Why should I provide my email address?

Start saving money today with our FREE daily newsletter packed with the best FREE and bargain Kindle book deals. We will never share your email address!
Sign Up Now!

Pricing to Fail: Case Studies in Dumb Pricing – Despite Some Bestsellers at $12.99, Agency Model House of Cards May Already Be in Danger

By Stephen Windwalker, Editor of Kindle Nation Daily – Originally posted 7.19.2010

I did a fresh price check over the weekend on Amazon’s overall Kindle catalog and the composition of the 100 top paid bestsellers list in the Kindle Store, after 17 days’ experience with major structural changes in pricing and royalties for the Kindle’s Digital Text Platform (DTP), and this and other data is beginning to suggest that we may see the collapse of the big book publishers’ “agency model” before it is time to renegotiate contracts early in 2011.

First, interesting trends at both ends of the Kindle Store pricing spectrum:

  • Amazon has mandated that indie publishers must price ebooks between $2.99 and $9.99 to qualify for generous 70 percent toyalties, and the overall percentage of titles in this price range continues to increase very gradually but steadily: from 56.96% on May 22 to 57.22% on June 14 to 57.32% on June 26 to 57.66% on July 18.
  • All of this migration has come from a relative decline in ebook titles priced at $10 and up, from 19.16% on May 22 to 18.82% on June 14 to 18.52% on June 26 to 18.09% on July 18.
  • Not surprisingly, the fastest growing price point in the Kindle Store is for ebooks priced at $2.99. As a percentage of the whole this segment has grown by 11.06% since June 26 and by 15.56% since May 22.
  • Any expected decline in the percentage of titles priced at under $2.99 has yet to occur, as that subset has grown from 23.88% on May 22 to 23.96% on June 14 to 24.16% on June 26 to 24.24% on July 18.

As for the composition of the 100 top paid bestsellers list in the Kindle Store, there is one shift that could be dramatic if it holds over the next few weeks. I commented in our last price-check post that Kindle readers are showing an increasing willingness to pay up to $12.99 for new full-length books by established bestselling authors, and this time the number of Top 100 jumped from 24 to 30 since June 26, including 19 in the top 50.

Meanwhile, the number of Top 100 bestsellers priced below $2.99 fell from 13 to 7 as many of the authors and publishers of popular low-priced ebooks raised their prices to $2.99 and above to take advantage of the new 70 percent royalty option. (As to why more authors and publishers haven’t conformed yet to the $2.99 minimum price in order to qualify for the 70 percent royalty, there are some interesting issues that we’ll try to address in a separate post at Kindle Nation Daily  in the next day or two).

However, Kindle readers continue to reject agency model new releases (and other ebooks) priced above $12.99. Although the number of Top 100 titles in the $13-and-up range grew from 2 to 3 since June 26, the far more significant tell is that there were zero $13-and-up titles among the top 74 bestsellers.

Even if significant numbers of Kindle readers are willing to hold their noses and pay $11.99 and $12.99 for big-name authors, the fact that the relative number of Kindle Store ebooks in all of the $10-and-up price ranges is declining steadily and significantly suggests that the agency model publishers are seeing exactly what Jeff Bezos says Amazon is seeing. Referring to a decline in market share for agency model publishers, Bezos said in a Fortune.com article at the end of June that Amazon has already seen a significant “share shift from one group of publishers to this other group of publishers.”
Since May 22, the relative decline in $10-and-up listings as a portion of the whole is dramatic:

  • the percentage of titles priced from $10 to $12.99 has fallen 4.70%; 
  • the percentage of titles priced from $13 to $14.99 has fallen 4.12%; and 
  • the percentage of titles priced at $15 and up has fallen 5.82%.

When five of the Big Six publishers unveiled their campaign to push back against Amazon’s mastery of the ebook domain early this year with the launch of the agency model scheme to fix or mandate prices, they clearly saw Apple as the white knight that would allow them to rearrange the ebook pricing battlefield to their liking.


