Why Ebook Pricing Is Elastic

Nathan MaharajNathan Maharaj is the director of merchandising at Kobo, where he manages a team of digital booksellers across eight languages and more than a dozen countries.

Maharaj is part of a panel at this year’s Digital Book World Conference titled “Elastic Ebook Pricing: Pricing in a Changing Ebook Marketplace.”

Digital Book World recently released a white paper titled “Viewpoints on Publishing’s Digital Transformation,” which you can download here. The report offers an insider’s look at both the current state and the future of digital publishing, and is filled with interviews and articles.

Below is an excerpt from an interview we conducted with Maharaj, in which he discusses the current state of ebook pricing, the challenges of the ebook marketplace, and more. To read the entire interview, please download the the white paper.

What’s the current state of ebook pricing, and why is it elastic?

When we talk about price elasticity in ebooks, it’s important to bear in mind that to truly know if price is elastic, we need to look at the same titles. That’s not the case when we talk about the rise of self-publishing and how it’s grabbing market share from the big trade publishers.

When we isolate titles and look at how demand moves in response to changes in price (in the absence of promotional activity) price elasticity is largely absent. And bear in mind that the best tests on this happen only on titles sold under wholesale terms, where retailers can set sell prices and gain experimental data. With agency titles, if the price doesn’t move, it’s hard to say anything about elasticity.

What are the challenges and opportunities with pricing in the ebook marketplace?

I don’t think agency publishers are changing prices as dynamically as they should—and I think many of them know that! I suspect that there’s been a fear that being too aggressive with ebook pricing would lead to rapid erosion of hardcover sales, but with the ebook market having stabilized, I hope to see publishers’ comfort with dynamic pricing to increase in an effort to drive further growth. I’m optimistic that we’ll see at least one of the “Big Five” starting to make noticeable moves here soon, to the mutual benefit of its agents (aka retailers) and authors.

The Digital Book World Conference + Expo is March 7th-9th in New York at the Hilton Midtown.

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