Platform Lock-In and Consumer eBook Prices

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Amazon and Nook LogosThere has recently been a great deal of speculation and study as to what is happening – and what will happen – to eBook prices in a post DOJ settlement world. I must admit up front that I, like many, don’t know, though I am following along and am as curious as the next publishing geek to see what will happen next.

I’ve been pondering the consumer price angle – as opposed to the list price angle – and recently had the opportunity to discuss it with some peers. Like much of the commentary about the future of pricing, I am venturing into the land of speculation but here goes…

In the eBook universe, devices rule. Specifically, the Kindle line, the Nook line, and the iPad. Others matter, but for this piece, I’m going to stick to those three. With each device comes tremendous consumer value beyond the prices of the eBooks purchased – immediate download, syncing across devices, lending, etc. As a consumer it is all very convenient and has a feeling of openness. However, it is all driven by the platform one has chosen and those platforms are closed. In other words, a Kindle eBook will sync across Kindle apps for various devices, but not with a Nook app. The platforms enable the conveniences for consumers but are only so open (and may change at any moment).

Platforms also do another thing – they enable virtual lock-in for the retailer who has been chosen by a given consumer. Yes, a consumer may download all eBook reading apps to, say, an iPad and then choose which edition of a given eBook to buy based on price (provided of course that Apple continues to allow Amazon and Nook apps on their devices). But I doubt this will be a common use case. My suspicion is that most consumers will choose a platform and populate their libraries with that flavor of eBook. It is, after all, the easiest and works best, especially with the reading-specific devices that dominate the market currently.

What does this have to with pricing? Well, in a bricks and mortar world pricing was most often used to attract a consumer to one store as opposed to another store. B&N, for example, would advertise the latest Harry Potter at a steeper discount than, say, Borders (remember Borders) in the hopes that the consumer would choose to go to B&N for that book and, they hoped, other books. In other words, it was a consumer-acquisition mechanism. It is hard for me to imagine eBook consumers who have chosen a given platform jumping platforms because of incremental differences in individual title pricing.

My thinking is that consumers will make their choices based on the purpose, quality, and price of the devices and the usefulness of the overall platforms (bringing into account other media such as movies and music). The $1 – $3 price difference of a given book, and maintaining the “perceived value” of books in general is key for publishers. And maintaining competitive pricing is important for retailers. No doubt on either front. However, unless something seismic happens, consumer eBook pricing will play a bit part, not the lead, with consumers, and this will affect what we ultimately see in terms of discounting at retail.

That’s my guess anyway. What do you think?

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Comments

  1. says

    I sometimes get muddled over the true distinction–from the customer’s POV that is–between devise and platform “lock-in,”in its various forms. And your piece is clarifying. I may love my X device but use Y’s apps to choose and purchase my eBooks because I prefer Y’s platform. And there’s a lot that informs that preference. This is one sort of customer profile.

    There is also the customer new to eBooks, who has a device but doesn’t yet have a preference for platform. Or the customer who has their customer data on several platforms, so they can easily pick and choose where they shop and for what by using different apps when necessary.

    I think what I’m trying to get at is there is a “soft piece” of the lock-in that has to do with where you keep your customer data and what the incentive is to go through the process of opening a new account or not. Paypal, of course, largely eliminates this dynamic.

    It seems like there is an increasing stress between retailers who want to keep customers to themselves–as monogamous as possible, so they can amass data customer data and consumption behavior–and customers who largely aren’t given a way of benefiting from this fidelity. Then there are folks like PayPal who don’t care where you shop but love what happens when your money is rubbing up against itself when it’s in transit through their system.

    • says

      Thanks, Peter. I really like this notion:

      “There is also the customer new to eBooks, who has a device but doesn’t yet have a preference for platform.”

      This is definitely someone who could be swayed by price points (probably in the aggregate).

      I also love the notion of the “soft piece” of lock-in and the choice to open that account or not. I’m guessing that consumers will be apt to choose one and stick with it rather than try to save a buck or two by switching. But, I could be wrong. Warren Buffet would switch platforms to save the dollar!

      Laura Dail (@LCDail), a wise agent, also pointed out via a tweet that an emerging model like Zola could be a game changer. My thinking is that as an idea they definitely are a game changer. But, they have to go up against Amazon, Apple, and B&N to actually change the game. And that’s a tall order.

      • says

        I agree that folks won’t likely switch platform for a buck or two, but they might be willing to be a “new customer” of a new platform for other benefits than price.

        On Zola, I have to admit I can’t quite see it–I can’t quite see their possible trajectory or even whose problem their solving, so to speak. Facilitating an alternative to Amazon is one thing; creating a vehicle for driving discover and conversion from a zero-customer base is another. I’m rooting for them but I’m not quite clear what I’m rooting for. I’d love to hear what you and yours have to say on this front.

        Cheers,

        Peter

  2. Fernando Vaz says

    I think what is missing is a new form of ad for all types of publication! When did you ever buy a book because an Ad? If you have an Advertisement system that allows readers to go to the site where it sell the book for the lowest price and download it to the apparatus, I can see why consumers will not chose the best deal!
    “There is also the customer new to eBooks, who has a device but doesn’t yet have a preference for platform.” This I hope will be the winner!
    I would like to hear also the legal aspect of landing e-books and digitized books! I just think the publishing industry is about to pass for what the audio industry is passing! A Nightmare! Authors will publish directly and books prices may drop a lot!!

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