But now Apple is beset with a growing number of problems of its own, and we may even be seeing signs that Steve Jobs’ company doesn’t quite have the focus or attention span to sustain, for the long haul, its iBooks leap into the world of bookselling: among the “Top Free Apps” for the iPad, the iBooks App has sunk like a stone from #1 to the #8-#10 range in the past week. And, of course, once the serious readers among new iPad owners respond to Apple’s heavy marketing that they should download the iBooks app, they quickly discover that finding the books they want to read there can be a frustrating challenge. Indeed, there are increasing signs that — on the iPad, at least — the Kindle Store with its 642,000-plus ebook titles may already be #1 in actual iPad ebook transactions and dollars transacted, ahead of iBooks with fewer than 100,000 titles (including as many as half of them free public domain listings).

If iBooks can’t even outsell Kindle Store ebooks on the iPad, it wouldn’t require a recall, a mass shipment of new cases, or even a public “iBooksFail” pronouncement. But we might see an iBooks shuffle into back-burner status in six months or so when it will be time to negotiate new contracts with the agency model publishers.

Of course, even in the extremely unlikely event that Jeff Bezos were to back up his broadbrush pronouncements with the public disclosure of sales figures, the agency model publishers are likely to be the last to know how much ebook market share they are losing to titles in the sub-$10 price range, since the greatest growth there appears to be coming from indie publishers and established as well as emerging direct-to-Kindle authors who appear not to be on the “big” publishers’ radar.

Click here to see underlying statistical analysis as of July 18, 2010. Here’s a price breakdown of the 642,616 book titles in the Kindle Store as of 7 a.m. EDT on July 18, 2010:

Here’s where we stood with the 623,077 book titles in the Kindle Store as of 7 a.m. EDT on June 26, 2010:

  • 20,636 Kindle Books Priced “Free” (3.31%)
  • 5,217 Titles Priced from a Penny to 98 Cents (0.84%)
  • 60,370 Kindle Books Priced at 99 Cents (9.69%)
  • 64,314 Titles Priced from $1 to $2.98 (10.32%)
  • 18,935 Kindle Books Priced at $2.99 (3.04%)
  • 119,484 Kindle Books Priced from $3 to $4.99 (19.18%)
  • 157,562 Titles Priced from $5 to $9.98 (25.29%)
  • 61,153 Titles Priced at $9.99 (9.81%)
  • 8,132 Titles Priced from $10 to $12.99 (1.31%)
  • 14,177 Titles Priced from $13 to $14.99 (2.28%)
  • 93,097 Titles Priced at $15 and Up (14.94%)

Here’s where we stood with the 609,975 book titles in the Kindle Store as of 5 p.m. EDT on June 14, 2010:

  • 20,589 Kindle Books Priced “Free” (3.38%)
  • 5,041 Titles Priced from a Penny to 98 Cents (0.83%)
  • 58,624 Kindle Books Priced at 99 Cents (9.61%)
  • 80,197 Kindle Books Priced from $1 to $2.99 (13.15%)
  • 115,891 Kindle Books Priced from $3 to $4.99 (19.00%)
  • 155,056 Titles Priced from $5 to $9.98 (25.42%)
  • 59,797 Titles Priced at $9.99 (9.80%)
  • 8,173 Titles Priced from $10 to $12.99 (1.34%)
  • 14,105 Titles Priced from $13 to $14.99 (2.31%)
  • 92,500 Titles Priced at $15 and Up (15.16%)

Here’s where we stood with the 587,104 book titles in the Kindle Store as of 5 p.m. EDT on May 22, 2010:

  • 20,584 Kindle Books Priced “Free” (3.51%)
  • 4,830 Titles Priced from a Penny to 98 Cents (0.82%)
  • 55,901 Kindle Books Priced at 99 Cents (9.52%)
  • 76,054 Kindle Books Priced from $1 to $2.99 (12.95%)
  • 109,706 Kindle Books Priced from $3 to $4.99 (18.69%)
  • 151,509 Titles Priced from $5 to $9.98 (25.81%)
  • 56,059 Titles Priced at $9.99 (9.55%)
  • 7,700 Titles Priced from $10 to $12.99 (1.31%)
  • 13,803 Titles Priced from $13 to $14.99 (2.35%)
  • 90,958 Titles Priced at $15 and Up (15.49%)

Here’s where we stood with the 511,759 book titles in the Kindle Store as of 9 a.m. EDT on May 7, 2010:

