Rovio Recognizes That Massive, Massive Volume At Cheap Prices Beats Low Sales At Inflated Prices
from the unrealistic-ebook-pricing-is-nothing-more-than-a-paywall dept
Maybe it takes a "digital native" like an app developer to instantly "get" digital publishing. Asking those who've spent most of the ebook era actively fighting the new medium is frustrating for both sides of the conversation.Rovio, the Finnish developer behind the omnipresent "Angry Birds" game, is releasing its first ebook/app, based on the print version that debuted last year. Mike Cane has a brief but excellent rundown on what Rovio's doing right, and where other publishers are continuing to fall short.
Cane starts by quoting from PaidContent's article on the ebook release, which points out a couple of important aspects of Rovio's offering:
[T]he app is "not just a book," said Peter Vesterbacka, Angry Birds CMO. "We took the content from the book, 41 egg recipes, but didn't want to just take the book, make a PDF and sell it to people. We actually made it a lot more interactive."First off, the app/ebook is not just a quick and cheap "port" being thrown into iTunes to grab some quick digital dimes. Secondly, the price is well under what most publishers would be willing to charge for a comparable ebook.
"Bad Piggies' Best Egg Recipes" is on sale for an introductory price of $0.99 or €0.79 in the iTunes Store and includes step-by-step photo instructions, an egg timer and photos of the finished dishes. Users can also upload their own pictures of the recipes they make.
Why is this such a frikkin big deal?That's a much steeper discount than most publishers would be willing to take, especially on a potential cash cow like this. Sure, one could argue that it's just an app spinoff, or that Rovio made plenty of money with its games, or that there's no "real writing" involved, or any number of tangents in an effort to minimize Rovio's deep discounting. One could even argue that Rovio is leaving money on the table or, as an outsider, just doesn't "get" publishing and price points.
[T]hey are selling an app-book for one-tenth of the print version's discount price. ($9.99) One-tenth!
Here's what Rovio has to say about the price point:
"We're not looking thousands or tens of thousands of downloads," he [Peter Vesterbacka, Angry Birds CMO] continued, "we're looking for millions of downloads of this book…We're going for massive, massive volume."Oh, those crazy Finns and their madcap ideas! Volume! It's as if Rovio believes that it can distribute an infinite good at an extremely low price and still make some very good money. Insanity! Mike Cane points out the sheer incongruity of the situation:
He gets it. None of the Big Six of publishing — or the Little Sixes of it — do.Yeah. What if? Unfortunately, that's still largely open to speculation as none of the publishers seem willing to try it out. Even in the wake of a DOJ investigation into price fixing, prices have tended to move up rather than down (or remain unchanged) as publishers burn through remaining discounts. Even after various self-published authors have demonstrated the ability to make a living selling thousands of cheap ebooks rather than dozens of expensive ones, the tendency is to price ebooks in the same neighborhood as their physical counterparts.
What if the Big Six started massively discounting their frontlist titles, going for that volume instead of trying to bleed each reader for the most they could squeeze out of them? They'd be able to transition their businesses to e faster and make lots more money in the process — and also help to thwart piracy!
Mike suggests deeply discounting the frontline titles and making more money through volume. But even if publishers aren't ready to take their current bestsellers down that road, what's stopping them from knocking the price of their back catalogs down to an impulse purchase level? Making the back catalog a bargain bin could turn casual fans into completists and give readers a reason to dip their digital toes into unfamiliar waters.
But, if nothing else, Rovio's pricing strategy has to, at the very least, highlight how many publishers are overvaluing their digital offerings, as if charging unrealistic prices will somehow prevent "devaluation." In reality, these higher prices simply show the huge gap between what the publishers desire and what the customers actually want.
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Filed Under: angry birds, apps, ebooks, peter vesterbacka, prices, volume
Companies: rovio
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I doubt you're ever going to understand that
Mainly,though, low-cost, "pulp fiction", "penny-dreadfuls", "pocket books", and even paperbacks as such are NOT new. You kids just think that it is because now it's on a COMPUTER! -- This is NOT a general solution, particularly as the seller broke out (somehow) and is widely known..
SO, the real question remains how one gets noticed in this new area that keeps getting flooded with yet more people wanting to get rich quick -- regardless how many sales they make. Heck, I once knew an author who'd have been happy just selling ONE book, if was for a million bucks.
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Re: I doubt you're ever going to understand that
Then maybe we go buy the author a drink at a con, or a tshirt at a concert, but that gatekeeper? all he gets is a hearty "go fuck yourself".
