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Apple Raises E-book Prices For Everyone
Nom du Keyboard writes "I was informed by my publisher this week that they would have to raise my e-book prices because they planned to sell them through the Apple iBooks store. How could this happen? A lot of my individual stories sell in the $1 to $3 range, which is well within the impulse purchase amount for many people. In this price range a 50-cent price difference may well be the difference between a purchase and a pass. Meanwhile, Apple is touting its new 'agency model,' whereby the publishers set the prices. However, it seems that Apple requires books sold in its iBook store have prices ending in .99 — nothing else." (More below.)
"Furthermore, Apple requires that if you sell books through them that you absolutely cannot sell them for less through anyone else. To my understanding Amazon also requires this, so Apple and Amazon prices should be identical in the future, but Amazon doesn't force prices to end in .99. What this means is that an e-book that the author was quite happy to sell for $2.29 or $2.49 is now going to cost $2.99 from everybody. While that sounds like only a few extra cents, it adds up over time and can lead to resentment against authors for charging higher prices, even though they have little real control over pricing. I, for one, do not understand why Apple computers only understand numbers ending in .99, or just how Apple is making it better for the consumer this way."
Because you obviously couldn't charge $1.99 for that book both places?
"He's lost in a 'floyd hole"
The problem is that Apple has and Amazon will shortly have a "you can't sell your book for cheaper at other ebook stores" clauses in their agreements. (The Amazon one is part of their newer pricing model, which matches Apple's 70% cut but adds restrictions on pricing, which should go into effect this summer.)
A hypothetical:
You've been selling your ebook on Amazon, and you've done some pricing experiments. You've found that you sell half again as many books at $2.49 than you do at $2.99, and the volume more than makes up the difference, so you set your price accordingly. In order to expand to the iBookStore, you must price your book at $2.99 there, and take the hit in sales. But wait! Apple will refuse to sell your book if you're selling for cheaper on Amazon, so you have to raise your price to $2.99 at the Amazon store as well.
So, now all your customers are paying more, even the ones who are not buying from Apple, and you have fewer of them. You are not making as much money, and neither are any of the distributing companies that make their money by taking a cut off yours. Everyone loses, all for the sake of a nice round (?!) number.
Except you might make more money if you drop the price to $1.99 and now sell in 2 marketplaces instead of one. Who says that the price adjustments have to be positive?
If Amazon really wants to fuck with Apple they'll force their pricing to end in .98 which would mean that books on iTunes would be $1.01 more (until Apple adjusted their pricing to .97)
Whatever. I'm heading down to the Apple store to get a new 3g iPad and hit In-n-Out for a Double Double. Cheers.
I still cannot find the droids I am looking for...
Seriously, will this .99 and .95 thing ever die? Does anybody really look at a price-tag that says $4.99 and not just think in their head "$5"?
Quite the opposite: a lot of people think $4. That's the whole point.
http://en.wikipedia.org/wiki/Psychological_pricing
I've caught friends doing this on a few occasions, and when I call them on it they do a sheepish "oh, yeah". :)
What's wrong with that? Remember, the legitimate argument against DRM on commercial media is that it gets in the way of a user making legitimate use of media that he has bought. For example by stopping him making backup copies or playing the media on multiple devices. Having your identity embedded in the media metadata doesn't get in the way at all.
I see the "Let's place an ad in the New York Times and we'll be rich because SO MANY PEOPLE READ IT" fallacy made it to the net intact.
Your "exposure" to 80 million customers is bogus. There are tens of thousands of apps - how many people are going to see YOUR app?
And the more apps in the closed store, the less that being in that closed store is worth.
Think of it - if everybody had 10,000 friends on facebook, it would become even more useless than it already is. You'd have to filter out 99% of it somehow.
Network effects don't scale when the amount of time a person has doesn't scale.
If it's such a great model, and the best way to get your apps sold, then why is Apple afraid to let people install stuff from outside the App Store? They should welcome inefficient competition as a way of demonstrating their superior approach - except that, like any pyramid scheme, it's only superior for those at the top.