E-Readers, Ebooks, and Publishing's Bottom Line: The Opportunities and Challenges Presented by the Explosion of the E-Reader Market

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Bundling Print Books and EBooks

Another lever that publishers are playing with is timing; how they can release content via various channels to maximize revenue opportunities without alienating customers. Over the 2009 holidays, a number of publishers including HarperCollins, Simon & Schuster, and the Hachette Book Group announced plans to delay the release of new books' electronic versions for periods ranging from 4 weeks to 4 months, in order to sustain the revenue stream from higher-priced hardcover new releases. The strategy was seen as a clear strike against ebook retailers such as Amazon and Barnes & Noble, who are offering ebooks at $9.99 and taking a short-term loss in the process, in order to beef up content (and long-term appeal) for all those Kindles and nooks hiding under the Christmas tree.

The January BISG report on consumer attitudes toward e-reading may lend credence to the booksellers' strategy; the report found that 30% of print book buyers would wait up to 3 months to purchase the e-book editions of books written by their favorite authors. HarperStudio's Miller is less cavalier about those delays. "Delaying the release of ebooks can give physical books a chance. But you're going to encounter impatience from the e-reading public. If that's the channel they prefer to read on, they shouldn't be punished for it," he says.

Miller prefers the model that Macmillan Publishing announced in December. In 1Q 2010, Macmillan started selling "enhanced" ebooks the same day the hardcover version comes out, at a slightly higher price. The enhanced books might contain reader guides, additional materials from the author, and other premium content to sustain the higher price point without punishing an e-reader. "Then, down the road, a lower-priced, plain vanilla ebook version can be released," Miller says.

Another idea that has Miller enthused is the concept of bundling, where ebook and physical book access are paired. "The idea is, if you buy a book from me, I'll give you the ebook for no additional cost. You shouldn't have to get charged twice." Miller, like many in the industry, sees strong parallels to the music industry, which has begun to apply differentiated pricing to different value propositions around the music. "Bands are doing interesting things," he says. "They sell a physical CD at one price, a CD plus immediate downloads at a higher price, and maybe a CD, downloads, and a T-shirt at a third price."

Safari Books' Rough Cuts program, introduced back in 2006, builds on aspects of both timing and bundling. These "books in the making" are manuscripts that are developed but not yet published, enabling the author to get early reader reaction and build audience buzz in the process. Readers can purchase online access to the book with unlimited online viewing and PDF downloads of each revision, prepurchase the print book at a significant discount, or buy a bundle that includes online access immediately and the discounted print book later.

As for what's coming next, Carlton says it will be years before we know. "Right now I'd say we're in the last movement of the final symphony of print. We haven't even heard the first real notes of the first symphony for digital reading." He adds, "It's easy to look at the current era as a period of doom and gloom, but publishing's not dead. It's just changing form."

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