Dispatches from the Digital Revolution

Everything must go! An evaluation of ebook price slashing


Last Tuesday, May 1, bestselling author of The Alchemist, Paulo Coelho, along with his publisher, HarperCollins, decided to drop the ebook prices of his backlist titles (excluding only The Alchemist) to $0.99 each. The promotion, offered for an indeterminate length of time, quickly propelled all of the books into the top 300 Amazon Kindle books, according to Publishers Weekly. Coelho later disclosed to TechDirt that “according to Amazon, the sales of a bunch of his books increased between about 4,000% and 6,500%.”

What Coelho and HarperCollins have done with this promotion is certainly interesting given that the little ebook pricing conflict between five of the six major publishers, Apple, and the country’s highest judicial entity, the United States Department of Justice, is just starting to heat up. The circumstances and motivations surrounding the promotion make for an interesting case study in ebook economics.

On his blog, Coelho wrote last week that the promotion was a “crucial decision” for him:

For years I  have been advocating that free content is not a threat to the book business. In lowering the price of a book and equaling it to the price of a song in iTunes, the reader will be encouraged to pay for it, instead of downloading it for free.

Aside from his stated motivations to make a point about the threat of digital piracy, what are the implications we can make about ebook pricing based on this experiment? Here are some questions to consider:

  1. How does the cooperation of his publisher, HarperCollins, influence how you view the promotion?
  2. How would someone who purchased one or more of those titles at full price in the past feel now that they’ve dropped by about 90 percent?
  3. Here’s the big, philosophical one: has the value of Coelho’s books been permanently diminished because of the risky price cut?

First, it does not go unnoticed that the publisher who instituted this promotion was one of the five named in the agency model lawsuit last month and is also one of the three that settled almost immediately after the suit was filed. I wonder: was this simply a way for HarperCollins to repair its former esteem after being named co-conspirator in an alleged price-fixing cartel? If yes, does it lessen the validity of the interpretation that restoring prices to its pre-agency model levels (or in this case, even lower) would accurately reflect market demand?

To address the second consideration, try to imagine how infuriating it is to buy a new pair of jeans at the mall, only to find out two weeks later that the same pair of jeans has now been discounted by 30 percent. Now imagine that common retail scenario encroaching on the literary marketplace—but triple-fold. I don’t know about you, but whenever something like that happens to me, I immediately blame the retailer for duping me in the first place. Even though I didn’t think of this when I happily skipped out of the store $80 poorer than I was when I went in, after realizing I missed the sale, I’d think, “this pair of jeans probably cost about $2.17 to manufacture and distribute to stores; how dare they rip me off like this!” Do we really want to introduce this to bookselling? Of course there’s a mark-up involved with book retail, but I’m more inclined to believe that the money is better spent on a  book, considering the effort that goes into each title by the author, editor, designer, and marketing team.

Lastly, let’s take a quick look at the potential this promotion has for devaluing Coelho’s work. In the same blog post announcing the promotion, the author exclaims, “a book now costs less than a cup of coffee!” Is that a good thing? Should books be priced in parallel with fast-food beverages? (Well, maybe, if we’re talking a Starbucks venti mocha cookie crumble frappuccino.)  Does the cup of coffee provide any sort of emotional catharsis for the consumer? Does it inform them of or engage them in important social issues? Does it provide a lasting form of entertainment to be shared with others for years to come?

Okay, so maybe my bias is emerging a bit here. I honestly don’t think what Coelho and HarperCollins have done is going to have any permanent effect on Coelho’s value as an author or the industry as a whole. But I do think it would be a mistake to think this pricing strategy should become the new standard.

3 comments on “Everything must go! An evaluation of ebook price slashing

  1. Pingback: The consumer/reader divide « appazoogle

  2. Pingback: What’s the cost of credibility? « appazoogle

  3. Pingback: Finding readers is complicated–but not as complicated as making them buyers « appazoogle

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This entry was posted on May 10, 2012 by in Business and tagged , , .

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