The Netflix’s of Books…

If its Free! Its for Me!

Everyone knows what Netflix’s did for movie as for one low monthly price you could get movies as fast as you could watch them which sunk their brick and mortar rivals as this done right to their mail box.  So we know the model works or at least by all indications it appears as the purveyor of the bright red envelope seems to be the last man standing.

So with this being the case, if you area Kindle user would you would whip out your credit card right now for a subscription-based service which allowed you to access the entire library of Amazon books for a low monthly or even flat fee?  Well don’t get too excited yet, as such a service is still only  in the “talking” stage and in fact may never materialize.  Why you ask, well guess as it would be thanks to the fears of publishers being cut out of their high margins.

While the rumor about Amazon’s potential new service, which seems to not have a name, even a slick code name like “Sandy Ice Sandwich”  however could come packaged as a $79 Amazon service, so say folks speaking anonymity  to the stalwart Wall Street Journal.  If accurate, the sources say subscribers would be able to pay an annual fee in order to access the library, which would  be limited to “older titles” as well as impose a limit on the number of “free” books a user could access every month.

However the long pole in the tent for  Amazon is as “several publishing executives” who spoke to the Journal, wained they have reservations about participating in a subscription-based service “for fear that it might lower the value of books in the eyes of customers”.  This is inline with a prior battle publishers took on with Amazon in 2010 over the pricing of their books.  As Amazon used to price all Kindle books at a basic $9.99, however the publishers worried that the flat price devalued their products. In the end, this showdown which resulted in Amazon allowing publishers to get their way and switching to “agency model” pricing, which ultimately led to marginally higher prices for many e-books sold through the Kindle store.

There is no doubt that publishers don’t like the idea of giving up control of the pricing of their books, and they’re positive their books are worth more than what Amazon thinks they’re worth.  However are they right about that?  As how much is a book really worth, as in the past we cut down trees, built roads to haul them to plants by truck, at which we polluted the environment with processing chemicals and ink to create a product that once read gathered dust for ages before finding its way to the landfill or fireplace.

There’s no doubt the time the author spends in developing their intellectual property is valuable, yet when amortized over the many copies sold electronically the cost basis is very low.  In addition the publisher also bring value to the table in aggregation, preparation and marketing however they lack a warrant to demand such a high price only to create a false scarcity of goods to underpin its higher price.  While we do live in a capitalistic society which allows the producer the right to price their product what they wish, the same rights are also afforded to the consumer to not buy what they feel is overpriced.    So it’s easy to see the day of reckoning for the book is near…

About Joseph Campbell

As a strong believer in the fact that "people work for people", it has been a life driver to better to understand the complexities of the various aspects which drive efficiency within this axiom, especially the concepts of leadership. Supporting this, I have been fortunate enough to having experienced this as leader on a global basis over the last decade and half. During this time it has been clear there are three core drivers being Life, Leadership and Economics.
This entry was posted in Economics..., Life... and tagged , , , , , . Bookmark the permalink.

2 Responses to The Netflix’s of Books…

  1. Frank says:

    Agree. The value is the cost less the production. What would give the publishers the idea that the IP of a book is now worth more? Being a rhetorical question the answer is because consumers are trained to pay “x” price for a book and there is a vested interest in keeping that price point high.

    This is a model that is shaking out quickly though, authors are self-publishing and breaking the traditional models.

    • Joseph Campbell says:

      Would agree with the comment about consumers being trained as much like pavlov’s dogs we’ve been brain washed by Madison Ave with given ideas from various media channels as Marshall McLuhan wrote in “The medium is the message”. As McLuhan put forward that a medium affects the society in which it plays a role not only by the content delivered over the medium, however also by the characteristics of the medium itself…

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s