The Race to Zero – $6.94 and £2.18 are the new $9.99

As we end 2010, a year that started with the Agency Model, it’s worth taking a quick look at what prices the bestsellers in the Kindle Store are at.

The Agency Model was introduced because Publishers felt $9.99 wasn’t a good enough price for them. Were they able to raise book prices above $9.99?

Keep in mind that we supposedly had just 2.4 to 3 million Kindles in January 2010, and now we supposedly have as many as 9 to 11 million Kindles. So, the new price standard replacing $9.99, will be far more important than $9.99 ever was.

The Top 100 Paid Bestsellers List in the Kindle Store

The price distribution –

  1. Books at $1 – 17. That’s 17 out of the Top 100 at just $1. You get the feeling $1 is threatening to take over, and that Amazon’s Deal of the Day page is an attempt to replace $1 books with $3 books.
  2. Books at $3 –  12.
  3. Books at $5 – 13.
  4. Books at $10, or between $6 and $10 – 28.
  5. Books above $10, or at $12.99 – 20. Just 3 out of the Top 20, and just 1 out of the Top 10.
  6. Books at $19.99 – 1. Take a bow, Mr. Follett. You are the champion of the Agency Model.
  7. Apps – 9. Average Price of Apps – $2.43. You get the feeling Amazon will have to move these to a separate list.

That list shows that there are 18 Agency Model priced books in the Top 100, but 51 books and apps at or below $5.

If we assume the price of all items is at the upper limit of the buckets they are in ($5, $10, $12.99, and so forth), we get an average price of … ta da … $6.94.

Publishers didn’t think they could survive on $9.99, they waged a war using $14.99 and $12.99, and they ended up with $6.94 per book in the Top 100. Of course, the fun doesn’t stop at $6.94 being the new $9.99.

The Top 100 Free Bestsellers List

Right beside of the Paid Bestsellers list, is a list of the most downloaded free books.

There are 5 free Kindle Apps, 43 offers on new books, and 52 public domain books in that list. Given that there are over 20,000 public domain books in the Kindle Store, and over 200 offers on new books, it’s safe to say that a lot of people are reading those – instead of buying new books.

So it keeps getting worse for Publishers. All those public domain books they could print out, and make money from – Gone. Even Oprah couldn’t get public domain books to sell well – What hope do Publishers have?

Let’s amble across to the other main stores – We want to confirm that prices aren’t just low in the Kindle Store.

Does the Nook Store save the Agency Model?

Here’s what we get in the Nook Store –

  1. Books at or around $1 –  3.
  2. Books at or around $3 – 5.
  3. Books at $5 – 29.
  4. Books at $10 or between $6 and $10 – 42.
  5. Books above $10 – 21.

Again, assuming all books are priced at the upper limits of the buckets they’re in, we get an average price of … $8.54 per book. Once again, Publishers attempts’ to go higher than $9.99 have been soundly rebuffed. In fact, there are just 21 books above $10 in the bestsellers list.

Surprisingly, B&N is managing to keep the average book price at a healthier price point than Amazon is. Those 17 $1 books, 12 $3 books, and 9 $2.50 apps, that crowd the Kindle Store bestsellers list, are all missing from the Nook Store. Insteads we have a mere 8 books priced below $5.

Kindle Store in the UK – Perhaps readers in the UK love Agency Model

Actually, they don’t.

  1. Books at £1 – 17 of the Top 20, 61 out of the Top 100.
  2. Books at £3 – 3 of the Top 20, 21 out of the Top 100.
  3. Books at £5 –  16.
  4. Books at £7 – 2.

No wonder Kindle is doing well in the UK. Amazon is giving away all these books for £1 each. There are just 2 books at £7 or higher in the entire Top 100. There are 82 books at £3 or less – 61 of which are at £1.

The average price for a Top 100 book in the UK Kindle Store is a ridiculously low £2.18. How is anyone making money from these books?

Kobo Store – How’s Canada doing?

Kobo Store only has a top 50 list. It often has 10% off to 30% off sales, and has a 33% off coupon for all new members. So, we’ll subtract 15% from the list price of books, to factor in these discounts. We’ll do this at the very end.

Note: These are prices in Canada.

  1. Books at $1 – 3.
  2. Books at $3 – 1.
  3. Books at $5 – 7.
  4. Books at $10, or between $6 and $10 – 30.
  5. Books above $10 – 9.

A mere 9 books out of the Top 50 are priced higher than $10. The average book price comes out to be … $9.16. We cut off 15%, to account for all the coupons, and get $7.79.

