Increased Competition Between Traditional Publishers and Indie Authors
Posted: 01/07/2014 - HuffPost
Predictions stir our imagination of what's possible. By imagining what's possible, readers and authors can prepare for the future, or take steps to realize the future they desire.
1. Big publishers lower prices - Back in 2009, one of my first posts for Huffington Post was a call for publishers to introduce $4.00 ebooks. Self-published (indie) authors heeded the call, but publishers did not. Until recently, it was rare to see a traditionally published book priced under $4.00. Why? Traditional publishers have fought tooth and nail to maintain higher ebook prices for fear that low-priced ebooks would cannibalize print sales, harm their profitability, and establish unrealistic consumer expectations of the worth of a book. By maintaining high ebook prices, they surrendered the sub-$4.00 market for ebooks to indie authors, which indies readily exploited.
The results of our 2013 ebook pricing survey released in May illustrated the competitive advantage of low pricing. The survey found that books priced $2.99 and $3.99, on average, received about four times as many unit sales as books priced over $7.99. For indies who could publish low-priced books that were as good or better than what New York was publishing at higher prices, they were able to out-sell and out-compete the books from the large publishers. For much of 2013, it wasn't uncommon to see indies holding up to half of the top 10 bestseller slots at major retailers on some days.
Big publishers have taken note. In 2013 big publishers began competing more aggressively on price, primarily in the form of temporary price promotions. In 2014 these price promotions will give way to a new normal of lower regular prices. Discounting is a slippery slope. Once customers are conditioned to expect big-name authors for $3.99 or less, the entire industry will be forced to go there. 2. Price promotions will become less effective - If readers have an increased supply of high-quality books from their favorite authors at under $4.00, it means the pricing advantage of sub $4.00 will diminish in 2013. If you compare our 2013 survey results to our 2012 survey, we see signs this is already happening. Although our 2013 survey indicated an approximate 4X unit sales advantage for $2.99-$3.99 over $7.99+ books, our 2012 survey indicated up to a 6X advantage. It means price promotions will no longer work as effectively as before. Factors other than price will gain increased importance.
3. Ebook growth slows - Here comes the hangover. After a decade of exponential growth in ebooks with publishers and indies alike partying like it was 1999, growth is slowing. We all knew this day was coming. Year over year growth of 100 percent to 300 percent a year could not continue forever. The hazard of fast-growing market is that it can mask flaws in business models. It can cause players to misinterpret their success, and the assumptions upon which they credit their success. It can cause successful players to draw false correlations between cause and effect. Who are these players? I'm talking about authors, publishers, retailers, distributors and service providers -- all of us. It's easy to succeed when everything's growing. It's when things slow down that your business model is tested. The market is slowing. A normal cyclical shakeout is coming. Rather than fear the shakeout, entrepreneurial players should embrace it. Let it spur you on to become a better, more competitive player in 2014. Players who survive shakeouts usually come out stronger the other end.
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