Posts Tagged ‘pricing’

The Kindle Store: land of mysteriously missed opportunity

Friday, July 24th, 2009

My Kindle Store home pageIn an earlier post, I went into detail on the problems with the Kindle’s magazine store.  In spending a little more time in the books section, easily solved problems are present there as well.   It’s so compulsively simple and fun to buy books in the store that this represents a massive opportunity.  I’d say conservatively that Amazon could easily double its on-Kindle revenue with a few tweaks.

One big surprise right off the bat is the loss of Amazon’s Recommendations engine. My Kindle account is linked to my main account, where I have literally ten years of purchase and browse history stored.  My Kindle recommendations appear on the Kindle Store home page, as can be seen in the picture at right.  At best, I would regard these as ‘generic’ recommendations that have little to do with what I’ve ordered either in the past or over the Kindle. I also have 25 books stored in my “Save For Later” tab as well as a number of samples I’ve ordered.  Many of these are books about media & marketing, yet not one single business book recommendation.  Clearly these aren’t playing into the recommendation intelligence.

Kindle's top sellers - not much like the NYT's or USA Today'sThe Kindle Top Sellers proves to be pretty much useless as well as a discovery engine.  As you can see in the screen shot, the Top Sellers are a pretty weird bunch with little relation to today’s accepted Bestseller lists like those in the USA Today or New York Times.  What’s going on here?  With the exception of the Glenn Beck book, all of these are free.  While this certainly shows the power of price elasticity in the store (and again supports Chris Anderson’s Free, dammit), it also supports my earlier point: if you make it fun & easy to shop, people will buy books in droves – even titles they might not want that much. Sherlock Holmes making the Kindle Top Sellers list shows that people will ‘buy’ pretty much anything if it’s free.  At minimum, you’d hope that Amazon could separate out backlist or classics from the true contemporary bestsellers.

This goes to show an easy fix that should go on each line – there’s no easy access to price information! I have to open a link to each book to find out what I’m going to pay.  While the Kindle is advertised as having most books at $9.99, I can tell you after a few months of ownership that most of the books I’ve been interested in – many of which are true Bestsellers – are not $9.99.  I’d be curious to see a price distribution graph if anyone’s done the work.

The Sample Chapters program is half-baked. Their easy availability ois a great idea but in practice gives unsatisfactory results with no apparent rational oversight of content selection.  On Amazon proper, you can select a “random page” in most books just as you would in a bookstore; when you pick up a physical book to browse it, you naturally open to the middle not the Foreword.   All of the Sample Chapters I’ve received have been just the Forewords, not the ‘guts’ of the book, which is what I’m really interested in.  Worse, in many cases half or more of the sample is just the credits at the front of the book!

Finally there’s no linking from reviews and other sources, a longtime basic function of hyperlinking which Amazon supports with its open affiliates program.  Every Sunday I read the New York Times Book Review in search of ideas for things to read.  You’d think that the NYT on Kindle could at least have links into the store.  Even if that’s not feasible, there could at least be a menu on the home page (or even within) for “Recently Reviewed” by newspaper or magazine.  Instead I’m left to search, with each click making it a little less likely that I’ll make a purchase.  And then of course there’s the issue – key for all E-books – of whether all books will even be available when they’re reviewed.

All of these are solvable problems.  If even one of these can be fixed, I predict a huge increase in the vitality of the Kindle.  One wonders if these will be better addressed in the upcoming competitive devices from PlasticLogic and others – and if Amazon’s strength online will be an Achilles heel for its E-books business.

Book Publishers: Embrace The E! (or else)

Thursday, July 16th, 2009

Yesterday The New York Times reported on book publishers’ discomfort with releasing books simultaneously as E-books and through traditional channels.  One idea, not supported universally, is to release E-books later than hardcover editions in the same manner that paperbacks are held back for at least a year.  The reason proffered is to preserve the initial $20-35 hardcover price versus the $9.99 becoming commonplace for E-book editions.

sQ1EMoVD81yp2ywxp7yFX4gt_500The ‘hold-back’strategy is ridiculous and totally ignores how most readers actually use their books.  While E-Books only represent a small slice of total sales today (but growing fast), there’s little question that somebody willing to shell out $200-300 for a ‘reading device’ is likely to be a passionate reader.  As one of those, I would surmise that many of the sales on E-Readers are actually incremental to publishers’ income, keeping people like me away from used book stores and libraries.  That’s where the E-Books goldmine is for publishers: not in keeping existing sales but in diverting money away from long-standing secondary and ‘free’ markets.  While its true that publishers get a nice arbitrage gain from the de facto DRM of a first-edition hardback (tough to reproduce cheaply, tough to read freely in its reproductive form), that gain can in turn be picked up by the reader upon completing the book by selling it or trading it.  An E-Book edition is essentially non-transferable.  I pay less – and perhaps the publisher makes less – but its fungibility also destroys its secondary market value.

Take, for example, my current reading: Infinite Jest.  It’s been fifteen years since it was first published, so there are plenty of used copies out there for around $10 and libraries consistently stock it, while a new copy runs $16.  Because of its ease of delivery and portability, I elected to get the $10 Kindle edition with the publisher getting some profit and no incremental printing costs.  Had I purchased a used copy, I would likely have resold it later for half-price – meaning no profit for the publisher, virtual cost of only $5 to me and $10 profit to the used book store (for selling it twice at 50% profit).  So where is the advantage to the publisher in holding it back?  It’s simply ceded its ability to profit off of its back catalog.

