Frankly, I am surprised that it took this long. But today, we read in the Wall Street Journal that two major publishers have decided to pull a music industry mistake. Simon & Schuster and Hachette Book Group have announced that they will not release most e-book editions until the hardbacks have been on shelves for four months.
And I quote David Young, CEO of Hachette Book Group, whom the article cites as saying: “We’re doing this to preserve our industry, I can’t sit back and watch years of building authors sold off at bargain-basement prices. It’s about the future of the business.”
Correction: This move is about the past of your business.
I’m just being a historian here when I point out that language like “We’re doing this to preserve our industry” is a classic symptom of what we at Forrester loving call The Media Meltdown. I wrote a whole report on this ailment and its many symptoms, chief among them is that media businesses attempt to preserve analog business models in the digital economy, even when analog economics no longer apply. This is exactly that scenario.
I have two very important messages to offer the book industry (most all of them clients, so I’m trying to be delicate here, the way a group of friends running an intervention for an alcoholic have to act even if it involves summoning tough love). The first message is the hardest to hear and it will make me some enemies. But the second message offers some hope and I encourage you book types to give it a fair hearing, because I have history and economics on my side.
Message #1: Dear book industry, I’m so sorry to tell you this, but your books really aren’t worth $25. Just like newspapers and magazines weren’t really worth what people were paying for them. And CDs, and DVDs. These were all worthy of a high price when analog economics were the only economics. When people understood that they paid $25 to get some paper, ink, and a binding, all of which had to be warehoused, shipped, and slotted on shelves in warm stores with Muzak and imported coffee odors wafting through.
A digital book suffers from none of those impediments. Therefore: it should be cheaper. Stop glorying in historical prices and accept the fact that a digital book should not cost $25 unless it comes with some awesome, exclusive premium that makes it worthy of such a price. Otherwise, $9.99 is darn awesome a price to pay, given how cheap it is to deliver an e-book (which has fewer bytes in it than a TV episode sold for $1.99 on iTunes).
I am no Chris Anderson. I am not telling you that content wants to be free. I’m just telling you that it wants to behave according to digital economics, not analog inefficiencies. I understand that you have the awful burden of serving both analog and digital economics simultaneously. That’s real life and I don’t pretend that you can go digital in a month, or even a year. So what’s a good publisher to do?
Message #2: You can actively “window” in a way that doesn’t alienate consumers. Just as I want you to charge a fair price for your digital content, I want you to be able to sell physical books for as long as a majority of consumers still want them. So here’s my proposal: Rather than creating artificial scarcity by holding e-books back four months, why not dynamically price your offerings so that a consumer who really wants that new Stephen King book on his or her digital reader can get it the same day as the hardback. Here are two possible, nonexclusive scenarios, both of which are better than what you currently have planned:
Bundle the digital download with the hardback. Having a hard time selling that hardback book these days? Bundle the digital version (at Amazon (NSDQ: AMZN) and Barnes & Noble (NYSE: BKS), they’d be happy to facilitate this for you). It costs pennies to deliver the digital version, it gives you a way to establish a relationship with the consumer since they’ll have to sign up to get the download, and it creates a truly multiplatform consumer experience that can’t be beat.
Offer a premium digital version to coincide with hardback release. Worried that $25 can’t compete with $9.99? It can’t, frankly, and 10 years from now, it won’t have to, but for now, manage that gap by offering digital content in windows: premium and basic. This takes a page from our recommendations to the music industry and it applies here perfectly. Offer a premium digital version (with a personalized dedication page from the author to the reader — automated, of course — an exclusive interview with the author, and some behind the scenes essays) for $19.99 that goes on sale the same day as the hardback. But make it clear to buyers that if they are willing to wait and don’t want the premium content, they can pre-order the $9.99 version right now, while all the marketing for the hardback is in full swing and awareness is at its peak. The money is already committed, and the digital book is simply delivered four months hence.
These options are 10 times more interesting to consumers than what you’ve given them today. Plus, they allow you to manage that awkward transition from analog inefficiencies to digital economics. You become a friend to readers in this scenario, not their headmaster or disciplinarian. We call that Media Rebuild, a phase beyond Media Meltdown and one we welcome you to if you’re ready.
This article originally appeared in Forrester Research.