by Mike Masnick
Fri, Apr 22nd 2011 6:31pm
by Mike Masnick
Thu, Mar 10th 2011 8:34am
from the do-the-math dept
It's not even that publishers aren't ready for how low book prices will go... it's that they still don't even realize that the prices are going to go down at all. Instead, many of them are still looking to make the prices go up, not realizing the umbrella they're creating for disruptors.
Do the math:
2.99 x 40 = 11.96
.99 x 620 = 613.8
Amazon pays out 35% for ebooks priced below $1.99, and 70% for ebooks that are $1.99 and up. So the math is:
2.99 x 40 = 119.60; x .70 = $83.72
.99 x 620 = 613.80; x .35 = $214.83
I don't think publishers are ready for how low book prices will go. It seems insane, dangerous, life threatening, but inevitable.
by Mike Masnick
Thu, Mar 3rd 2011 2:54am
from the up-to-something... dept
by Mike Masnick
Wed, Feb 23rd 2011 9:36am
from the hello-price-elasticity dept
We've seen over and over again that video games appear to have very high price elasticity of demand. Two years ago, we wrote about some experiments by Valve, where it tried lowering prices of games by 10%, 25%, 50% and 75% -- and saw the increase in sales at a stupendous rate. While the 10% decrease only resulted in 35% higher gross revenue (already pretty good!), at a 75% discount, the gross revenue shot up by 1470%. Think about that, for a second. Basically, dropping the price by 75% increased revenue by almost a factor of 15. Not bad.
Last year, we saw a similar experiment that also had great results. An online video game store in Sweden tried dropping its prices by 75% and saw an increase in sales of 5500% (in unit sales). When looking at the gross revenue, it appears that it came out approximately to a similar 1300% increase.
And now we have some more examples. Capitalist Lion Tamer points us to an article that looks at some super popular iOS (iPhone/iPad) apps that drastically cut their price, but saw their gross revenue shoot way up because of it.
Street Fighter IV for iOS recently slashed its price by a breathtaking 90% overnight, from £5.99 to 59p. Within 48 hours its position in the overall Top-Grossing chart (that's the list of all apps, not just games) instantly rocketed from 116 to 2. Coincidence or magic? You decide. But that's not all.And yet, time and time again we hear how execs at big entertainment companies feel the need to keep raising prices. Hell, we just mentioned how Nintendo's President Reggie Fils-Aime was complaining that cheap games might kill the industry. Apparently, they don't teach basic economics to folks who become president of Nintendo.
And just to reiterate -- we're monitoring the Top-Grossing chart, ie the one measuring money made, NOT the ordinary numer-of-sales one, where SFIV currently sits comfortably on top of everything else. What that means is that the game's sales have increased by dramatically more than 1,000% (because it would have had to sell 10 times as many just to hold the No.116 position at the new price, never mind climb 114 places).
by Mike Masnick
Wed, Feb 9th 2011 12:07pm
from the no-cheat-codes-in-the-real-world dept
His main concern, it appears, are games for mobile phones that run a dollar or two. He's complaining that these games:
Create a mentality for the consumer that a piece of gaming content should only be $2Darn those consumers for actually going where the market goes, when Nintendo apparently would prefer to keep things priced at what the market doesn't like. Welcome to the modern world, Reggie, where prices change, and businesses adapt. I'm sure the last laptop you bought cost a lot less than the one you bought a decade ago, but that didn't herald the end of laptops. It's a digital age: prices get cheaper, and the only companies that are really at risk are those who don't adapt and don't learn to be more efficient. Oh, wait... perhaps he's telling us something about his employer...
by Mike Masnick
Tue, Nov 30th 2010 12:42pm
from the pricing dept
The Kindle ebook version is a whopping $18.99. Yet, if you actually want to kill some trees, the Hardcover is $10.51. The paperback is $11.56. And that's just if you order from Amazon directly. If you order from an Amazon partner, you can actually get the hardcover for $2.96 new or $2.49 used. And someone thinks it makes sense to price this book (of all books) at $18.99 as an ebook?
by Mike Masnick
Fri, Oct 29th 2010 1:02pm
Irony: Book About Recording Industry's Mishandling Of Digital Priced Higher As Ebook Than Physical Book
from the that's-saying-something dept
If you go to the ebook page itself, Amazon clearly states, "This price was set by the publisher" (a clear response to complaints about the rapidly rising price of ebooks lately). It kinda makes you wonder if the decision makers at Simon and Schuster even read the book they're pricing? They might want to crack open a used copy of the paperback (it's cheaper) to learn why not understanding digital, and therefore thinking you can price digital things super high, is not the smartest move...
by Mike Masnick
Wed, Oct 20th 2010 12:39am
from the words-are-futile-devices dept
I operate under the conviction that people buy records because they want to own them, not because they want to hear them. It is too easy these days to hear a record without having to buy it. I don't resent that fact, rather I feel we at Asthmatic Kitty embrace it through streaming albums and offering several free mp3s (even whole free albums). And why do they want to own it? They want it to illustrate to others their taste and identify who they are as a person. I also believe they want to be part of something bigger than themselves, they want to belong.So, we were disappointed last month when the label appeared to have sent out an email concerning the release of the band's biggest act, Sufjan Stevens, suggesting that Amazon's promotion of the album for $3.99 was somehow devaluing the music, telling fans:
Our job is no longer to sell folks things they want to hear. They want an experience and to identify themselves as part of a community. Ownership then becomes a way of them supporting your community through investing in that community. Fostering that in an honest, transparent and "non-gross" way takes a combination of gracefulness, creativity and not taking oneself too seriously, while still taking art and music seriously.
