Most consumers have wondered why e-book pricing was so close to bound copy pricing. I know I have. Eliminate the warehouses, trees, delivery trucks, stores, shelf space, clerks – and you are left with author payments, product development, marketing, and electronic delivery. The cost structure is probably half of a real-world product (I don’t have any documented research to back that up, though).
And most consumers assumed there was some price collusion going on. Well the justice department has weighed in, and Amazon is shaking things up.
So lets do a little scenario planning.
Scenario one. Amazon, at 60+% market share for ebooks, trounces B&N, Apple. They corner the self-printing market. Bookstores around the country close down because consumers flock to the significantly lower priced e-books, for a small entry fee (<$100 for a reader). Paper-base reading becomes anachronistic – like smoking; there is still a market, but nowhere what it used to be. Amazon achieves 90%+ market share again, based on Kindle pervasiveness. Prices drop to averages of $5-10 per edition, then slowly creep up to 10-15 again due to market dominance over a 5 year period. The Justice department jumps in again – this time the issue is monopoly, not collusion. Makes the current Justice move look like a Government make-work project for Justice.
Scenario two. Amazon grabs share. Apple does too. A Duopoly ensues. Bookstores still close (or at last become super specialty – like antique shops). Prices pressure margins, and new ways to compete take hold: new features, new social sharing options, etc. Imagine a book reading experience that rivals words-with-friends in its interactivity and connectedness?
Scenario three. The “Mule” scenario (respects to Asimov’s Foundation trilogy). Google, Facebook, Microsoft, Zynga(?) jump in and deliver those new features, trumping Amazon (and Apple) on innovation. Bookstores offer “meet the author” experiences, reading groups and other reading enhancement experiences – virtually and in-person. Maybe even coffee and a sandwich, too. They use membership pricing, or profit through affiliate purchasing techniques. Access is greater, and broader, for the average reader, and more collaboration ensues – generating more ideas and more innovation. Maybe this is “the future’s so bright I have to wear shades” scenario.
What scenario would you bet on? what others would you add?
Most importantly – how does this game affect your enterprise? If you are a publisher – its obvious. But as a bank, manufacturer, healthcare provider, government agency – the implications are insidious. Whether it’s advertising, eyeball share, meme generation, or just plain reference and documentation. What an opportunity. The argument can be made that art is actually an arm of commerce. Think Madonna and Lady Gaga . So it is for books…