E-Book Prices Rise
As Sales Growth Slows
Published: 12/28/2012 02:13am
The sales growth on e-books is slowing, and prices are rising, according to the New York Times. Amazon and other e-retailers have kept prices on e-books above the $9.99 level this year, after the price war reached graphic novels with a $9.99 price on Watchmen last Christmas (see "Kindle Launches Graphic Novel Price War"). The backdrop for the higher prices (which were below cost on many titles at $9.99) is a year-over-year e-book growth rate that had slowed to 34% (from 2X the last two years) as of August, and has shown signs of declining further since then.
The Times mentioned several factors that may be contributing to the lower growth rate, including a backlog of books purchased by enthusiastic new device owners than need to be read before new titles are purchased; and the possibility that the loss of over 600 Borders stores last year eliminated showrooming that had been driving e-book sales.
An observation others have mentioned is that as buyers switch from dedicated e-reader like the black and white Kindle to more full-featured tablets, they have more easily accessible entertainment options than just books in their devices.
Regardless of the reason, a slowing digital books growth rate means less new market share to get, and less motivation for Amazon and its competitors to take a loss to get a customer on other titles. The margin on devices has also declined, so to keep over-all margins at acceptable levels, retailers like Amazon and Barnes & Noble may have to charge higher prices on content.
And there may also be a growing realization that lower prices do not increase the size of the pie, but just reduce profits. With the notable exception of Archie, most comic publishers are keeping digital prices around the same level as print, especially for the first month, and sales have been growing robustly.
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