Even outside the US, Publishers can’t manage to get $12.99 and $14.99 to work.

The Agency Model is in ruins

How do you interpret it when –

  1. Publishers say $9.99 aren’t sustainable prices.
  2. They push $12.99 and $14.99.
  3. They end up with an average price of $6.94 for the Top 100 books in the Kindle Store, and an average price of $8.54 for the Top 100 books in the Nook Store.
  4. They end up with an average price of £2.18 for the Top 100 books in the UK Kindle Store.
  5. They end up with an average price of $7.79 for the Top 50 books in the Kobo Canada Store.

Publishers to Readers – $9.99 isn’t good enough. It’s time to pony up $14.99.

Readers to Publishers – How do you like them apples?

Readers have destroyed the Agency Model, and the Race to Zero is on. In 1 year we’ve gone from $9.99 to $6.94, in the US, and £2.18, in the UK. As more and more people buy eReaders, and the market gets more and more competitive, we are going to see prices go down further. All the companies hoping to make money from books are the Queens of Wishful Thinking.

Reviewing two new 'Kindle is going to die' articles

The Kindle might have sold 8 million units this year. Perhaps it was just 5 million. Perhaps just 3 million. Perhaps 11 million.

The only certainty is it was ‘millions of Kindles’.

You’d think that would get Kindle haters to stop predicting the death of the Kindle. No such luck.

Success of eReaders only Hype?

Lars Paronen at Reuters asks a question and answers it – Claiming that the success of eReaders is only hype.

Well, you have to admit there’s a fair bit of hype. However, it definitely isn’t 100% Hype.

The reason he feels it’s 100% hype is a survey of 755 Internet users between October 28th and November 1st.

Who are we to challenge such conclusive findings? Let’s just go through them.

  1. 65% of 755 random people paid to download/access some kind of online content. 
  2. 10% paid for ebooks.
  3. 33% paid for music. 15% paid for ringtones.
  4. 5% have paid to access online dating sites or services. That’s it?  
  5. 2% paid for adult content. There goes the reliability of that survey.

You get two classes of possible headlines. First, you have the ‘Kindle is doing very well’ type of headline –

Twice as many people buy ebooks as dating site memberships.

Kindle Books almost as popular as ringtones.

Paid eBooks 5 times more popular than paid adult content.

Of course, that isn’t what Reuters would like to discuss. Here’s what we get –

Is the success of eReaders only hype?

That’s right – ringtones are more popular than ebooks.

Let’s interpret everything negatively.

Flawless Logic. Not. 

Here are the reasons why Kindle and Nook are all hype –

  1. A survey of 755 random ‘Internet users’ says only 10% bought ebooks.
  2. 15% of those people bought ringtones.
  3. The Magazine industry is going through tough times.
  4. Kindle and Nook can’t handle ‘enhanced video content’.
  5. iPad users play Angry Birds more than they read.

The author also discusses how eBooks have ‘only’ 10% of book sales. It must have been really easy to choose Option 2 out of –

  1. Option 1: eBook sales rocket from 3% to 10% of the book market in 1 year.
  2. Option 2: eBook sales account for only 10% of the book market.

Then we get this gem –

Extrapolating from the Pew survey, for online e-book sales to compete with other media such as digital music, prices have to come down and subscriptions heavily promoted.

Guess we all forgot the rule that you have to choose one out of ebooks and digital music.

This is lovely – take an industry that has already made the shift to digital, and use it to claim that eReaders are all hype. Lately, there has been a lot of hype – However, let’s not forget that we probably have 10 million or more eReaders in play around the world.

Lack of Faith in the Kindle

At Vator News we have Faith Merino claiming Kindle will crumple under iPad. The only thing crumpling will be your hands – if you read an entire book while holding an iPad in just your hands.

To put an exclamation mark on her Kindle crumpling prediction she puts a picture of Jeff Bezos with the Kindle 1 right next to a picture of Steve Jobs with an iPad. Nothing like using a 2007 product to illustrate why the 2010 version is going to die.

She starts off with this gem –

studies have revealed that the tablet owner and the e-reader owner are two very different people.  But is that trend going to stick?

No. Those two very different people are going to merge into one.

She reduces Kindle vs iPad to price. Basically, she’s assuming once the iPad drops in price there will be zero reason to buy the Kindle. Here’s her assessment –

However Apple plans to cut the price, once it does, consumers will have no reason to prefer the Kindle over the iPad. 

With the iPad’s e-reader capability and myriad other functions, the Kindle will be rendered obsolete—that is, unless it, too, drops its price, which it likely will.

