Amazon’s Urges Publishers to Greatly Lower ebook Prices

When ebooks first appeared on the scene a few years ago, it was feared that this may spell the doom of physical paper books and bookshops. However, it seems even the convenience of ebooks compete with the feel of a real book in one’s hands and paper books have continued to thrive as ebooks struggle to keep up.

Amazon’s publishing chief, David Naggar, has urged publishers of ebooks to lower the price of their books to 99p, as he believes this attractive price point will attract more readers. However, some publishers argue that such a move could be “economically unwise” and would damage the all book sales in the long run.

Speaking to The Daily Mail, Maggar suggested that traditional publishers should follow the example of self published authors who set a low price point for their books in order to encourage readers.

“I look at price as a tool for visibility. You can either spend a lot of money on marketing or you can invest it in a super-low price until they get the flywheel going of the recommendation engines – and this is just for Amazon”, Naggar said. “What self-published authors will do is they will publish a book and sell it for 99p right out of the gate… Publishers [with new authors] could much more afford to do that than self-published authors. If I have two books in front of me and I don’t know either author, and one book costs £9.99 and the other is £2.99, which one am I going to take?”

Some professionals in the industry disagree with Naggar as there are differences between self publishing and traditional publishing. Nicola Solomon, chief executive of the Society of Authors, called Naggar “naive”, saying:

“He makes a direct comparison between publishing companies and self-published authors, but conveniently avoids the fact that the economics are completely different”, she said. “Self-published authors on the Kindle Direct Publishing (KDP) platform earn between 35%-70% of the e-book retail price (where traditionally-published authors earn 25% royalty on e-books)– that’s why they can discount to that level and still enjoy a decent income if their book is successful. But I doubt Naggar has considered the likely impact on the incomes of traditionally published authors if their e-books were discounted to 99p as standard. The routine discounting and implied devaluing of printed books – often at the authors’ expense – is already a big problem. The last thing we need is to encourage even more discounting on digital platforms.”

Chief executive of the Publisher’s Association, Stephen Lotinga, also agreed that he two business models are different and believes Amazon has publishers “over a barrel” due to its high e-book market share, about 90% in the UK.

“Amazon have a vested interest in lowering prices as much as they possibly can because it helps them maintain their market share,” Lotinga said. “Effectively, they’re saying, ‘In order to promote your book, we’re going to dictate the price’. Our members are running a different business model than self-published authors are. They invest a lot of money in authors and feel that they price their books appropriately. We are not seeking to sell very low [priced] commodities.”
However, CEO of ebook publisher Endeavour Press, Matthew Lynn, agreed that ebook prices need to be lower, saying:

“In general, e-books are still over priced,” he said. “The industry is stuck where music industry was five years ago, but the market has moved on. Just as people weren’t prepared to pay £15 for a digital music file, they’re not going to pay a great deal for digital books. I think 99p is low price point, £1.99 is much better. But it depends on genre.” He went on to say digital and print books are not “competing products” because they serve different audiences. “Cheaper e-books are not cannibalising sales, they’re enhancing them”, he said.

A spokesperson for Amazon has since said that Naggar’s comments were taken “very much out of context” and were meant to show how new authors who self publish can use low price points to help get exposure.