iPad’s first effect

The iPad has only been announced for a little over a week and it has already increased the price that consumers are going to have to pay to purchase e-books. The hype about the iPad saving the publishing industry has convinced the publishers that they are already saved even though not a single book has been bought for the iPad yet. The threat that they think they have been saved from is a lack of retail pricing control over e-books. The ability to buy a new release for $9.99 in digital form decreases the perceived value of the hardback version. The obvious way to combat this is to raise the price that people have to pay for the e-book so that they will not feel ripped off by the price of a hardback.

The publishers are right to fear the current trajectory of the book selling business. Traditionally, their business model has been predicated on controlling the content delivery medium and distribution network through economies of scale. Those advantages are dead.  The music industry tried to prop up the perceived value of newly released albums by raising prices and succeeded in doing nothing more than killing all the physical record stores.

Fighting a holding action by increasing the price of e-books might buy them time, but it risks doing so at the cost of damaging the nascent digital publishing market. Publishers need to redefine the value that they bring to both authors and consumers. Change is coming. Retailers like Amazon, Borders, and Barnes and Noble will become indistinguishable from publishers except that they will have better stores both online and off. The only way that publishers will even be able to compete is to create their own stores and add value to them that the others cannot. See Baen books for a fantastic example of how to do this. They give extensive free samples. They give away lots of complete books to interest readers in series. Their author’s interact with readers in the forum.

The final transformation is that someone will actually start adding value to newly released hard cover books. I expect that once it all shakes out, buying the hard cover edition will be like buying the collector’s edition of a DVD. You might get exclusive content and commentary, a download code for the electronic version, and many other goodies that can be delivered electronically and cost the publisher nothing (exclusive avatars for their forum, sneak peaks at upcoming books etc.).

Any way, publishing is changing. Apple is causing disruption. But the challenge of getting more people to buy more books has already been solved by Amazon. The only thing left to figure out is how to make money if you aren’t Amazon. The answer for Apple is to do much more than just sell books. I think that publishers will find that the answer for them is the same.