This is one of the central mysteries of Kindle Store availability to date.  It features plenty of hot new titles, but the back catalog titles is still mysteriously empty with many major authors most famous works; Roth, Mailer, Pynchon, Heller and Updike just for starters.  Wouldn’t a great cut-rate selection be a great source of found profit with barely any incremental cost?  I understand there may be unanticipated contractual issues (a la last year’s Writer’s Strike over web royalties), but the longer they wait, the more the price will drive towards Zero (as it did for the music industry and iTunes).  Already sites like ebooksbay.org are popping up with ‘free’ back titles.  (I found a fully convertible PDF copy of Gravity’s Rainbow last weekend.  There goes a lost sale.)

Click here for free Free

On this very same day by coincidence, Chris Anderson’s Free: The Future Of A Radical Price was released for free on Kindle and immediately shot up to #1 on the Kindle sales chart.  I’ll leave his argument for other bloggers, but in Anderson’s eyes, he’s able to do this because he (and presumably his publisher and agent and c.) can use it as a platform to make money other ways: speaking fees, leverage at his job, increased opportunities generally.  This is also the direction the music industry has taken with its ‘360-degree’ contracts for its biggest artists; Live Nation taking a cut of all of an artist’s revenue streams, from ticket sales to licensing.  The book publishing industry needs to figure out its ‘Freemium’ strategy quickly.  As a post on Mashable points out this morning, not all Free business models are created equally.  People will pay (as I have done with IJ) for convenience or added value.  What can book publishers bring to the table?  Figuring this out quickly before E-Readers become commonplace – look for them to spread like wildfire among textbook-toting students – is absolutely urgent for an industry that’s lived off the same industrial-based business model for hundreds of years.

Sports franchises need to take a cue from airlines and Apple

Tuesday, April 28th, 2009

Joba Chamberlain opens the second game ever at the new Yankee Stadium and empty seats outnumber full ones in the exclusive areas behind home plate and the dugouts. The Stadium was packed otherwise.  (Flickr / Fansherpa)

Joba Chamberlain opens the second game ever at the new Yankee Stadium and empty seats outnumber full ones in the exclusive areas behind home plate and the dugouts. The Stadium was packed otherwise. (Flickr / Fansherpa)

With all the fuss over the empty luxury seats at the new Yankee Stadium, I was mildly surprised to find something similar – dramatically so – happening in my own backyard.  We went to Sunday’s A’s-Rays game at the Oakland Coliseum.  All the ingredients for a great day at the ballyard were in place: sunny April weather, last year’s AL champions in town and a Sunday afternoon.  What we found instead was a micro-market in disarray. As the credit markets teetered last October, the market for sports tickets anecdotally seems to be following.

The first indication there was a problem was the total lack of online ticketing activity.  There were practically no offers on CraigsList, even from brokers, and none at all on eBay.  At the walk-up ticket booth, we found that we could buy any section in the house, including the Diamond Level.  This should simply never be the case.  The Diamond Level is a very limited “VIP” area, maybe 60 seats tops, right behind the plate on the playing field level.  Seats go for $225 but also include free food and drink service for the whole game.

Weirdest of all was the scene inside the stadium.  The A’s bifurcate each of the two seating levels – a minimum of two pricing levels in each deck.  In both decks, there was a cluster of people behind the plate, practically nobody for several sections as the seating moved towards the outfield, another cluster in the sections starting the new pricing tier, again fading to nothing.

The mystery to me is why shouldn’t the people forced out to the outfield be able to sit in these empty “mezzo-sections.”  The answer could come from a nimble dynamic pricing system at game time.  As airlines like Virgin and JetBlue have discovered with exit rows sold at check-in, why not enable ask fans as they arriveto purchase a better seat for an extra few dollars?  It would be an easy thing to equip ushers with Palm-style barcode and credit card machines like those carried by the clerks at The Apple Store.  Everybody gets the opportunity to move closer (or elect not to), getting rid of the weird empty spaces and (I’m assuming) presenting a better, more invigorating environment for the home team.  (I know they’re supposed to ignore the crowd, but ask any actor or musician if they’d rather play to a full orchestra than have the front rows empty and the crowd loosely dispersed.)

Meanwhile across the bay, the Giants are trying out a number of dynamic pricing policies.  First, the team partnered up with a firm to build elastic pricing around its unsold inventory for the least attractive games.  Last week, though, came the real reckoning – and a big indication that the team is running scared about its attendance.  Ticket prices were dropped 40% for the Giants series this week against the Dodgers, traditionally the most attractive opponent.  Granted the team is trying to stir up interest for later in the year – it appears they’ll be competitive in a moderately challenging division – but to have to do this so early and against the team’s best natural rivarly is surprising.  One wonders how scared the Giants are about advance sales for the rest of the year.

Susie is quick to point out that the lack of an Oakland A’s ticket market framed by the fact that the Oakland Coliseum is a horrible dump, getting dumpier every day.  The tarps in the third deck look weathered and horrible, while the bathrooms, parking lot and facilities remain some of the worst for a major league sport.  Nevertheless the empty seat patterns – along with all the unsold display ad inventory throughout the stadium – are clear indications that baseball is not recession-proof.  There are easy ways to make profit from making markets more efficient; marketing and pricing are the classics.  Let’s see if the A’s and their brethren take up the challenge.

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