Amazon Exec Suggests Publishers Could Promote Books By Slashing Prices

That's probably a bad idea.

Want people to buy your books? Try selling them for a song.

That was Amazon’s advice this week to U.K. book publishers. According to The Daily Mail, and relayed by The Bookseller, the online retailer’s head of publishing, David Naggar, told publishers that they could see success by mimicking the low sales prices offered by self-published authors on the platform. 

“What self-published authors will do is they will publish a book and sell it for 99p right out of the gate,” he said. “Publishers [with new authors] could much more afford to do that than self-published authors.”

But why would publishers slash their own prices so dramatically? While book publishers might pour resources into a debut author’s book tour, free review copies and even ad campaigns, Naggar suggested they could make those books more appealing by simply lowering the consumer’s barrier to entry.  

“I look at price as a tool for visibility,” he explained. “You can either spend a lot of money on marketing or you can invest it in a super-low price until they get the flywheel going of the recommendation engines ― and this is just for Amazon.” Readers, he said, would be more likely to pick up a book from an unknown author if it were cheaper, and these early readers might generate enough buzz to goose sales of the book.

An Amazon spokesperson told HuffPost, “The comments in question were used very much out of context and were made to illustrate an example of Kindle Direct Publishing authors’ tactics to drive discovery. The conversation was about how to maximize sales for unknown authors.”

The tactic might sound simple, but there’s an obvious downside for publishers: Using books as loss-leaders for themselves can degrade customer expectations of what books are worth ― and though Amazon, with its iron-stomached investors, can afford to keep cutting prices and losing money on its business, most branches of the publishing industry cannot. Publishers don’t simply create books out of the ether, but invest significant resources in them, and prices are calculated to allow publishers, as well as booksellers, to recoup their business costs. In addition to authors, publishers must pay editors, designers and production workers who collaborate to turn out a product, as well as sales and publicity staff.

More than one or two dollars’ worth of labor goes into producing a new hardcover, or even a new ebook ― and by selling brand new books to consumers at that rock-bottom price, publishers would risk creating the expectation that books will sell for that unsustainable price in perpetuity. This has already effectively happened with ebooks, which publishers initially tried to sell for similar prices to hardcovers; Amazon undercut prices radically, and it’s now expected that ebooks will cost between $10 and $15. Once again lowering prices to tempt readers would seem likely to have the same result.

It may not even help with promotion, as Naggar suggested. An anonymous indie book publisher told The Bookseller that “price alone doesn’t make much of a difference to sales,” unless it’s combined with good promotion. “But Amazon decides what ebooks to promote ― not publishers ― which is a bit of a problem,” the publisher said.

Naggar’s reported statements don’t indicate that Amazon plans to pressure book publishers to lower their prices; the strategy is presented as an option that might help publishers garner attention for little-known debut authors. But if publishers are skittish about such suggestions from the online retailing giant, they have reason. 

Amazon does have the power to put book publishers in the impossible situation of sacrificing their profits on book sales or sacrificing their sales altogether: According to MarketWatch, the online retailer controlled 93 percent of e-commerce for books in 2015. And Amazon has a history of wielding that power ― for example, during its famous dispute with Hachette over ebook pricing, when the online retailer removed Hachette titles from pre-order and two-day shipping availability and even made books harder to find in search results.

Economists and anti-trust experts have warned that Amazon has been given a pass by regulators because they use their immense market power to lower prices ― but its growing clout in the market still positions it to harm producers and interfere with future innovations that might disrupt its business model. In June, Lina Khan critiqued Amazon’s acquisition of Whole Foods in The New York Times, noting, “Reports chronicle how executives tinker with recommendation formulas that determine whether customers see certain goods, turning algorithms on and off as retailers watch sales flow and dry up, Amazon’s hand on the spigot.”

Since the Hachette debacle of 2014, Amazon seems to have backed off and achieved a tenuous truce with the major U.S. publishers. But the company still holds a lot of cards, not to mention the power to stack the deck. As long as that’s the case, publishers will continue to watch Amazon’s book-selling strategy like hawks.



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