Tuesday 9 October 2012

Tools of Change Frankfurt - Pricing Digital Content: Publishers and Consumer Perspectives

Ed Nawotka introduces the pricing panel
Ed Nawotka from Publishing Perspectives introduced the Pricing Digital Content panel including Ann Betts from Nielsen Books, Ashleigh Gardner form Kobo and Timo Boezeman from A. W. Bruna. He jumped straight in and posed the question 'whatever happened to free?'

Ann Betts provided research insight: people are more amenable to paying for content and in established markets e.g. the US that price is getting higher. Timo Boezeman believes that no one can live on free, you have to make money, you can use free content, but it somehow needs to lead to sales.

Picking up on this theme, Nawotka then asked where the industry can go from saying no one can survive on free? What impact does self publishing have on large publishers? Can they compete? Boezeman feels you don't have to compete with self-published titles, you compete on quality. Quality has a price and digital has it's own price. At Bruna, they use a matrix, but it varies from title to title and they like to experiment. They are not there yet in the Netherlands when compared to the US.

Ashleigh Gardner said that Kobo would like to see more on price optimisation: it's not printed on the back any more, so you need more experimentation with changing price. Price range is all over the place, but the $9.99 price is still a sweet spot. However a customer willing to pay that will still pay $12.99 and you can move to $14.99 without losing too many sales. When someone is looking for something specific, those titles can hold a higher price. She cited JK Rowling's publisher experimenting with pricing to find that sweet spot.

Betts, Gardner and Boezeman: the pricing panel
Betts believes that people are not as concerned with price as we think they are explaining that 15% of US consumers think the price is too low. In terms of price points $9.99 is most popular and takes c.20% share - but that price point is becoming stronger. $12.99 is now the second most popular price point for driving volume sales and $9.99 is down to fifth place. There is a shift from looking for the cheapest thing and buying in quantity. The market is becoming more sophisticated and looking for quality.

Boezeman finished with the view that if Amazon comes to the Netherlands with ebooks he can see a price war on digital starting. Their ebook price is 13-15 euros and approximately 70% of paperback price (this upholds Jo Henry's data from the opening keynote).

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