Monday Morning Musings: 2014 Publisher Predictions – Part 1

Monday Morning Musings

Last week’s post on the economic landscape of e-book pricing was such a hit that I’ve decided to start a weekly post with something related to the book publishing market, or something else a bit more intellectual than the usual reviews, etc. I’ll still stick with the book theme, but take on a different perspective from the rest of my posts.

This weekend I stumbled across this article, written in January 2014. Basically, it’s about predictions that the book publishing industry made for the book market over the course of this year. Now that we’re roughly 3 quarters through, I though it might be interesting to give my perspective on the status of those predictions. This will take place over 7 posts (2 topics each)—since there’s so much content, this post would go on forever if I tried to do it all in one!

Please weigh in with comments or related posts!

  1. Big publishers lower prices:

Summary of article comments: 
Basically, this comes back to the price of ebooks discussion. There are pressures for ebooks to be cheaper. In particular, there was a “call for publishers to introduce $4.00 ebooks.” Apparently indie authors followed this call, but the traditional publishers haven’t. It even goes so far as to mention fears of cannibalization of their print sales. There’s apparently been some evidence from 2013 market research that some indie authors who adhered to lower pricing guidelines out-sold some of the large publishers, even going so far as to hold up to half of the places on top 10 bestseller lists. The article predicted that 2014 would see more competition on pricing, “primarily in the form of temporary price promotions.”

My thoughts:
Well, I won’t go so far as to say we’ve seen some serious price competition this year. Yes, some e-books have been cheaper. But just the fact that I had sufficient inspiration to write an article on the lack of downward pressure on ebook prices leads me to believe that this change hasn’t been as drastic over the last 9 months as publishing companies feared. I even discussed the fears of ebooks cannibalizing print sales. Read what I had to say here if you’re interested in knowing more.

There have been some new pressures on ebook pricing, however. Amazon and Hachette (a sizeable French publishing company that relatively recently acquired Time Warner’s book division and Disney’s Hyperion—one article indicated that it’s the 4th largest publishing company in the US market, though I haven’t verified) have been locked in a pretty heated debate for quite some time. Apparently they couldn’t agree on a profit share structure, and Amazon has accused Hachette of colluding to keep ebook prices high. Amazon supposedly went so far as to delay orders of Hachette books and refusing to stock them.  This seems to be a very complicated issue with a lot of secrecy and strawmen and hyperbole. I’m going to take some time to sift through some articles, then will probably do a post just on this topic. Basically, we haven’t seen much in the way of lowered prices, but Amazon is pushing for it… with what might be considered some faulty logic.

  1. Price promotions will become less effective:

Summary of article comments:
This bullet was short and sweet. Basically, the low-price advantage will diminish this year. In 2013 the books priced at $2.99-$3.99 sold 4X better than the books priced at $7.99. This compares to 2012 where the difference was a 6X advantage. This supposedly suggests a trend that says that in 2014 that price advantage will be even lower, and that it will be other factors that become more important.

My thoughts:
Well, I can’t really argue with hard data. Oh wait, I can. In fact, I’m getting a degree that helps me do so. I want to start off with pointing out some logical flaws in the basis of the prediction. I’m not arguing right now that the prediction is wrong, merely stating that the logic they used to get there has some inherent problems.

First, two points do not a trend make. Yes, they make a line. But every beginning statistician knows that you can’t prove a correlation with only two data points. If we see a progression along that “trend” this year, then there might something more to it. If they had data from 2011, I’d be curious to throw that into the mix and see if it was lower than 6X as well. Maybe 2012 had some sort of external factor causing it to just have abnormally high ebooks sales. Something like … the introduction of the Kindle Fire? Two Kindle releases could easily have caused this upswing in 2012: the release of the Kindle Touch in September of 2011, and the release of the Kindle Fire in September of 2012. I don’t know about you personally, but my mom started buying ebooks like crazy in 2012, especially the low-priced/free ones. She still does today, but it wouldn’t surprise me if the new Kindle devices started an ebook buying frenzy that subsided a bit after the Kindle Fire wasn’t so new anymore. Maybe 2014 will behave very similarly to 2013 as a result. (I have no data to back this up; it’s just conjecture, so take these ramblings with a grain of salt).

Second flaw: I would hardly consider the $2.99-$3.99 category as the only representative category of having a “price advantage.” What so-called trend did you notice in the <$2.99 range? Did purchases of $1.99 books go down relative to the $7.99+ books as well?

So enough of my initial thoughts and ranting. What have we actually seen in 2014? I’m honestly not sure. I found the following chart when I did some digging:

Average Price of an E-Book Best-Seller on the Rise

What does this really tell us? The average price that people are willing to pay has increased in recent months. At first blush, this seems to indicate that the 2014 prediction is correct: consumers are willing to pay more. However, if that were all that was going on, we’d see that same updward trend in 2013 relative to 2012 in order for the article’s comments on historical actuals to hold weight. And it’s hard to keep in mind that this is just best-sellers. A single person may buy 100 different cheap e-books where they would buy only 1 more expensive best-seller, and those cheap ones won’t necessarily make it onto this list.

What did the article that produced this chart have to say? It suggested that the data is biased due to the effects of Amazon’s subscription services. You can read about it now, by checking out that article. I’ll discuss this further in a few weeks, when I respond to bullet #10.

 

Upcoming Topics:

  1. Ebook growth slows
  2. Competition increases dramatically
  3. Ebook sales, measured in dollar volume, will decrease in 2014
  4. Ebook unit market share will increase
  5. A larger wave of big-name authors will defect to indieville
  6. It’s all about the writing
  7. All authors become indie authors
  8. Subscription ebook services will change the game
  9. Traditional publishers will reevaluate their approach to self-publishing
  10. Author platform is king
  11. Multi-author collaborations will become more common
  12. Production takes on increased importance in 2014

 

 Some side-thoughts:

After posting last week’s discussion about the price of e-books, I came across this article from the LA Times. I strongly encourage giving it a read. It talks through both Amazon’s comments on how much an e-book should cost as well as some counter-arguments. It makes some very good points.

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Posted on September 8, 2014, in Monday Morning Musings and tagged , , , , , . Bookmark the permalink. 2 Comments.

  1. Interesting stuff. There’s a lot of shouting about the future of books both from big publishers and indies, and not as much statistically sound evidence as I’d like. I think that the best developments would come from big publishers and indies learning from each other – for example, print on demand shows a potentially more efficient way for publishers to get print books into readers’ hands. But I think everybody might need to calm down a bit before that learning can happen.

    • Yeah, I can’t tell if the people who would have the data are looking at it and keeping quiet while they do super secret squirrel stuff or if we have a case of genuine ignorance. Whatever the case, I’ve only seen speculation, opinion, and hyperbole being thrown around. I’ve been amazed at how many people feel so strongly about what the “right” thing to do is. Calm down people, and think rationally (that is, after all, the basis of most economic theory—how do you expect your market to work if you don’t expect rationality? All right, different definitions of ‘rational’ but that’s not the point …). Thanks for stopping by! 🙂

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