The Race to Zero – $6.94 and £2.18 are the new $9.99

As we end 2010, a year that started with the Agency Model, it’s worth taking a quick look at what prices the bestsellers in the Kindle Store are at.

The Agency Model was introduced because Publishers felt $9.99 wasn’t a good enough price for them. Were they able to raise book prices above $9.99?

Keep in mind that we supposedly had just 2.4 to 3 million Kindles in January 2010, and now we supposedly have as many as 9 to 11 million Kindles. So, the new price standard replacing $9.99, will be far more important than $9.99 ever was.

The Top 100 Paid Bestsellers List in the Kindle Store

The price distribution -

1. Books at $1 – 17. That’s 17 out of the Top 100 at just $1. You get the feeling $1 is threatening to take over, and that Amazon’s Deal of the Day page is an attempt to replace $1 books with $3 books.
2. Books at $3 –  12.
3. Books at $5 – 13.
4. Books at $10, or between $6 and $10 – 28.
5. Books above $10, or at $12.99 - 20. Just 3 out of the Top 20, and just 1 out of the Top 10.
6. Books at $19.99 – 1. Take a bow, Mr. Follett. You are the champion of the Agency Model.
7. Apps – 9. Average Price of Apps – $2.43. You get the feeling Amazon will have to move these to a separate list.

That list shows that there are 18 Agency Model priced books in the Top 100, but 51 books and apps at or below $5.

If we assume the price of all items is at the upper limit of the buckets they are in ($5, $10, $12.99, and so forth), we get an average price of … ta da … $6.94.

Publishers didn’t think they could survive on $9.99, they waged a war using $14.99 and $12.99, and they ended up with $6.94 per book in the Top 100. Of course, the fun doesn’t stop at $6.94 being the new $9.99.

The Top 100 Free Bestsellers List

Right beside of the Paid Bestsellers list, is a list of the most downloaded free books.

There are 5 free Kindle Apps, 43 offers on new books, and 52 public domain books in that list. Given that there are over 20,000 public domain books in the Kindle Store, and over 200 offers on new books, it’s safe to say that a lot of people are reading those – instead of buying new books.

So it keeps getting worse for Publishers. All those public domain books they could print out, and make money from – Gone. Even Oprah couldn’t get public domain books to sell well – What hope do Publishers have?

Let’s amble across to the other main stores – We want to confirm that prices aren’t just low in the Kindle Store.

Does the Nook Store save the Agency Model?

Here’s what we get in the Nook Store -

1. Books at or around $1 -  3.
2. Books at or around $3 – 5.
3. Books at $5 – 29.
4. Books at $10 or between $6 and $10 – 42.
5. Books above $10 – 21.

Again, assuming all books are priced at the upper limits of the buckets they’re in, we get an average price of … $8.54 per book. Once again, Publishers attempts’ to go higher than $9.99 have been soundly rebuffed. In fact, there are just 21 books above $10 in the bestsellers list.

Surprisingly, B&N is managing to keep the average book price at a healthier price point than Amazon is. Those 17 $1 books, 12 $3 books, and 9 $2.50 apps, that crowd the Kindle Store bestsellers list, are all missing from the Nook Store. Insteads we have a mere 8 books priced below $5.

Kindle Store in the UK – Perhaps readers in the UK love Agency Model

Actually, they don’t.

1. Books at £1 - 17 of the Top 20, 61 out of the Top 100.
2. Books at £3 - 3 of the Top 20, 21 out of the Top 100.
3. Books at £5 -  16.
4. Books at £7 - 2.

No wonder Kindle is doing well in the UK. Amazon is giving away all these books for £1 each. There are just 2 books at £7 or higher in the entire Top 100. There are 82 books at £3 or less – 61 of which are at £1.

The average price for a Top 100 book in the UK Kindle Store is a ridiculously low £2.18. How is anyone making money from these books?

Kobo Store – How’s Canada doing?

Kobo Store only has a top 50 list. It often has 10% off to 30% off sales, and has a 33% off coupon for all new members. So, we’ll subtract 15% from the list price of books, to factor in these discounts. We’ll do this at the very end.

Note: These are prices in Canada.

1. Books at $1 – 3.
2. Books at $3 – 1.
3. Books at $5 – 7.
4. Books at $10, or between $6 and $10 – 30.
5. Books above $10 – 9.

A mere 9 books out of the Top 50 are priced higher than $10. The average book price comes out to be … $9.16. We cut off 15%, to account for all the coupons, and get $7.79.

Even outside the US, Publishers can’t manage to get $12.99 and $14.99 to work.

The Agency Model is in ruins

How do you interpret it when -

1. Publishers say $9.99 aren’t sustainable prices.
2. They push $12.99 and $14.99.
3. They end up with an average price of $6.94 for the Top 100 books in the Kindle Store, and an average price of $8.54 for the Top 100 books in the Nook Store.
4. They end up with an average price of £2.18 for the Top 100 books in the UK Kindle Store.
5. They end up with an average price of $7.79 for the Top 50 books in the Kobo Canada Store.

Publishers to Readers – $9.99 isn’t good enough. It’s time to pony up $14.99.

Readers to Publishers - How do you like them apples?

Readers have destroyed the Agency Model, and the Race to Zero is on. In 1 year we’ve gone from $9.99 to $6.94, in the US, and £2.18, in the UK. As more and more people buy eReaders, and the market gets more and more competitive, we are going to see prices go down further. All the companies hoping to make money from books are the Queens of Wishful Thinking.