The potential impact of the Kindle 3 and Kindle WiFi on the Agency Model isn’t really being discussed.
It’s worth wondering -
Will Kindle 3, Kindle WiFi owners cause a strengthening of the $9.99 boycott? Could they cause the downfall of the Agency Model?
Are people paying $139 for Kindle WiFi and $189 for Kindle 3 going to pay $14.99 for books?
If you’ve waited for the price to get to $139 to buy a Kindle WiFi you’re likely to be willing to wait for an ebook to drop below $10. That or pirate the book or get it from the library.
New Kindle owners will probably stick to buying books that are reasonably priced.
$14.99 and $12.99 will frustrate new Kindle 3 owners and strengthen the $9.99 boycott
We’re now getting a lot of people who simply couldn’t afford to pay $259 for an eReader or didn’t think an eReader was worth that much. In either case they are likely to feel that an ebook isn’t worth $14.99 or even $12.99.
Such ridiculous ebook prices (especially since hardcovers are just a few dollars more and paperbacks are cheaper) will cause a lot of anguish and force new Kindle owners to choose from amongst the few available options -
- Pirate eBooks. Most people aren’t particularly inclined to do this - It’s too much of a bother and it isn’t exactly ethical.
- Stick to books priced below $9.99.
- Give in once in a while if you really want a book.
- Wait for the book price to drop.
- Get it from a library or buy it used for a few dollars.
The Kindle Store might have 510,000 out of 630,000 books priced at $9.99 or below – However, most new releases are priced at $14.99 and $12.99. It forces new Kindle 3, Kindle WiFi owners to delay gratification and a lot will probably join the $9.99 boycott.
Where do we currently stand with the $9.99 boycott?
We are in an interesting stalemate where the Agency Model has failed to establish $14.99 but has managed to get $12.99 working -
- In the top 25 – 8 books priced at $12.99. Rest below or at $9.99.
- In the top 50 – 13 books priced at $12.99, 1 at $11.99, and 1 at $10.99. Rest below or at $9.99.
- In the top 100 - 18 books priced at $12.99, 1 at $13.65, 1 at $11.99, and 2 at $10.99. Rest below or at $9.99.
22 books out of the Top 100 priced above $9.99 might not seem very bad. However, before the Agency Model the number used to be 4 to 8.
On the other hand, 22 is an improvement from about a month back when there were 28 books at $12.99, 4 books at $14.99, and several at $11.99 in the Top 100.
$12.99 is the current new book price-point and new Kindle owners will hate it
What the last section does show is that the Agency Model has managed to establish a new $12.99 price point - most new ebooks arrive at this $12.99 price.
The new wave of Kindle owners will attack this as they expected $9.99. They didn’t get the benefit of the ‘Try for $14.99, Settle for $12.99′ trickery Publishers played on all of us and will fight hard against $12.99.
There’s little doubt new Kindle owners will strongly resist the $12.99 and $14.99 prices of the Agency Model.
Will their resistance make a difference?
Can the Agency Model withstand Kindle 3, Kindle WiFi owners?
We do know a few things from the first Publishers vs Kindle Owners battle -
- $9.99 books sell better than $12.99 and $14.99 books.
- $14.99 failed as an experiment.
- Kindle owners (the ones who bought Kindles when they were $399, $299, and $259) fought hard against the Agency Model.
- Lots of Kindle owners participated in the $9.99 boycott. Lots of them still do.
- There’s a general perception that $9.99 is a fair price for new ebooks.
With new Kindle 3, Kindle WiFi owners we are going to see the same things and a few additional factors -
- New Kindle owners are probably more price-sensitive. They are going to come in expecting $9.99 prices.
- They are likelier to boycott prices above $9.99. They are likelier to buy books priced below $9.99.
- New Kindle 3, Kindle WiFi owners are going to help increase Kindle ebook sales. We may hit 15% to 20% market share by end of the year.
- They will strengthen the ranks of current Kindle owners – most of whom have resisted the Agency Model.
- Their arrival will revitalize current Kindle owners. Suddenly we all feel we have more say and Publishers seem weaker.
Publishers get a new group of Kindle owners who come in with the exact opposite mind-set of what Publishers would like. New Kindle owners are probably going to fight for $9.99 far more vigorously than current Kindle owners do.
As the number of Kindle owners increases Publishers can’t afford to play games
While ebooks made up 5% of the market Publishers could afford to price ebooks at $14.99 and $12.99 and let rivals like smaller publishers and independent authors get more ebook sales. As the number of Kindle and Nook owners goes up and ebooks’ share of the market increases Publishers can no longer afford to lose ebook sales.
It’s all fun and games to fight against a small group of customers – overprice your books, flex your muscles, dare customers to boycott higher prices. As the number of eReader owners increases and the market share of ebooks goes up to 20% Publishers will have to get serious.
Would they be willing to lose 20% of their sales? Perhaps.
However, as the market share of ebooks increases it becomes tougher and tougher to mistreat/exploit Kindle and Nook owners.
Perhaps the best way to kill the Agency Model is to simply sit back and watch the new Kindle 3 and Kindle WiFi owners join the $9.99 boycott. New kindle owners who are even less willing to pay prices over $9.99 than we are. New Kindle owners who will probably strengthen the $9.99 boycott enough to kill off the Agency Model.