Periscope Depth

I ran contraband that they sponsored; before this rhyming stuff I was in concert

With the surge in e-readers and tablets, as well as new programs like KDP Select, there’s been a huge churn of stories on ebook pricing. Here are a couple of recent links:

First, via The Kill Zone, a link to a Booklr survey of the top 100 Kindle Books vs. the top 100 Nook titles between January 12th-19th. 35% of the top Kindle titles were less than $2 or free; none of the Nook titles were. At the other end, 40% of Nook’s top 100 were $10 or more; only 27% of the Kindle’s were.

Second, via Forbes, an EbookFriendly report based on Amazon data shows that the average price for a self-published ebook in 2011 was $1.40. The average price for Amazon’s top 100 eBooks was $8.26.

(This was for all of 2011. The Booklr data above, for one week in 2012, gives an average price for the top Kindle 100 of $6.48. So already the KDP Select strategy has worked at lowering ebook prices)

Finally, my man Ben Snitkoff linked me to a blog post by David Kazzie on how KDP Select shot his debut novel, The Jackpot, to the #1 spot for Kindle legal thrillers. He has a few theories as to why the free promotion helped:

Also, I had so many free downloads, the book began to appear in other books’ “Customer Also Bought” pages. Amazon doesn’t seem to care if these books mix together on the Also-Bought lists, so many more people were seeing the book once it switched back to Paid status, even though all its prior traffic was due to free downloads.

I like this theory, partly because it jives with my own successes on the Nook platform. The more people download your book, the more your book gets paired up with other titles by recommendation algorithms. If it hits some lucky sector, sales can suddenly take off.

So what’s Amazon up to?

I love every chance I get to chat with my CEO for a few minutes, because he has amazing insight when it comes to online marketing and media*. Many months ago, I was sitting with him at a company lunch while he was holding court to our Directors of Business Development and of Revenue about Google’s apparent product strategy. “Make a good enough product,” he said, “and give it away for free. Sure, Google Docs isn’t as feature-rich as MS Office, but it doesn’t need to be in order to exert price pressure.”

It appears that Amazon is following a similar strategy. They’re a big enough player that they can throw a lot of weight behind a particular price point. If their goal is to make life harder for legacy publishers, this makes sense as a tactic. Yes, Amazon would be collecting more margin if the average ebook price were still $8.26, not $6.48. But Amazon can afford to lose a little margin because they’re getting money elsewhere (people buying TVs or groceries or sweaters online). Random House isn’t.

This is purely speculation, of course. But it’s a story that makes sense to me.

* And I’m not just saying that because he’s my boss. If you know me in real life, you’ll know that I never compliment someone’s intelligence unless I really mean it. This has less to do with my integrity and more to do with my overweening conceit.

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