Thursday, January 21, 2010

ebooks: being customer-centric.

The ebook debate is becoming very confusing, with all sorts of people saying all sorts of things.

The only way to cut through and get some clear perspective is to do what strategists should always do, that is, see it through the eyes of the customer. Be CUSTOMER-CENTRIC. It's not easy but it's essential.

As a new consumer of ebooks, here's an early stab at what I would like to see:

1. Simultaneous publication with the first version of the print book.

Some major US publishers are getting spooked by Amazon, and delaying their ebook release dates for a few months. They're trying to protect print edition sales from being undercut by Amazon's nasty $9.99 price. Instead of seeing hundreds of thousands of new and enthusiastic Kindle owners as an opportunity they're seeing them as a threat, because some of those enthusiasts would purchase the print book if the ebook weren't available. Some. Maybe 25-30%? Let's do the math:

   Print revenues without the ebook available:    10,000 x $15.00 net = $150,000.

   Print revenues with the ebook also available:    7,000 x $15.00 net = $105,000
   ebook revenues:                                              3,500 x $12.00 net = $42,000

(I've assumed ebook sales to be 50% of the print book sales if both versions were available, as Amazon seems to be suggesting this is their current, for now at least, sales ratio).

So you can see revenues are pretty much the same under both scenarios.

2. ebook prices should be lower than the initial print version by 30% at least, and then decreased sequentially just as print books are now.

Let's look at what the customer doesn't get by purchasing an ebook: a well-designed and printed package which incudes an arresting, beautiful cover; something to place on a bookshelf for all to see and pick up for years and years; something to lend to family and friends; something to sell second hand; a felt sense of where you are and how much further you've got to go - the standard 'flick' thing. What you get instead is just the content, in a standard typeface, with clumsy accessibility. It's a pared down, decontextualised experience, well and truly.

What I'd dearly like to see, and would be willing to pay extra for, would be the ability to purchase a 'print and ebook combined' package at my favorite terrestrial bookstore. If I could buy the printed version of Wolf Hall and get the ebook version thrown in for either free or another five bucks, that would be wonderful. That would entail a partnership agreement between the bookseller, the publisher and Amazon, so that when I walked out of the shop I carried the thick-as-a-brick paper version and knew that the ebook version was sitting snugly in my Kindle. A real 'home and away' package!

Regarding prices, there is a great deal of confusion in the industry on this subject. There's this quite silly notion that the ebook has to be the same price for all time. Rubbish. The whole point of sequencing cheaper versions of print books, from the initial hardback, to the trade paperback, through to the mass market paperback, is to make the book available, in an orderly fashion, to wider markets at lower prices. People don't want the mass market paperback - they want the mass market price. Ebooks therefore, where no printing costs have to be lowered accordingly to protect margins, can also undergo a lower price process. In the first year of publication they could be 70% or so of the hardback price, in the second year 50%, and finally 30%, or some such gradation.  Not all books have to follow this tradey sequence of course, but many do. You can't have a situation where the ebook is $10.00 and the paperback $8.00. (I'm talking US dollars here, as this is where the debate is. We're a long way from the action in Australia, unfortunately, and will be until local titles are readily available on the Kindle, the iPhone and then all the others).

3. Choice should be part of the standard offer.

Publishers should stop seeing the so-called 'enhanced ebook' as part of the pricing solution, as in 'Throw in some audio, video and added extras and we can charge more and solve our revenue problems'. As a customer I want to be able to chose - either the basic or enhanced version, or a print/ebook combination, or some other appealing package.

So in summary, publishers should embrace this new market aggressively and optimistically, and stop being scared witless and defensive. Focus on readers and customers and their needs and preferences. As for Australian publishers, for god's sake get off your bums and get on with it.


RachaelMc said...

Well said Peter. Ditto to previous post. The ebook world changes from week to week. I am eagerly awaiting the Apple announcement (any day now...!) to see how the ebook world responds. Amazon has already preempted as we know and goodness knows what Sony plans to do. By all accounts, they've been pretty lethargic locally.

As to post above, do you know I've had Managing Directors, Sales Directors, GMs etc of MAJOR publishing houses say ebooks won't last and they won't be popular in Australia, there's no market for them yada yada yada.

Um, that's because a) you haven't bothered to listen to consumers or consumer trends and b) you left your digital strategies to your overseas offices c) you don't have digital strategies in place locally let alone a person to take charge of this changing market. And heck, checked the media lately. Not a week goes by when ebooks aren't mentioned in something here, and a day (or even hours) for overseas media.

In all of this the consumer suffers. I mean I've been buying my ebooks through Sony US. Can't get them here when I want them. Because there's no market here remember!?!

And god forbid, don't start me on libraries. Yep, fine for many academic and reference publishers to get behind ebook vendors but trade publishers are SOOO behind the ball. Don't want to engage with libraries so US companies are coming in and cleaning that market up. Real shame.

And that's by rant for today. Hey maybe I should change my blog to Rachael's Rant instead of Ramble?!!

Peter Donoughue said...

Excellent rant Rachael!

I guess the consumer pressure on local publishers isn't strong enough yet because the eReader installed base would still be pretty small. (Except for the iPod). Which means publishers can blithely ignore the future and hope it all goes away.

Have you heard any news from Amazon yet as to whether they are intending to allow 'foreign' publishers to supply them? Non-US ebooks seem to be sinking into a huge black hole. (A&R's Blio deal may move things along a bit, hopefully).

RachaelMc said...

Yep, have heard about some Australian publishers in discussions with Amazon about local content. It was linked in to them taking the Kindle 'global' as such. I'll find out more at the Digital Symposium in a few weeks. I'm speaking at the Melbourne one about libraries and ebooks. Have 10 minutes to do so!!! A topic I could speak about for hours so keeping to time will kill me!!!!!! :)