Three Predictions for the E-Book Marketplace Following DOJ Settlement Approval
In his latest blog post, publishing consultant (and DBW partner) Mike Shatzkin ruminates on how the e-book marketplace will change if (more like “when”) Judge Denise Cote approves the proposed settlement between the Department of Justice and Hachette, HarperCollins and Simon & Schuster.
Here are two of Shatzkins most bankable predictions:
It is a safe prediction that one of the stories of Christmas 2012 will be the extent to which the agency publishers dropped prices from what they were permitted to charge to meet competition, driven by Amazon.
Whatever they do, the agency publishers will have to respond in their pricing too.
It’s an equally safe prediction that a consequence of that will be that fledgling authors living at the lower price points will lose market share. That will not be obvious and nobody will actually notice.
The notion that the remaining agency publishers will drop prices to compete with the new, lower prices offered for books by the settling publishers assumes that the decision to buy The Passage of Power: The Years of Lyndon Johnson by Robert Caro (Random House, May 2012) over Steve Jobs by Walter Isaacson (Simon & Schuster, October 2011) is made largely or even solely on price. Books are not commodities.
Still, publishers worried about losing market share or strangling sales of a new title due to what may now be perceived as a too-high price point may lower their prices in reaction. As Shatzkin writes in his piece, there is certain to be some serious thinking about pricing at Random House, Penguin and Macmillan, the three publishers that are likely to still be on agency pricing this year. At the very least, there’s likely to be some price experimentation.
Regarding titles at the lower end of the price scale benefiting from a pricing halo effect created by higher-priced e-books, as the range of prices for most e-books shrinks, cheaper titles won’t look as cheap. Still, a $0.99 e-book will continue to look like a deal next to a $9.99 e-book. Whether this affects (and how much) the low end of the e-book market remains to be seen.
Here’s one more prediction: Different retailers will react to the terms of their new deals with publishers in different ways. If they gain control over pricing as is expected, the marketplace may see a lot of creative selling: bundling of books into packages, perhaps even with print titles; giving away e-books along with device purchases; using e-book giveaways as marketing tools in other ways; buy-one-get-one-free deals; anything is possible.
We may see retailers get very creative in the face of stiff price competition from Amazon, as most e-book marketplace observers predict. One retailer Digital Book World spoke with said it intends to sell books from the settling publishers at cost in an attempt to build market share. If the e-book market was the Wild West, come Fall when the settlement kicks in, it could get even wilder.