A year ago Dan Gilmor complained about greedy US publishers forcing ebook prices to climb by between 30 and 50%.
In the US electronic books are now priced at the same, sometimes higher, than the hardback version of the same book. As Gilmore points out, this is a terrible deal because unlike physical books, you can’t resell, trade or give away your finished ebook.
The same dumb thinking is at work in the music and movie industries where digital media costs as much as physical media.
I’ve made this argument before, I’ll make it again. Printers use raw materials and machines to make physical books, CDs or DVDs. They package and ship them to warehouses before shipping again to stores.
Factories, packaging companies, shipping firms, wholesalers and retailers all clip the ticket. These are input costs and they’re not cheap, they can account for over half the retail cost.
While we can understand publishers wanting to recoup some of the cost-cutting benefit from digital media, they can’t expect to have it all. Doing so has three direct consequences:
- Consumers see high prices as a rip-off. This has the knock-on effect of undermining otherwise valid moral arguments against copyright piracy.
- It slows migration from the old low margin physical model to the new higher margin model. Why would consumers choose what is still an inferior experience when the cost of hardware plus higher cost of media makes it more expensive?
- Reduced sales mean set-up costs of a book, CD or DVD are spread over fewer purchases. Surely this is a time when publishers need to seed the market.
At the start of 2013 we’re at a point where the decline in printed book sales has stabilized while the hitherto triple-digit growth in ebook sales has fallen to a still impressive 34%. And sales of ebook readers plunged 36% in 2012.
So where do we go from here? Will publishers cut ebook prices sharing some of the extra margin with their customers or will they paint themselves into a corner?
New Scientist (Photo credit: Wikipedia)
For most of the last six years I’ve subscribed to New Scientist magazine. My degree is in Physics and I like to keep up to date with the subject – even if only in a casual way.
Right now I’m on a subscription breather. I do this when the pile of unread paper magazines gets too high. Most likely I’ll subscribe again early in the New Year.
Or maybe not.
A one year subscription to the New Scientist print and web editions costs NZ$255. That’s a good price.
What isn’t so good is the magazine wants NZ$383 to extend that subscription to smartphone and tablet. Presumably we’re not talking about accessing the standard website from mobile devices. I guess the extra NZ$130 or thereabouts is to pay for apps.
An online-only package including smartphone and tablet is NZ$229.
I’ve no objection to paying for an online subscription. I don’t expect to get this kind of information for free and lord knows its difficult to make money from selling advertising into online publications.
But to charge an extra $130 just to view content via an app seems a bit steep.
What do you think?
After hearing Newsweek lost 51% of its print circulation in the space of just five years London-based digital media blogger Martin Belam looked at UK newspaper performance. He found the British market declined 27% over the same period.
How do New Zealand newspapers compare?
I went to the Audio Bureau of Circulation and found comparable numbers for the three large daily metro papers and the two main Sunday papers. This is not a direct comparison, The Herald on Sunday was just getting started in 2007 and that had a big impact on its direct rival The Sunday Star-Times.
During the five-year period the five big New Zealand papers collectively shed 16% of their readers.
The biggest loser was the Sunday Star Times down 28%, while the Herald on Sunday increased its circulation by 11%. The Dominion-Post is down 19% while the New Zealand Herald and the Christchurch Press are down just 15%.
Among these titles Fairfax newspapers lost ground to APN titles.
So, for now at least, New Zealand’s newspapers are holding up relatively well.
Fairfax CEO Greg Hywood says the media company will move to a digital-only model.
Hywood doesn’t put a date on it but says the move will be in the future and only if print becomes unprofitable.
This makes perfect sense even if there’s little evidence of other newspaper publishers making a successful move to digital. Media companies have little choice, either shrink to a digital core and hope the mastheads continue to carry weight, or hang around for the inevitable day when the presses stop running.
Of course, anyone reading this site will have known that was true a decade ago.
Hywood says Fairfax’s digital strategy is ahead of the company’s competitors and ahead of most traditional media companies around the world. He is only part right. Fairfax’s most serious competition comes from media companies that were born digital.
Speaking of businesses born digital, I wonder about Fairfax’s strategy in the light of its part sale of the TradeMe auction site. If I was in Hywood’s shoes TradeMe would sit at the core of my business. By now there would an Australian TradeMe. And I’d junk those crappy low-value Google ads on Fairfax sites and link to TradeMe auctions instead.
AdNews: Fairfax will shift to digital-only model.
The NZ Herald’s iPad app is among the best examples of its kind
Remember how publishers saw tablets and mobile apps as an opportunity to reboot the online news business? Or Rupert Murdoch describing Apple’s iPad as the newspaper industry’s saviour?
They had a point.
The latest numbers from the Pew Research Center’s Project for Excellence in Journalism show readers who use apps to get news are more attractive customers in every regard. They read more news than others, they choose a wider range of news sources, they read longer and in greater depth. They are even more prepared to pay for online news.
There’s just one problem. Only a fraction of tablet and smartphone users rely on apps for news and their numbers are falling. Most tablet and phone owners prefer getting news from browsers.
Pew says 60% of tablet users and 61% of smartphone users turn to browsers for reading news. A year ago just 40% of tablet users preferred browsers. That’s a rapid turnaround.
While the number of user who prefer apps is roughly steady at 23%, the number of users who choose both apps and browsers and halved.
There’s a marked difference between iPad users and those with Android tablets – most of those who still prefer apps are Apple customers. With Android’s market share increasing, it looks as if those news apps are likely to decline still further.
My experience as a reader says news apps are often more flawed than web sites. Some limit what you can access, others are buggy, many are slow. On the other hand they tend to look better and are much better for displaying photographs.
Newsweek’s owners have stopped printing the magazine and announced plans for the title to live on in an “all digital format”.
In other words Newsweek is dead. Apparently there will be a tablet version and a web site supported by paid subscriptions.
Good luck with that. I doubt it will last more than a year.
Don’t get me wrong, I’m not against digital publishing. Far from it.
Nor am I against the idea of asking readers to pay for online publications. After all, advertising supported online publishing isn’t thriving.
Selling online ads is tricky. It can be expensive. Google Ad Words is not a practical publishing business model. A large number of online ads that come in from robotic sales operations are inappropriate, some are downright sleazy.
Getting readers to stump up for their reading material makes perfectly logical sense. I sometimes pay for online subscriptions myself.
However the sad truth is that not enough people are willing to pay for journalism unless the cost has an obvious and quick return on investment. Hence the success of paywalls for business publications like the National Business Review and the Australian Financial Review.
I can think of many print titles that limp on as digital only publications. In almost every case they are mere shadows of their former selves. They feature less quality journalism than when they were in print and the live on hugely reduced incomes.
What Newsweek sells isn’t special enough for advertisers and isn’t unique enough for readers to part with cash. Newsweek is dead.