Last week an article in the Wall Street Journal, E-Book Sales Fall After New Amazon Contracts, reported that major publishing houses were experiencing declining e-book revenue. The article also pointed out that publishers had raised prices, and it implied the prices were the likely cause of declining sales. After all, price up, unit volume down means the increases caused the problem, right? It is possible that is correct, but the publishers need to be more rigorous in their analysis before concluding they should change their pricing strategies.
One potential explanation for lower e-book sales is the titles just are not as good, and readers are not interested in marginal books. Publishing houses could measure the change in volume of physical book sales compared to e-books. If physical book sales (seasonally adjusted) are declining as fast or faster than e-books, then perhaps the price of e-books is not the culprit.
Another area worth pursuing is the results by price point. Have e-book sales declined primarily in the high-priced category? If high prices are causing a problem, I would expect to see a shift in sales toward low-priced e-books or at least steady volumes at the lower price points. Conversely if the unit sales declines are at similar rates across all price points, other non-price issues are probably a bigger factor.
How does age factor into the sales of e-books, if at all? There has been a general perception over the last decade that kids don’t read as much as they used to. If the generalization that younger people read less than older people is true, I would expect the total number of people reading books to decline over time. I would also expect that the number of e-books sold would decrease more in younger age groups than in older groups. If those things are true, then perhaps price is not the cause of declining e-books.
Sharing is another factor that could impact book sales. When someone has read a good book, they like to share it with family and friends. And friends appreciate someone giving or lending them a book they had read and enjoyed. For a long time, it was difficult to share e-books. On Amazon, it was only possible to share the book to another device on the same account. The sharing problems were part of the reason for a sizable discount between prices of e-books and physical books. With Kindle unlimited, and new loan and borrow options with Kindle, e-book sharing is easier. That additional value to the reader should enable prices to rise and reduce total sales of books.
The last area worth exploring is emotion. Customers make purchase decisions for many reasons, and emotion can play into those decisions. If e-book declines are greatest at the highest price points and the other factors do not explain unit volume decreases, it is certainly possible customers are just angry about the price increases. However, that does not necessarily mean prices should revert to the old lower levels. Those customers are likely to get over their anger and there is a strong possibility they will return to buy e-books again. It was just four years ago that Netflix implemented a substantial price increase that angered their customers. Subscribers canceled, the stock price tanked, and many words were written about the foolish decision. Netflix stayed the course, subscribers came back and the stock price is up nearly 800% since then.
As with all analyses, sometimes simple correlations point to real root causes, but often there are other reasons for the observed results. Acting on the apparently obvious can often make results worse. It is better to do the math at a detailed level and get real actionable insights. It is also important to allow enough time for customer reactions to stabilize before making important decisions.
New higher prices for traditional publishing house ebooks absolutely affects my purchasing choices! I shop on Amazon, mainly mystery, thriller and romance. Nora Roberts, JD Robb, Linda Howard are among my favorites. I have EVERY book each of them has written, some in multiple formats. Nora’s latest is going for $14.99. I won’t be buying it. Nora is competing with fabulous self-published authors who sell their books from $2.99 to $5.99. I can buy 3 books or more for the price of Nora’s book. I waffled and opted for more self-published books when publishing houses started charging $7.99 and $8.99, but $14.99? The publishing houses and I are going to have to go our separate ways.
I buy a couple of books every day. My library is full of books. My wish list is full of those from favorite authors whose prices have risen to a point that I hesitate before I push that 1-click button. The books in my wish list will probably never make into my library.
I am not a bargain shopper and my family is very comfortable financially. If I’m holding back, people with less free money to spend on books have to be holding back as well. Publishing houses have begun to charge more for ebooks than they do for paperbacks. It’s ridiculous.