck with that idea and you can see the results now.

Converting music from CD to MP3 took a click of a mouse, physical book pages --> PDF is a much bigger pain in the ass. On top of that, like I said...they are early enough in the proliferation of books being sold digitally that they can command the marketplace and set the status quo for what consumers expect as long as every other company offers the same.

[Gerd Leonhard]

Runthistown: sorry, don't agree at all. The music biz did NOT miss the boat by not protecting MP3s ie. haven open format CDs. Nothing else would have worked for CDs!! Quiet different than DVDs if you ask me (and even there the fact that they are protected has NOT helped the content from being ripped and shared). There are LOTS of books available as free pdfs already - 10s of 1000s of people are quite happy to make PDFs and put them online to sell ads.Check out http://www.wired.com/gadgetlab/2009/12/diy-book-scanner/

Protection as a business model is dead.

[runthistown]

OK i understand your argument but how about some simple logic? How many people do you know would like to rip a 300 pg book? How many people do you know would rip a CD?

of course there are examples of free books on PDF online & some "pirated" illegally digitized stuff but it is currently nowhere near the amount that music was in the late 90's w/ P2P when there was so much catalog available online that people were even trading around radio rips & prereleases because it was sooo EASY to do.

Im sorry man but most kids (at least in America) dont enjoy reading books & only do them for school...they dont enjoy reading books so much that websites like SparkNotes get 3 million unique hits month...btw thats more than the most popular BitTorrent sites The Pirate Bay & Mininova.

with that said, kids and teenagers are the most engaged in the music biz vs older, more sophisticated people are w/ books. Kids spend the most amount of time online + are generally more likely to spend that getting everything for free if they can.

In the long-run (next 30-40 years) you can debate whether DRM on books will stop any sort of piracy but certainly right now there are very few similarities to the music biz.

[Gerd Leonhard]

Don;t agree, runthistown ;) sorry - but thanks for the comment. Maybe add a link about you?