Future of eBook prices: lessons from apps

Guest author and blogger Fergus McNeill is thriller author and app developer. He’s spent years watching the app industry race to the bottom on pricing. Here are his thoughts on what that can teach us about ebook pricing. Fergus’s most recent thriller, Cut Out, is available now. You can find him on Twitter.

Change is inevitable. If you had told me, fifteen years ago, that I’d soon be able to buy and read practically any book on a handheld device that was thinner and lighter than a paperback, I actually would have believed you. And why not? Technology marches forward at a terrific pace. However, if you’d told me that people would be paying little or nothing for these books, I’d have shaken my head; I certainly wouldn’t have thought that authors and publishers could just give away their revenue. And yet, that’s the way things are going. In a storefront packed with titles priced 99p or less, £2 or £3 can seem an awful lot to pay for an ebook “which”, the public tell themselves, “costs nothing to produce”.

Let’s begin by making something clear. I’m not opposed to digital, and not opposed to ebooks. If people want to read my novels on a Kindle rather than in print, that’s fine with me, and if Kindles mean that more people read more often, that’s great. I’m also fine with ebooks costing a little bit less than their physical counterparts.

So change was inevitable, and the advent of ebooks was always going to impact on traditional pricing models… but even so, how did we find ourselves dipping below the £1 mark? When did it become acceptable practice to give away books for free?

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I write series crime for Hodder, so I watch the publishing industry trends with interest. However, in my day job, I run a successful app studio, making games for smartphones and tablets. My company works with a range of different brands and digital publishers – it’s a comparatively young industry, but it evolves a lot faster than other media such as books or music, quickly overtaking those more traditional media. We’re driven by innovation, but we’ve seen huge collateral damage to both people and businesses who work in the sector; my hope is that the book industry won’t blindly follow in our footsteps and imitate some of the dreadful mistakes we’ve made.

Let’s consider the problem of “discovery”.

It’s true that digital publishing delivers more choice, but there’s a catch – almost everything is harder to find. Fifteen years ago, publishers fought to get their physical products onto physical shelves, where it was tough to stand out, surrounded by hundreds of rival products. But now, in the online store, each product is swamped by millions of others. The virtual shelves are never decluttered; they just keep being extended as hundreds of hopeful new titles are published every day. Remember, I’m talking about the games industry here, but doesn’t this sound awfully familiar?

Let’s consider the question of quality. In the old model, there were publishers and specialist retailers, all curating the content, weeding out the unworthy titles to make room for others. But those old gatekeepers are fading away, and now, in the era of self-publishing, a lot of shelf-space is dedicated to mediocre content.

Which leads us nicely on to price. After all, if your title is getting lost in a sea of other content, you need a way to stand out. You know that online-store ratings can be rigged, and reviewers tend to focus on the blockbusters. So what do you do to get people’s attention? You lower your price.

And this is where it gets interesting. The theory is that while you might make less money on each sale, you’ll make more sales overall, and come out ahead. It makes sense… if you’re the only one following that strategy. If everyone does it, things can turn ugly. In the app business, prices immediately plummeted to £0.69, the lowest pricepoint available at the time. In a bid to attract audiences, some big-budget titles dropped their price to zero. And of course, once they were free, everyone else had to make their games free, or risk being left behind. Within a year, the majority of games had followed suit – meaning there was more free content than anyone could possibly consume. In such an environment, charging anything suddenly seemed extortionate.

But games and apps are successful sectors, aren’t they? Some of them make money… doesn’t this partially vindicate the new digital model? Doesn’t this suggest that something similar could work for ebooks?

It’s not quite that simple. Unlike books, games are not fixed linear titles – they adapt to each user and usually have no end. They monitor everything that each player does, and employ a range of clever psychological techniques to sell extra lives, better weapons, power gems, etc. Games are no longer products; they’re ongoing services, designed to encourage in-app spending. And although there is plenty of scope for innovation in ebooks, I don’t believe that ebooks can earn a sustainable income through selling what amounts to digital accessories.

So if the outlook is really so bleak, why doesn’t someone do something about it? The answer is simple – the new model makes money for the platform-holders.

Remember, there will always be plenty of new people who are desperate enough to give their content away for free, in return for a little exposure. This wealth of free content draws audiences away from other retail channels, and some of the audience will spend some money; it won’t be as much as before, but if traditional retailers die, then the one or two dominant platforms that remain can carve up the world between them, and take a percentage of everything.

Cynics may say that these platform-holders are killing traditional retail. I think it’s just a matter of basic maths – if we keep giving our content away for nothing, then we really can’t expect to make much of a living from it.

This is a complex and emotive subject. Once again, I’m not particularly pro-print or anti-ebook, and I think that there’s room for sensible pricing models which ensure books are affordable for everyone. However, I also want to see the industry operating in a sustainable way and, for content creators, that means not going free.

Because, in the long-term, free is just too high a price to pay for creativity.

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