The First Mistake

Yesterday was the day book publishers made their first mistake in the new digital world.

Many in the digerati will say the first mistake was digital right managements that publishers allowed to pollute the distribution channels. While that is bad, it was also expected as they followed their media cousins in creating artificial scarcity with code wrapped in code.

No, the first misstep is Simon & Schuster, Hachette, and now HarperCollins announced they are delaying the release of their ebook edition until after the hardcover edition has been on the market for three to four months.

This response is a frontal attack on Amazon’s $9.99 ebook pricing strategy. No one in publishing likes Amazon establishing the price for digital goods so far below what the physical copies are currently priced. The only real competitor Barnes & Noble has been forced to follow on that pricing scheme as they rollout of the Nook this week.

Creating the digital window in the publishing release process in theory protects the higher margin hardcovers from customer’s choice of cheap bits or expensive atoms. This is the same strategy of price discrimination that movies studios use in staggering the releases in theaters, DVD, premium cable, and mainstream TV over three years. These release windows maximize profits with high margin products or venues first followed by ever decreasing editions until, in the case of movies, you can watch it for free on ad-supported TV.

Now, this may be a tactic to get Amazon to back off their loss leader strategy that is collapsing the pricing on digital products.

Delaying ebooks is going to make the folks in Seattle very unhappy. The current Kindle tagline of “Books in 60 seconds” certainly suffers. Maybe this brings the retailer to the table to talk about a better compromise of pricing and timing.

Two big problems exist with the delay release tactic that publishers have decided to employ in the battle to regain control of their markets.

The first problem is all the people with new e-readers. Forrester Research estimates that three million e-readers will be sold this year and six million units will be sold next year.

I don’t think it is a big jump to call these customers important. They read lots of books. These individuals are the early adopters who are investing in the technology that the future of the industry is going to be based on. You want to treat these people right.

These publishers have told these nine million potential e-reading customers that they are going to have to wait months to read the newly released books they want to read. This would be like saying in the music industry, “We will be releasing the vinyl first and anyone with an iPod can expect to see the mp3s in ninety days.” What?!

Publishers have lost sight of the customers who are actually buying the books as they battle with Amazon over when things will be sold and for how much.

Their response also creates a second problem. Publishers are creating the exact conditions for piracy to expand. Giving customers the single choice of a $25+ hardcover at release will encourage people to search out pirated files. Millions of people have e-reading devices, they are going to want to use them, and they have plenty of experience filling portable digital devices with pirated content.

People have told me you can’t just rip a book and start sharing the files. And that is true. The trouble is the books being delayed for digital release are exactly the ones with large enough demand that someone will go through the time to scan the pages or crowdsource the transcription or get the actual digital file that is being increasingly passed around during the publicity phase of the book launch.


I know about the incredible financial implications that digital is bringing to bear on book publishing. That doesn’t not change the fact that it is coming. Delaying releases will not delay its arrival.

The answer here is pretty simple: release the hardcover and digital at the same time. Let customers choose what they want, when they want it, and how they want it. If you help them with those things, they’ll buy from you. If you don’t they’ll find another way to satisfy that need.

Update: MacMillian CEO John Sargent says in the New York Times that his company already delays ebooks and will likely do so in the future.

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