Amazon recently published a post about their Kindle pricing, which John Scalzi has some disagreements with.
There’s one particular disagreement that leaped out at me, though:
Amazon’s math of “you will sell 1.74 times as many books at $9.99 than at $14.99″ is also suspect, because it appears to come with the ground assumption that books are interchangable units of entertainment, each equally as salable as the next, and that pricing is the only thing consumers react to. They’re not, and it’s not.
Maybe I’m atypical, but for me books do largely work as fungible units of entertainment. That’s because there are far more books worth reading than I’ll ever have time to read. At any given moment I have at least a dozen books I’m eager to read waiting for my attention. If a miracle happened and I managed to read through my queue of purchased-but-unread books, I have a wishlist with over 100 more on it. Most of my friends are avid readers with big queues of unread books too, so I know I’m far from alone in this situation.
So it’s not that books are all equally as saleable as each other. It’s just that there is a subset that is full of equally saleable books, and that set is plenty big enough to consume all my reading time. I’m not going to read Anne McCaffrey instead of the new China Miéville novel just to save $5, but some Neil Gaiman would be a more than acceptable substitute.
So yes, 90%+ of the books in my reading queue end up there after I see them at an attractively low price. Or to look at the other side of things, I can think of maybe 3 e-books that I’ve bought because I decided I absolutely needed that specific book, at that moment. I absolutely had to read “The Invincible” by Stanislaw Lem as soon as it finally became available in a direct English translation, for example, and I paid whatever they were asking in order to do so. (And it was worth it.) But that was an exceptional situation.
Let’s put some numbers on this. Checking my wishlist, I see that it has a Neil Gaiman novel at $4.99, another at $6.64, some Vonnegut at $7.99, a Vernor Vinge classic at $8.54, and so on. So, what do you think are the chances that I’ll decide to spend $12.99 to buy the new Charles Stross book instead? Sorry, Charlie, but I hope you can see you’re up against some stiff competition there.
The same happens with music. When Kraftwerk’s “Tour de France Soundtracks” was released, EMI wanted $18.99 for it. My response was sorry, but no, not even for Kraftwerk. I waited until I saw a copy for under $10. (Ironically, I then ended up buying the album a second time when I ordered the German language Kling Klang boxed set, but that’s another exceptional situation.) Meanwhile on another occasion, Mute records decided to put their entire back catalog on sale for under $10 per album, and I sent in an order so large that I got an e-mail comment after I submitted it.
So yes, I totally believe that authors will sell 1.74× as many e-books at $9.99 as they’ll sell at $14.99, and I think album sales probably work similarly. Once that price hits four digits, there’s a psychological barrier that makes me think “Hmm, I think I’ll just pick something with a 3-digit price instead”. I could be wrong, but I think there are a lot of people with huge queues of books they want to read who think similarly. Amazon has a ton of data about people’s purchasing habits, and when they say that e-books have high price elasticity of demand, I don’t think they’re lying.
Looking through my wishlist again, I see evidence that some publishers are getting smarter about pricing books in such a reality. I see fewer examples of e-books being more expensive than physical books, a situation that always feels like the publisher is giving you the finger. I see many publishers taking their older books and gradually reducing the price of the e-book, taking advantage of time-based differential pricing. The superfans who’ll pay anything pay $10 to get the book on release day, and then by dropping the price by (say) a dollar every couple of months, the publisher picks up as much income as possible from everyone else.
I have friends who are authors, and yes I do know how much work goes into writing books. Maybe we should live in a world where all books are at least $15, forever. However, we don’t, and in the world we’re in, I’m pretty sure that pricing an e-book at $15 screws the author.