  • 20,601 Kindle Books Priced “Free” (4.03%)
  • 4,857 Titles Priced from a Penny to 98 Cents (0.94%)
  • 53,936 Kindle Books Priced at 99 Cents (10.54%)
  • 73,987 Kindle Books Priced from $1 to $2.99 (14.46%)
  • 101,014 Kindle Books Priced from $3 to $4.99 (19.74%)
  • 91,871 Titles Priced from $5 to $9.98 (17.95%)
  • 54,342 Titles Priced at $9.99 (10.62%)
  • 7,434 Titles Priced from $10 to $12.99 (1.45%)
  • 13,489 Titles Priced from $13 to $14.99 (2.64%)
  • 90,257 Titles Priced at $15 and Up (17.64%)

Here’s where we stood with the 487,715 book titles in the Kindle Store as of 9 a.m. EDT on April 7, 2010:

  • 20,620 Kindle Books Priced “Free” (4.23%)
  • 4,709 Titles Priced from a Penny to 98 Cents (0.97%)
  • 46,360 Kindle Books Priced at 99 Cents (9.51%)
  • 69,846 Kindle Books Priced from $1 to $2.99 (14.32%)
  • 94,891 Kindle Books Priced from $3 to $4.99 (19.46%)
  • 86,924 Titles Priced from $5 to $9.98 (17.82%)
  • 53,705 Titles Priced at $9.99 (11.01%)
  • 7,537 Titles Priced from $10 to $12.99 (1.51%)
  • 13,124 Titles Priced from $13 to $14.99 (2.69%)
  • 90,011 Titles Priced at $15 and Up (18.46%)

Here’s where we stood with the 480,238 book titles in the Kindle Store on April 1:

  • 20,620 Kindle Books Priced “Free” (4.29%)
  • 4,706 Titles Priced from a Penny to 98 Cents (0.98%)
  • 43,993 Kindle Books Priced at 99 Cents (9.16%)
  • 68,807 Kindle Books Priced from $1 to $2.99 (14.33%)
  • 93,706 Kindle Books Priced from $3 to $4.99 (19.51%)
  • 85,612 Titles Priced from $5 to $9.98 (17.83%)
  • 53,124 Titles Priced at $9.99 (11.06%)
  • 5,952 Titles Priced from $10 to $12.99 (1.24%)
  • 14,158 Titles Priced from $13 to $14.99 (2.95%)
  • 89,525 Titles Priced at $15 and Up (18.64%)

Here’s where we stood with about 463,000 Kindle Store titles on March 10:

  • 20,125 Kindle Books Priced “Free” (4.34%)
  • 2,588 Titles Priced from a Penny to 98 Cents (0.56%)
  • 39,095 Kindle Books Priced at 99 Cents (8.44%)
  • 64,105 Kindle Books Priced from $1 to $2.99 (13.84%)
  • 90,580 Kindle Books Priced from $3 to $4.99 (19.55%)
  • 84,055 Titles Priced from $5 to $9.98 (18.15%)
  • 53,697 Titles Priced at $9.99 (11.56%)
  • 5,793 Titles Priced from $10 to $12.99 (1.25%)
  • 13,731 Titles Priced from $13 to $14.99 (2.96%)
  • 89,448 Titles Priced at $15 and Up (19.31%)

And here’s where we stood with about 447,000 Kindle Store titles on February 25:

  • 19,795 Kindle Books Priced “Free” (4.42%) 
  • 3,023 Titles Priced from a Penny to 98 Cents (0.67%) 
  • 36,370 Kindle Books Priced at 99 Cents (8.12%) 
  • 62,275 Kindle Books Priced from $1 to $2.99 (13.9%) 
  • 87,722 Kindle Books Priced from $3 to $4.99 (19.58%) 
  • 81,230 Titles Priced from $5 to $9.98 (18.13%) 
  • 55,269 Titles Priced at $9.99 (12.34%) 
  • 5,139 Titles Priced from $10 to $12.99 (1.15%) 
  • 9,331 Titles Priced from $13 to $14.99 (2.08%) 
  • 87,771 Titles Priced at $15 and Up (19.59%)

By Stephen Windwalker, Editor of Kindle Nation Daily
Originally posted 7.19.2010

    Share via
    Copy link
    Powered by Social Snap