Amazon announced yesterday (July 19, 2010):
Over the past three months, for every 100 hardcover books Amazon.com has sold, it has sold 143 Kindle books. Over the past month, for every 100 hardcover books Amazon.com has sold, it has sold 180 Kindle books.
This is good news. Ebooks give readers a quick, easy and (hopefully) inexpensive way to not just read books, but discover and try new authors.
However, I’m wary of how publishers will react. Some publishers fear that ebooks released at the same time as hardcovers take away from sales of the highly profitable hardcovers. As well, there is a belief that demand for ebooks and hardcovers if released at the same time are equal, so the price of ebooks relates to its perceived demand rather than cost.
Now with Kindle sales surpassing hardcovers, publishers might feel justified in delaying ebooks or keeping prices elevated to make up for what they perceive as a shortfall in profits. Yet if publishers want to improve their bottom lines, they should drop the prices of ebooks and release books in ebooks and hardcover formats simultaneously.
Hardcovers Are Money Makers
Hardcovers have higher per unit profits than paperbacks. Publishers know that big name authors have a built-in audience who are willing to pay a premium for the latest book. This is the reason why paperbacks come out a year after the hardcovers—publishers give the audience the choice: buy the expensive hardcover now, or wait a year and save.
I don’t fault publishers for this approach—they are in business to turn a profit. My issue, though, is they’re mistaken impression that releasing an ebook at the same time as hardcover will eat into hardcover sales. What publishers do not understand is they are two different markets.
Readers of Hardcovers vs.Those Who Read ebooks
Hardcovers are for serious, committed fans. They want to read the story right now, but also want the book—its weight, cover art, and whatever other goodies there might be inside. And later, they want it up on their shelf where they can see it… or allow others to see that they have it.
People who read ebooks want convenience. Bringing a paperback on the bus or to the beach is easy. Bringing the equivalent of many paperbacks in one small device—a device where you can preview and buy new books from anyplace with a wifi signal—is easier. For those who value convenience, a hardcover is a bulky, cumbersome object that gets in the way of trying to read it.
Publishers Don’t Understand These Markets
Yet publishers get this confused. They seem to think a committed fan will now opt for an inexpensive ebook rather than a hardcover. Or, they might think the casual reader will pay for a hardcover if no ebook is available. Neither of these is true, but with this news from Amazon, publishers may think “We can’t risk hardcover sales. We should delay the release of the Kindle version. Or, increase the price so we make up the profit from lost hardcover sales.”
Publishers Have An Opportunity
But the increasing sales of ebooks is actually good news for publishers and should result in good news for readers of ebooks.
Lower eBook Prices
With ebooks growing in popularity, publishers should be lowering ebook prices. There is a large market out there interested in ebooks, but are hesitant to buy a reader and then incur additional costs of buying ebooks that cost as much a paperback—better to just buy the paperback. By lowering the price, readers can make up the cost of the ebook device in the price difference between the ebook and paperback. Though publishers may make a lower per-unit profit, the increase in units sold will increase overall profit.
Further, with more casual readers buying ebooks, publishers can lower the print runs on paperbacks, which have a higher per unit costs than ebooks.
Release eBooks and Hardcovers Simultaneously
Releasing an ebook at the same time as the hardcover might improve hardcover sales. Imagine a new novel you’re interested in comes out in hardcover and ebook. Not willing to spend $25.99 on the hardcover, you buy the ebook for $5.99 (which is lower than the price of the paperback released next year). You read it and love it. You want to go back and re-read it, savouring the experience. Rather than read the book one small screen at a time, you buy the hardcover.
Now imagine if the ebook came out a year after the hardcovers. There might not be any hardcovers left in stock, denying the publisher that additional sale.
Two Audiences—Committed and Casual—Allow Buzz to Grow
By allowing committed fans (who buy the hardcovers) and those who are curious (who buy the ebook) to read a book at the same time, publishers allow for greater buzz to build from those two audiences, who each bring different perspectives. If the buzz is positive and loud enough, it might convince someone who is waiting for the paperback to go out and buy the hardcover.