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Re: I doubt you're ever going to understand that
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Re: Re: I doubt you're ever going to understand that
nowhere in that was the author, who i loved, making any money off of me. Now i get them in ebook, and there isn't exactly a used digital goods market to be found. So i'm going to pirate them. i'd much rather give a buck or two straight to an author i like. but that option isn't available. Remember, i don't buy new books. i'm not a lost sale, i never was a sale...but i could have been.
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Re: Re: Re: I doubt you're ever going to understand that
In other words - if your book was too expensive, I wasn't buying it - or at least if I was, I'd be obtaining it legally with no money going back to the publisher.
Since I got a Kindle last year, my physical purchasing has almost completely stopped. But, with the Kindle I follow the same pattern. Most of my legal purchases have been below �1, most of them free. I've made a number of impulse buys on top of those, but nothing below �2. I've bought a couple of more expensive titles but if your eBook is over �5, forget it, you'll never sell that to me because it's simply not worth that much (more than a supermarket paperback, with less value).
People like ootb are deluding themselves if they think people *want* higher prices. They may be willing to pay more for certain titles, or immediacy rather than waiting for a price drop, but nobody wants the higher price point. unlike the physical market, where there was a definite reason to pay more for a hardback rather than a paperback, the eBook you buy for 20p is the same as the eBook you buy for �5 (and I've seen those price points on the same titles recently). Why would anyone *want* to pay the higher amount, and how many more people buy at the lower price point?
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Re: I doubt you're ever going to understand that
The fact that it is on a computer does matter -- it changes the cost of distribution radically. It will be a big battle. Very exciting. When the dust clears, there will be an entirely new landscape.
And one serious and persistent issue -- as you imply -- will be that it's very hard to get rich by selling, say, a few hundred of anything for one dollar.
Price-fixing or trying to protect the old industries won't work, however. The market forces (including the dark side of the market !) are too strong.
But it's always been hard to make it as a writer or creative person. What is different now is the shape of the market. The writers will need all the old skills plus potentially new skills (to the extent that they now can operate as self-publicist if they have the ability and energy). The distributors will have to re-make themselves completely.
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Re: I doubt you're ever going to understand that
What about selling a million books for 1 dollar?
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Re: I doubt you're ever going to understand that
Sure thing. Just don't whine when people aren't paying those high prices.
>Mainly,though, low-cost, "pulp fiction", "penny-dreadfuls", "pocket books", and even paperbacks as such are NOT new.
No one is saying it's new, but criticism against anything that's not Big Label is usually stated on the grounds that doing things cheaply is "new" - contrary to publisher tradition and therefore doomed to fail.
>Heck, I once knew an author who'd have been happy just selling ONE book, if was for a million bucks.
Your point? Who wouldn't want to make that kind of money? Doesn't mean it's practical, though. It also doesn't mean that we should be propping up this sort of example as the standard.
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And somewhere on Earth (or what's left of it), there will be a tiny, dilapidated building, housing a few ancient men on life support. They will spend all their days shouting hoarsely into microphones that broadcast over ancient frequencies, ranting endlessly about how much money they are owed by everyone for infringing their copyright.
I can picture a bored teenager listening to the audio stream for a few minutes, then turning to a friend and asking, "Hey, what's that 'money' stuff they keep asking for, anyway?"
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Not in my iTunes store ...
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Re: Not in my iTunes store ...
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What about Steam?
The logic you have to yield to is that high price points for digital goods act as a barrier to all those people that want to buy. Sure, you'll get everyone that is willing to pay that price to buy it, but little more than that. Others will wait for a lower priced option to arrive. This is why used games is such a big market, they make a high-priced good more accessible by lowering the price in a second hand market.
There are just only so many sales you're going to grab at that price and interest will steadily decline once each new customer exhausts their social circle to publicize the game to. It's like a chain reaction. It only lasts as long as your supply of reactants last. If you lower the price so that a greater number of people can get a copy, each new customer is additional access to new social circles, creating more opportunities for publicity.
There's minimal extra cost to distributing 1 million digital copies compared to 100,000 copies. The overhead is small, so why not lower the price in kind so that you can access a larger audience? The worst thing you can do to your prospects of notoriety and visibility is artificially limit your audience. Volume is more important than the revenue ratio per sale.
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Re: What about Steam?