Got to give credit to that Angry Birds – teaches you to use words like myriad and obsolete. In the same sentence.

This ‘price’ thing is the favorite defence for people who don’t get eReaders.

Kindles and Nooks are only selling because they’re cheap. Just wait until the JesusPad is $300. Just wait until the JesusPad is $200. And so on …

It’s amazing to see Kindle haters and eReader haters coming up with rationalizations for why eReaders are doing well.

Helping out anti-Kindle people

It’s a little disappointing to see such lame analysis.

Perhaps we can come up with things that are more precise, and things that are so imprecise that they can’t be argued against.

Here are a few things that Kindle haters should use as evidence for Kindle and Nook being a fad –

  1. Kindle is available in more countries than iPad. Once iPad arrives in Madagascar and Faroe Islands, 90% of Kindle sales will dry up, as people will have a better option.
  2. B&N and Amazon are tricking people by not telling anyone how many are sold. Once people find out actual numbers they’ll start buying iPads instead.
  3. iPad is going to add ‘smell of books’ to iBooks soon. Once that happens, it’s bye-bye Kindle.
  4. People who buy eReaders don’t know the iPad can be used for reading. Steve Jobs is going to start sending out iBooks ads telepathically to the entire world’s population. Then everyone will know, and no one will pick eReaders.
  5. A survey of 50,000 one-toed sloths showed that iPad is better for a relaxed pace of life. Only 12% of the sloths felt an eReader would help them relax, while 52% picked the iPad. The other 36% fell asleep during the survey. 
  6. Once iBooks adds more books, the wooden bookshelf and the animated page turns will force everyone to choose iBooks. 
  7. 90% of Kindle book sales are through iPhone and iPad. The other 10% are through Android. There have only been 25 Kindles sold, mostly to people with a gun put to their head. Everyone you see carrying a Kindle – that’s just an illusion. If you were to try to grab one of the Kindles you see – well, your hand would go right through.
  8. Amazon knows sales are so bad that it’s started advertising Kindle reading apps instead.
  9. Apple couldn’t produce enough iPads. If it could have produced another 8 million iPads, zero Kindles would have been sold.

Actually, there’s a very credible rationalization eReader and Kindle haters could use to keep themselves happy in the face of tens of millions of eReaders being sold in 2011.

As iPad becomes available in enough numbers, in enough countries, and with enough animated books, we will see Kindle and eReaders die out.

They shouldn’t even worry about money – Doesn’t the iPad provide a lot more value for money? Why, Angry Birds alone is worth a few thousand dollars in wasted time.

5 offers for the last day of 2010

For your Kindle, 5 offers to bid 2010 goodbye –

  1. Wilderness #55: Into the Unknown by David Thompson. Price: $0. Genre: Nature, Adventure. Rated 5 stars on 3 reviews.
  2. The Perfect Woman by James Andrus. Price: $0. Genre: Serial Killers, Father vs Serial Killer, Thriller, Police Procedural. Rated 5 stars on 5 reviews. A very interesting sounding book.
  3. The Queen’s Dollmaker by Christine Trent. Price: $0. Genre: Historical Fiction, Female Heroine. Rated 4 stars on 19 reviews. 
  4. Mistress By Mistake by Maggie Robinson. Price: $0. Genre: Historical Romance, Romance. Rated 4 stars on 28 reviews.
  5. Two Rivers by T. Greenwood. Price: $0. Genre: Literary Fiction, Contemporary Fiction. Rated 4.5 stars on 44 reviews. This was free earlier, on January 27th, 2010.

It’s interesting to see Amazon release some offers on the last day of the year.

Quick Thoughts on the Lending Feature

Now, both Kindle and Nook have a lending feature that’s a mockery of what lending means to books. It’s better than nothing – but not by much. Quite a few Kindle owners are now complaining – that the feature is just as restricted as on the Nook, that this isn’t really lending, that physical books can be lent unlimited times.

Well, they need to take into account, how much they used to have to pay for physical books, around release date. You can’t really get all the benefits of ebooks, and all the benefits of physical books, in one package. At least not if you want $5 and $10 prices.

How come Kindle owners never complain about multiple people being able to read the same book in parallel? About lower ebook prices? About public domain books being free instead of $7?

The main problem is one of setting the wrong expectations – B&N started it by calling the feature lending. It should have been obvious that referring to it as ‘lending’ would invoke images of ‘free and unrestricted lending, just like with physical books’. Yet, Amazon is going with the same term – lending.

There really should be a separate term for it – 1-time-loan. That would set the right expectations.