Digital Book World has been buzzing about the rapidly declining prices of best-selling ebooks for the past few months. Now, popular ebooks have reached an all-time low average of $8. I originally thought these bottom-basement prices were related to holiday sales and Amazon trying to capitalize on the thousands of new Kindles owners after Christmas. But the continually falling prices of best-sellers well into late January tell another story — or rather, two stories.
The first story has to do with the Department of Justice suing Apple and the five major publishers for alleged price-fixing to keep ebook prices high. Basically, Amazon’s bargain-basement prices were so low that they were cutting into publishers’ profits, so the publishers and Apple banded together to jack up the prices of best-selling ebooks.
Consumers, of course, are happy that Amazon now has the power to slash prices to its heart’s content. Paying $14.99 for a digital book can seem like a rip-off when it doesn’t buy you anything tangible like a paper book. Big publishers are fuming because they have a lot of costs to cover with that $14.99. Selling $3 ebooks just isn’t profitable for them.
The second story has to do with indie or self-published authors. They’ve utilized low pricing as a marketing method for years, and they can afford it. Indie authors have much lower costs than the big publishers, and many have devised brilliant pricing strategies for selling book in a series (e.g. giving book 1 away for free). Most indie authors find that pricing books lower (say $2.99) actually earns them greater profits than selling fewer books at a higher price.
In my opinion, the big publishers will have to start thinking small. Clinging to the way things were — pricing ebooks like print books, publishing slowly, publishing fewer books, etc. — will not help them stay profitable in the coming years. They will have to adjust their strategy and get more nimble if they hope to stay in the game. Indie publishers are already years ahead.
As for writers, I say: Why worry? Most authors are already paid a pittance for their work. I would suggest hybrid publishing — working with a traditional publisher and publishing independently. Actually, I’m gaining more confidence in the state of indie publishing every day. Sorry Random Penguin — Soon, writers may not have a need for the big guys at all.