Market Watch

Why Buy? A fresh perspective on the eBook pricing debate

Few topics elicit passionate responses and heated debate from both publishers and readers like ebook pricing. Covered extensively in the news media, in blogs, in book groups and beyond, ebook pricing continues to be the number one industry issue. Publishers warn of drastic losses while readers complain that without a physical product they should pay significantly less than what they pay for print. The ideal solution remains to be determined, but one thing is certain, however – ebooks are here to stay and both publishers and reader must embrace ways of selling and purchasing content.

From readers’ perspective, ebooks offer an experience, rather than a physical product. Readers can’t loan ebooks to friends or sell them, and they can’t keep ebooks on their living room bookshelf. With this prevalent consumer attitude, it is up to publishers to determine a pricing model that addresses the value of the experience rather than a physical object.

Yet from publishers’ view, the costs of physically printing and distributing a book are the final costs in a long series of expenses.  Whether a book is printed and bound or formatted for download as an ebook, publishers still incur costs leading up to that final stage.  Publishers pay for author advances and hire editors, copyeditors, proofreader, designers, and illustrators. Publishers create sales kits and marketing materials, invest in publicity campaigns, and invest in the staff needed to coordinate all of the details that make books possible at every stage.  Yet this is little known to readers. With publishers’ costs primarily in the pre-production stages, the difference between actual physical or electronic production is minimal.

How to reconcile legitimate publisher concerns with a common perception of ebooks as overpriced? One thing is certain: it’s going to require some new thinking. One option to consider is a micropayments or “rental model”.

In the digital era, publishers have come to recognize that their number one asset is their content, yet the publishing industry continues to lose significant revenues due to a huge seconds market and pirated books market. Meanwhile, seemingly unreachable markets like students who refrain from buying reference books for their exams due to costs, researchers who refer to libraries for information required to prepare their reports, and professionals who do not buy all the books that cover a particular topic remain untapped. A micropayments model connects publishers with these customers and others who would have otherwise not bothered to make a purchase at all.

With micropayments, publishers can effectively rent out access to a particular title or series for a limited period of time and price it nominally. By adopting this type of model, publishers expose their content to new markets, encourage “a la carte” purchasing, and build previously unimaginable sales. The technology to experiment with micropayment models is already in place, and has greatly reduced associated infrastructure investment and risk.

In an era of real-time technologies and instant information, it’s easy to lose sight of the long-term. When developing strategies for ebooks, publishers should be aiming to sell in volume and seeking to deliver the kind of exceptional value – and experience – that build long-term loyalty and sales. With micropayments publishers have the freedom to identify and tap new revenue streams while readers gain access to previously unavailable content.

The pricing issue looks to dominate the industry for some time, yet as the debate rages on, this mutually beneficial model is gaining ground: leading publishers like MIT Press and Cengage Learning have started to adopt the rental model with excellent results.