This blog post was written by Paula Krapf, Author Marketing Experts' COO - it's so good I thought I would post it here. We welcome your comments!
A classic case of business fail: you've got something to sell, and better yet, you've got customers craving your product. But then you decide you don't want to sell your product to those people no matter how enthusiastic they are.
Why? Apparently today's business world is a lot like eighth grade -- you don't want to do business with them because you don't "like them." I'm not joking, by the way -- this is on the record from none other than that bastion of media freeze-out Apple CEO Steve Jobs, who has forsaken his usual silence to launch his iPad and align with New York publishing against the big bad wolf known as Amazon. For reference:
Meanwhile, Amazon is the same company that took the e-reader, which had been a fairly obscure device, and turned a dedicated reading device into a marketing success story -- which, you would think, publishers would realize was a wonderful business opportunity, not a threat.
However, the New York publishers are doing everything in their power to do an end-run around Amazon and deny a growing audience of Kindle owners the chance to purchase their books.The situation reached a boiling point at the end of last week, when Macmillan told Amazon to raise e-book prices and Amazon initially responded by taking all Macmillan books off their site. When Amazon, a couple of days later, decided to reinstate the publishers' titles, their letter to customers indicated they disagreed with the pricing model but the ultimate decision was -- wait for it -- up to the consumer.
And what will the consumer say? Based on evidence from Amazon's own Kindle forum the consensus seems to be: "We're not buying overpriced e-books." A call to boycott all e-books priced over $9.99 has more than 7,000 responses to date.
Seth Godin, author and new media expert, said it best on his blog, responding to a letter Simon & Schuster CEO Carolyn Reidy wrote to her colleagues late last year. Godin wrote, "Smart businesspeople focus on the things they have the power to change, not whining about the things they don't ... They don't have the power to demand that we pay more for the same stuff that others will sell for much less." Read the aptly-titled post,
In addition, New York publishers are stuck on the idea that their business model can only succeed if they can sell hardcovers at $25 a piece, and they want to thwart anything perceived as a threat to that model (such as Amazon's average e-book price of $9.99 -- which is a huge loss for Amazon, by the way). What I'd like to know is who in this day and age of deep discounting pays $25 for a hardcover? Every major title released last fall was discounted the minute it hit the stores -- a 30 to 40 percent markdown at the very least. So we're being sold a bill of goods in order to maintain a way of business that doesn't work anymore. Amazon and Wal-Mart duked it out in 2009 and the battles will only become fiercer.
Apparently the price point for e-books, according to New York publishers, is $12 to $15. If they could prove that e-books should cost $15 I'd consider it, but I've yet to see any publisher make a compelling case; instead we get a lot of behavior that seems awfully similar to a child's foot-stomping temper tantrum. Although, to be fair, there is an old-guard business world that completely backs up the publishing establishment, stated perfectly by Fast Company today. I've got two words for them: Boo Hoo.
The problem is there are so many facts missing on ALL sides. I'd love to see Amazon release Kindle sales figures (no, I don't take last week's comment from company CEO Jeff Bezos that there are "millions" of Kindle owners to be sufficient) and for the publishers to make their case for their pricing model -- which would mean they'd have to discuss the cut their authors get. Now that would be an interesting discussion since Macmillan reportedly cut the author's percentage of e-book royalties to 20 percent from 25 percent -- if that's the case then clearly the publisher needs to charge more for e-books so their authors won't feel the pinch. What we do know is that e-books, even priced under $9.99, can be profitable for authors. J.A. Konrath (also published as Jack Kilborn), revealed his Amazon Kindle numbers last year as well as the methods he used to get the word out about his e-books, and it's an eye-opener.
The world is changing for all of us, and New York publishing is not exempt from those forces. Adapt, or perish -- and it seems like they'd prefer the latter which seems absurdly self-destructive. I've got to send you back to J.A. Konrath one last time because his post from Jan. 31, Selling Paper, is simply stellar in the way he breaks down this situation.
But don't take my word for it, consider the case study presented by the music industry and their unwillingness to adapt to downloadable music. They didn't win that battle and subsequently lost the chance to to lead the way to the new music business paradigm. Oh, and who took them down? Why none other than the book publishers' new best friend, Steve Jobs of Apple. Ironic, no?
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