I'd be very intrigued to see how well these are doing for the publishers, especially the MacMillan titles as they are new books from very well established and notable authors. I'd dare say that many more casual readers are buying the books compared to buying at the higher price point. How much more profit is debatable, but I can guarantee that I've bought books that I'd never have bothered with at full price.
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Re: Re: What about Steam?
I picked up the The Phoenix Conspiracy by Richard Sanders free and enjoyed it so much that I didn't even hesitate to pick up the second book, The Phoenix Rising, when it came out for �5. The guy understands ebook pricing and got money from me he likely wouldn't have ever seen otherwise by doing so.
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hahah,, yes that might be true, but it certainly does not beat massive volume at suitably priced or even inflated prices.
for example Apple, massive volume, inflated price, happy users..
but you dont really know what expenses are involved, so it is only your opinion that a price in inflated..
clearly with companies like apple, the consumers do not believe the price they are paying is inflated, in other words they feel they are getting value for their money..
provide value for money, and the rest will follow..
why do you think things like linux have not really taken off (as a desktop OS) ? it's because price is not everything.. people are willing and happy to pay a fair price to recieve a product they consider of that value.
ie, it's worth the cost.
it's got nothing to do with scarcity or some other crap that masnick goes on about.. it's about knowing that consumers want to spend their money on products they see as valuable and worthwile for them..
have you even been to a bargin basment record (CD) shop, where they have a big box of albums for a super low price, 3 for $1 but them you look at the titles, nana mascuri, kenny rodgers and so on... mostly crap (all crap)..
BUT IT"S CHEAP,, if your product is crap price does not matter, scarcity does not matter, it's crap..
if your product is quality, prices does not matter, scarcity does not matter, people are willing and WANT to pay their money to purchase things they want..
people buy what they want, not what there are alot of..
it's a consumer led market, masnick would have you believe that it is a vendor led market, no the vendors follow the consumers. the vendors fill niches that consumers create.
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What would the effects be of even a small price increase, say from 99 cents to $1.49 or $1.99? If you lose 10% of your sales, but gain 50% or 100% more income (and net Itunes fees, more than that), would it not be better to sell it slightly higher?
Why the rush to the bottom all the time?
Rovio makes good enough products, they have a good reputation, they shouldn't need an insanely cheap price to sell their wares. Increases in income might even let them hire on even more staff to create even more products, and continue to grow faster than they are now.
There are a limited number of consumers for the product, pricing it below what they are willing to spend isn't a great way to do thing. yes, they sell a lot, but they also leave a ton on the table.
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Or... They understand that this particular product is essentially a silly gimmick product that most people are going to buy on impulse rather than by making a considered purchase. More people will buy on impulse at the $1 price than they will at the $2, so they may actually be making more than they would at a higher price.
There's arguments either way, but whatever they "leave on the table" from individuals who would have bought at the higher price point may well be largely made up for (if not surpassed) by those who wouldn't.
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If the 99 cent Itunes / app store sale gives them net 50 cents... and $1.49 gives them net $1 (because the processing is already covered within the Itunes cost structure), then they have doubled their income without increasing cost. They would have to double the number of consumers (or lose half of their consumers) to make this happen.
There has already been some indictions (even here on Techdirt) that too cheap isn't the actual sweet spot.
The point is that raising the price may not in fact cost them any users, and lowering the price to the lowest possibly price point (aside from free) may not garner them any new customers.
It's sounds cool that they sell a lot at 99 cents. Selling almost as many at $1.99 and making a ton more money (to reinvest) seems cooler!
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While fools like the AC at the top of this thread are whining that 99c makes it a bargain price and somehow implies low quality, and artificially propping up their own prices, Rovio are going to be raking in far more than they would have done at 10x the price.
I think that's clear, whether you think 99c or $1.49 was the real sweet spot. Fine-tuning can come later, but it's those who deliberately overprice their product who are going to be the ultimate losers here.
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Well said sir, even though the rest of your argument only addresses one part of the truth. Both models can work, if your brand manages to get people to buy at higher prices then so be it, if not... Massive sales for very low prices.
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Most people will not fork $20 for an unknown author but $0,99? Probably.
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Price point; sweet spot; supply & demand
Okay, maybe $3 is a tad too low. There must be a "sweet spot" somewhere in there between 3 & 13. But the industry never even tried to experiment with lowering the price to find that sweet spot, did they. They must have figured the Copyright Police would enable them to dictate the price & keep it sky-high. How'd that work out again? Oh yeah, they killed off their own monopoly market. Way to go, a-holes!
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