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advocate2 · 08-05-2009, 11:21 AM

Although this article ostensibly is focused on the new Sony Readers, its discussion about pricing has great insight.

August 5, 2009
Sony to Cut E-Book Prices and Offer New Readers
By BRAD STONE and MOTOKO RICH
Adding to mounting tensions in the publishing industry over the pricing of electronic books, Sony Electronics announced Tuesday evening that it was lowering prices for new and best-selling books in its e-book store, to $9.99 from $11.99.

Book publishers have worried about the $9.99 flat price ever since Amazon.com introduced it for its Kindle reader in 2007, fearing that it could cannibalize sales of higher-priced hardcover books.

Sony is also introducing two new electronic reading devices: the Reader Pocket Edition and Reader Touch Edition. They will sell for $199 and $299 respectively and will go on sale at the end of August. The devices replace earlier and more expensive versions of the Sony Reader, the 505 and 700, which cost $269 and $399.

Although Sony’s reading devices are available in retail outlets like Wal-Mart and Best Buy, sales have lagged those of Amazon’s Kindle, which is sold only online and was recently reduced in price as well, to $299.

“The e-book industry has not hit the mainstream yet. We are focusing on affordability,” said Steve Haber, president of Sony’s Digital Reading Business Division.

Regarding the price cut for digital books, Mr. Haber said: “We have to offer value. It’s clear e-books should be less expensive than regular books, with the savings on printing and logistics getting passed on to the consumer.”

Book publishers will still retain their traditional cut of every e-book sale — about half the hardcover retail list price. But they are concerned that as online retailers like Amazon and Sony gain market power, they will eventually tire of losing money on e-book sales and ask publishers for lower wholesale prices, a move that would cut into their profit margins.

“We all know that these companies are taking a loss and that’s not going to continue forever,” said Jonathan Karp, publisher and editor in chief at Twelve, an imprint of the Hachette Book Group. But he added that “$9.99 has now become the effective price for e-books in August of 2009. Let’s just take a breath and see how long this lasts.”

In response to the $9.99 list price, some publishers are thinking about postponing the release of the digital versions of their most popular books, lengthening the period in which only the higher-priced hardcover versions are available. This is similar to the approach taken by Hollywood studios, which allow DVD sales and rentals only after a film has left theaters.

“To the extent that best-seller and new-release prices have really converged at the under-$10 price point, it is really going to heighten the attention paid to this whole release window question,” said David Steinberger, chief executive of Perseus Books.

The Knopf Doubleday Publishing Group, the division of Random House that is publishing “The Lost Symbol,” Dan Brown’s follow-up to “The Da Vinci Code,” will release the novel in hardcover in September but has yet to decide when it will release the electronic version.

Similarly, Twelve, which is publishing Senator Edward M. Kennedy’s memoir, “True Compass,” in hardcover in October, has not announced a release date for that e-book.

Sony’s price cut on digital books and the new devices may not be enough to help it catch up to Amazon. One significant drawback to Sony’s new devices is that, unlike the Kindle, they cannot connect wirelessly to an e-book store. Owners of Sony Readers must plug their devices into a computer to buy and download books.

The new Readers also cannot access magazines or newspapers, and Sony has yet to develop a version of its reading software for other devices like the iPhone. Mr. Haber from Sony said that the company was working on developing all of these features.

Sarah Epps, an analyst at Forrester Research, said Sony had publicly indicated that the two new devices were part of a new suite of e-reading products it would introduce this year. She said it was a “reasonable assumption” that Sony would introduce another device in the fall that had wireless features.

Sony had planned to unveil the two new Readers later this month, but images of the devices were posted on gadget blogs this week after one retailer prematurely added them to its online store.

08-05-2009, 11:21 AM	#1
advocate2 My Kingdom for Karma Posts: 430 Karma: 7125 Join Date: Jul 2009 Location: Las Vegas Device: Sony 350, 650, 950, Nook Color	New York Times on Pricing/publishers Although this article ostensibly is focused on the new Sony Readers, its discussion about pricing has great insight. August 5, 2009 Sony to Cut E-Book Prices and Offer New Readers By BRAD STONE and MOTOKO RICH Adding to mounting tensions in the publishing industry over the pricing of electronic books, Sony Electronics announced Tuesday evening that it was lowering prices for new and best-selling books in its e-book store, to $9.99 from $11.99. Book publishers have worried about the $9.99 flat price ever since Amazon.com introduced it for its Kindle reader in 2007, fearing that it could cannibalize sales of higher-priced hardcover books. Sony is also introducing two new electronic reading devices: the Reader Pocket Edition and Reader Touch Edition. They will sell for $199 and $299 respectively and will go on sale at the end of August. The devices replace earlier and more expensive versions of the Sony Reader, the 505 and 700, which cost $269 and $399. Although Sony’s reading devices are available in retail outlets like Wal-Mart and Best Buy, sales have lagged those of Amazon’s Kindle, which is sold only online and was recently reduced in price as well, to $299. “The e-book industry has not hit the mainstream yet. We are focusing on affordability,” said Steve Haber, president of Sony’s Digital Reading Business Division. Regarding the price cut for digital books, Mr. Haber said: “We have to offer value. It’s clear e-books should be less expensive than regular books, with the savings on printing and logistics getting passed on to the consumer.” Book publishers will still retain their traditional cut of every e-book sale — about half the hardcover retail list price. But they are concerned that as online retailers like Amazon and Sony gain market power, they will eventually tire of losing money on e-book sales and ask publishers for lower wholesale prices, a move that would cut into their profit margins. “We all know that these companies are taking a loss and that’s not going to continue forever,” said Jonathan Karp, publisher and editor in chief at Twelve, an imprint of the Hachette Book Group. But he added that “$9.99 has now become the effective price for e-books in August of 2009. Let’s just take a breath and see how long this lasts.” In response to the $9.99 list price, some publishers are thinking about postponing the release of the digital versions of their most popular books, lengthening the period in which only the higher-priced hardcover versions are available. This is similar to the approach taken by Hollywood studios, which allow DVD sales and rentals only after a film has left theaters. “To the extent that best-seller and new-release prices have really converged at the under-$10 price point, it is really going to heighten the attention paid to this whole release window question,” said David Steinberger, chief executive of Perseus Books. The Knopf Doubleday Publishing Group, the division of Random House that is publishing “The Lost Symbol,” Dan Brown’s follow-up to “The Da Vinci Code,” will release the novel in hardcover in September but has yet to decide when it will release the electronic version. Similarly, Twelve, which is publishing Senator Edward M. Kennedy’s memoir, “True Compass,” in hardcover in October, has not announced a release date for that e-book. Sony’s price cut on digital books and the new devices may not be enough to help it catch up to Amazon. One significant drawback to Sony’s new devices is that, unlike the Kindle, they cannot connect wirelessly to an e-book store. Owners of Sony Readers must plug their devices into a computer to buy and download books. The new Readers also cannot access magazines or newspapers, and Sony has yet to develop a version of its reading software for other devices like the iPhone. Mr. Haber from Sony said that the company was working on developing all of these features. Sarah Epps, an analyst at Forrester Research, said Sony had publicly indicated that the two new devices were part of a new suite of e-reading products it would introduce this year. She said it was a “reasonable assumption” that Sony would introduce another device in the fall that had wireless features. Sony had planned to unveil the two new Readers later this month, but images of the devices were posted on gadget blogs this week after one retailer prematurely added them to its online store.