We also feel like the work that our artists produce is worth more than a cost of a latte. We value the skill, love, and time they've put into making their records. And we feel that our work too, in promotion and distribution, is also valuable and worthwhile.This seemed like a bit of an about-face, and we were also confused as to why the label would allow Amazon to promote its album if they didn't like the price. I also wondered if such promotional discounts even impacted the label's bottom line, as everything I'd heard suggest the labels still got the same cut on such discounted albums as they normally would.
John Beeler, who works for Asthmatic Kitty, now points us to an interview with the label's A&R guy, Michael Kaufmann, where he more or less admits that the label goofed in how it presented the email, and that it was never intended as a guilt trip or to suggest there was anything bad about the Amazon promotion. In fact, he now claims, they were actually excited about the Amazon promotion:
Unfortunately we poorly communicated this point. As Sufjan sings, "words are futile devices." When we first heard about the potential Amazon deal we were very excited to participate. For a small label like our own this was a great opportunity for essentially free marketing. It is a great program, Amazon is doing this as a loss leader, and therefore we still make the same amount of money we would have made at the regular sale price.That makes a lot of sense, and I apologize for contributing to blowing the story out of proportion, and apparently not providing the proper context, which I was unaware of at the time. I'm still a little confused about the claims in the original email about the "value" of music, but I understand that's a different discussion. In the meantime, the label seems back to recognizing that it's important to connect with fans in whatever manner possible, rather than guilting them:
So I am sure many folks are thinking, "What in the world is our problem?" What gave us pause was that we were also offering the album at a higher price and we wanted to make sure our customers knew that it would be available for half that price on street date through Amazon. We wanted to be honest and transparent about the coming deal so that folks who preordered at a higher price didn't feel like they have been misinformed, or had a lack of information to make an informed choice.
We never wanted to impose any sort of guilt on our consumers. To me this is in large part of what the record industry has been doing wrong: criminalizing music lovers. However, the message when taken away from the intended audience and often taken out of context read as if we were guilting people into buying direct from us. This was certainly not our intention, and if we had known this was how it was going to be perceived, we certainly would not have sent the email.
What we wanted to do was provide choices. And in the process we thought it would be an interesting opportunity to give food for thought on the perceived worth (or value) of an album. But that discussion should have taken place in a different context. The intent was certainly not to criticize of Amazon's approach. Rather, we hoped to spark conversation and examination of our methods of doing business real time with our customers. We didn't realize this spark was going to blow something up in our faces. Again, what we intended as a cursory thought of the email became the main focus of its criticism.
We want them to have the opportunity to hear our releases. We want them to have the opportunity to listen. We want them to take active part in deciding what it is worth to them to own our music by deciding how they purchase. The last thing we want to do is dictate price or guilt someone into a particular point of sale. That is pretentious for us to think we even can. It is a complex mechanism that involves supply, demand and all the other facets that make a market economy. We have our opinion, but that isn't meant to be an authoritative statement.
We do want to encourage folks to support us, and they are supporting us whether they buy it from Amazon, iTunes, eMusic, Bandcamp or from their local record store. So ultimately their decision of where they buy and how much they pay is trivial, because they chose to support us in an age where it is so easy to just download for free.
by Mike Masnick
Fri, Oct 15th 2010 3:45pm
from the he's-onto-something... dept
"A piece of music is a valuable form of art. If you want the person to respect it and value it, it's got to cost them not a huge sum of money but a significant sum of money."Yeah, so that's not how value works, actually. And the problem, which Dickins appears to have figured out, but Jonathan Shalit who made the quote above has not, is that whether you like it or not (and whether it is legal or not), music today is already competing with free music online. So, it's not a question of "value," but of market prices.
Dickins seems to recognize the actual economics at play here, noting that by making albums so cheap, the number of sales would shoot way up, offsetting some of the price decline when it came to revenue and getting more people more interested in more acts, leading to greater revenue from alternative sources like concerts and merchandise. Of course, plenty of folks have been suggesting this same thing for years, but it's nice to see an "insider" get it, even if he's mocked by those who are still confused about these things.
from the history-repeats-itself dept
In fact, watching the ebook market in action is like watching a slow motion train wreck that parallels the music industry. Here are two examples. First, some publishers have apparently decided to price ebooks higher than hardcover books. Customer are protesting (and giving the books one-star reviews on Amazon), but the publishers don't seem concerned. Meanwhile, publishers are still insisting on ineffective and annoying DRM which only serves to harm legitimate buyers, without doing anything to prevent unauthorized copies from proliferating. We've seen this story before... How is it that folks at these publishers haven't been paying attention? Or do they really think "but, with us, it's different"?