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Originally Posted by zacheryjensen
- You seemed to completely misunderstand that I was talking about public perception, not actual costs. If you knew anything about markets you would know that it matters little what things actually cost to produce when setting prices, but, it matters greatly what people are willing to pay....
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Well, it's a
tad more complicated than that. Unless someone threw 2/3 of macroeconomics out the window while I wasn't looking.
For example, it was not necessarily "perception" that caused a spike in global food prices in 2007 and 2008, it was a sudden shortage in certain specific staples (e.g. rice) that reduced supply, thus driving up prices. Or did the perception of how hard it is to grow food change for no apparent reason in 2007? Or, are prices in Zimbabwe spiraling out of control based on perception, rather than a disastrous fiscal policy? And if the demand for a Hannah Montana concert ticket vastly overwhelms the available supply, the resulting prices aren't all that influenced by the perception of the "right price" of the concert.
Further, if your price and/or pricing structure results in revenues too low to cover the cost of doing business, your business is unsustainable and will fail.
Conversely, if the "perceived right price" is so much higher than your costs that you are raking it in, in the absence of some other force or limiting factor (e.g. Miley Cyrus can only do 100 concerts a year, or patent laws allow for only one manufacturer), it's highly likely that a competitor will undercut your price. E.g. Walmart has a perception of "value" and "low prices," to the point where they don't have to be cheaper than everyone on every item and will still get the sales. But they couldn't charge 25% or 50% more for flat-screen TVs than Best Buy and maintain that reputation for long.
Mind you, I do not think there is necessarily "one right price," that the market is hyper-efficient, or that consumers are always rational. However if you *cough* knew anything about markets and economics, you'd understand that perception is only one factor among many, its influence varies depending upon the situation, it's often less critical than supply, demand, and the cost of producing a good.
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Originally Posted by zacharyjensen
The public perception of paying for a copy needs to be replaced by the perception of paying for the service that was provided from author to distribute for the production of that IP.
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It's a charming idea, but seems extremely difficult for an industry that is somewhat hazy on what form it will be in 10 years from now, and is far from uniformly supporting the transition to ebooks, to "educate" its consumers to a new business model -- especially if you happen to be trying to teach people to pay more for something,
and need to keep the other 95% of your business going,
and plan to make a case for ebooks in the first place. Even if it was somehow possible to do so, I don't see how the book industry has the resources to launch a massive "Pay More For Books" education campaign, let alone have it come across as anything other than an act of greed.
I might add if you
could devise an education campaign that can convince your customers to pay 50% or 100% more for your product as they initially thought it was worth, pretty much every industry on the planet would launch one ASAP, regardless of the merits of such an argument.
Not to mention that while a good business wants as many customers as possible, and I concur that it won't want to price itself out of the market if it can help it: not every customer is worth having. If Joe Shablotnik is offended by the very idea of spending more than $5 for a new book, and you need to price it at $10 or you'll go out of business, what kind of resources are you really willing and able to expend to make Joe your long-time customer? No amount of education is going to convince Joe that he should pay $10 when he wants to pay $5, and a business model that "tricks" Joe into paying $10 when he wants to pay $5 is unlikely to last very long or result in a satisfied customer base.
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Originally Posted by zacharyjensen
- I feel my statement about artificial supply constraints is important enough to correct your reading comprehension error there....
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Uh huh. I guess I missed the point of your dissertation on that point because it doesn't really apply.
The book industry isn't basing their prices on the scarcity of paper and ink; it's based on their estimations of the costs of publishing and distributing titles. Even the hardcover/softcover pricing differentials are not really based on "artificial scarcity," it's more about making a physical wrapper for the higher demand for a brand-new book.
The only "artificial" elements to current ebook pricing is that a) wholesale prices don't reflect the slightly lower cost of making the ebook, and b) publishers don't want cheap new books eroding the *cough* perception of the value of their wares. (There is also the very real concern that cheap new books may erode their already-thin margins.) I don't see how any sort of "scarcity" model is really coming into play here.
Also, my comments on subscription-type services is that I don't think it will
actually work -- with some notable exceptions (see below) -- for a few reasons. One, as mentioned above, I don't think it will be possible for the book business to change everyone's mind about "what it means to buy a book." One and a half
, you've now doubled your educational workload; consumers aren't used to the idea of a book subscription, so now you have to teach them to pay more AND to understand and accept a whole new way of getting books. Two, afaik you'd have to rewrite any contract that doesn't already have some type of subscription rights in it, which obviously drives up the cost and will restrict availability (as some authors undoubtedly won't go for it). Three, books are a poor fit for this type of model, as they take much longer to "consume" than movies or music. Four, subscription models have a mixed success record even in mediums where it's a better fit. Five, subscriptions eliminate one major potential benefit of an electronic business, namely the ability to quickly modulate the price of a good without having to (physically) relabel everything. Six, changing to a subscription model doesn't reduce the costs of doing business, so it will still need to result in generating the same revenues as the per-book model -- e.g. you can't necessarily market it as a "good deal" for consumers.
Subscriptions may work fairly well though for one fairly popular and lucrative wing of publishing: genre fiction. For example, many readers of romance novels will consistently buy 2-3 books a month, the publishing costs are fairly predictable, and there are enough authors to generate a consistent supply; the books are for all intents and purposes a commodity. But this hardly requires a major education campaign -- e.g. all Harlequin says, and needs to say, is "you get your books faster and cheaper." They don't have to bog their customers down with esoteric explanations of the nature of intellectual property or royalty payments -- nor would that be particularly good for their business, IMO.
I may have missed some of the thrust of your argument, but it's still the case that a) price is clearly based on more than just perceptions and beliefs about the "right price;" b) educating people to increase what they believe is the fair price for a good and/or that "books are a service" almost certainly won't happen and/or will not succeed, and c) subscription models are a bad fit for books (other than genre fiction) and probably won't work.