Kindle & the iTuning of book purchasing

Probably my favourite app on my iPad is, errm, Kindle. Yes, getting my £600 device to behave like a £100 one is where it's at.

That aside, what is interesting about the Kindle is the way it is beginning to alter my book buying behaviour. In short it is iTuning my purchasing behaviour, in that I am tending to buy more on impulse – a recommendation or thought comes to me, and I don't add it to a wishlist, I buy it. This means I am adopting a more exploratory approach, buying books I wouldn't do otherwise, or ones I know I only want a section from.

But this behaviour is hampered by the publishers and arcane pricing policies. iTunes had the advantage that music (in the form of CDs) was evenly priced, ranging from around £3.99 to £13.99. This meant that getting consensus from recording companies on a set price of 99c for a track was relatively easy. Books on the other hand (and particularly academic books) range wildly from £1 to £100. Reaching agreement on a uniform price is therefore more difficult. But, for the sake of the industry itself, it is essential. At the moment the Kindle version is usually the same price as the physical one – and laughably, sometimes it is more expensive.

Amazon is probably the only player big enough to push this through. Publishers are proprietary and closed by instinct, so want to believe e-books are just another outlet but with higher profit margins. There are two reasons why I think they need to alter their behaviour:

i) iTuning buying behaviour leads to greater sales – if the standard price for a Kindle book was sufficiently low, say £1.99, then it leads to higher sales, particularly in the long tail. Brynjolfsson, Hu & Simester (2007) demonstrate that when a product moves online the concentration of sales becomes more distributed: “the Internet channel exhibits a significantly less concentrated sales distribution when compared with the catalog channel, even though these two channels offer the same products at the same set of prices.” Being online encourages a more ‘long tail’ oriented set of behaviours. They further argue that as search costs reduce, then so sales concentration becomes more skewed towards niche products. This means selling more of those special interest books, but only if the price is sufficiently low to encourage 'I may as well' purchasing behaviour. Maintaining the price point artificially high loses the benefits they might gain from this new channel.

ii) Resentment breeds piracy – by maintaining physical object prices, buyers become irritated at what they perceive as both greed and a lack of understanding around the new channel. Music piracy was driven partly by getting something for free, but also out of frustration that music companies were either ignoring the internet or treating it just like an infinite shopfront. One of the reasons Apple got agreement for iTunes was the fear of Napster. By repeating these mistakes publishers will drive potential customers into piracy, and then spend ages trying to lure them back. This is a key moment for book purchasing, they shouldn't ignore the very recent lessons history has to teach them. I want my book purchasing behaviour to be iTuned, don't turn me away now.

3 Comments

  1. Yes, the two classic business models – pile em high, knock em out cheap; or offer something with a little bit more value, including after-sales service perhaps. But there’s little between iTunes/iBooks and Kindle in this respect (and in net marketing and sales more broadly). Both offer more or less the same.
    So, let’s hope WHSmith make some impact. Interesting that their app is less polished than either Kindle or iBooks, but it’s not at the tipping-point that makes it unusable. I’ve read one or two complaints of crashing but I have had no problems. The number one complaint for the slick Kindle or iBooks I’ve read online is the pricing.
    Many of the books are noticeably cheaper on WHSMith. ‘Wolf Hall’ is only about 4 quid there; definitely one for an impulse buy.

  2. Like you, Martin, the Kindle app is probably my favourite app on the iPad – for me it’s for the very simple reason that iBooks has a simply dreadful choice of books available. I looked back today, having read your post, to see if things have gotten any better in the couple of months since I last tried to use it. Didn’t look any better to me. I searched for 4 or 5 books, none of them particularly unusual, and could get not one of them!
    Kindle isn’t perfect yet either, but it’s only rarely that I can’t get the e-book I want on Amazon.
    For the e-book market generally, I’m less convinced of the need for a uniform price, but I do think the market needs to settle on a, fairly narrow, price range within which e-books should be priced, or at least an agreed maximum price.

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