What happens if ebook prices drop to the $1 to $5 range?

It’s interesting to see how low-priced books are gradually taking over the Kindle Store.

You can fill your Kindle for a lot less now than what it would have cost you a few years ago.

The Race to $1/$5

Let’s do a quick comparison between 2008, 2010, and 2011.

Please Note: In 2009 free books were included in the bestsellers list – so 2009 can’t really be compared properly to 2008, 2010, or 2011.

1. 2008 – 4 books in the $3 to $5 range out of the Top 40. Zero books at $1. 5 books in the $3 to $5 range out of the Top 100. Zero books at $1.
2. 2009 – 6 books in the $3 to $5 range out of the Top 40. Zero books at $1 in the Top 40. 12 books in the $3 to $5 range out of the Top 100. Zero books at $1. Note: Excluding this year as there are lots of free books included in the Top 100.
3. 2010 – 7 books in the $3 to $5 range out of the Top 40. 1 book at $1 out of the Top 40. 18 books in the $3 to $5 range out of the Top 100. 4 books at $1 in the Top 100.
4. 2011 – 12 books in the $3 to $5 range out of the Top 40. 8 books at $1 out of the Top 40. 27 books in the $3 to $5 range out of the Top 100. 21 books at $1 out of the Top 100.

It’s interesting to see the percentage increases -

1. Percentage of books at or below $5 out of the Top 100:  5% in 2008, 22% in 2010, 48% in 2011.
2. Percentage of books at $1 out of the Top 100: 0% in 2008, 4% in 2010, 21% in 2011.

The best way to put it would be -

In 2008 there were zero books priced at $1 out of the Top 100 bestsellers of the year. In 2011 there are 21.

In 2008 there were only 5 books priced at $5 or below out of the Top 100 bestsellers of the year. In 2011 there are 48.

We have gone from 5% of the Top 100 books being at or below $5 to 48%. It’s an incredible change.

How do you justify $9.99 and $14.99?

You might argue that there will always be a place for books at $10 and $14.99. That the Agency Model $14.99 and the pre-Agency Model $9.99 are safe.

I won’t argue against that. We do, however, have to look at what’s happening.

Books at or below $5 make up 48% of the bestsellers list now. The decisions customers have to make include ones like these -

1. Do we get Alone by Lisa Gardner for $1 or Cross Fire by James Patterson for $14.99?
2. Is A Discovery of Witches by Deborah Harkness worth $14.99, or should we instead pick up Saving Rachel by John Locke for $1?

At some point readers will stop getting both the $1 book and the $15 book. They are going to start wondering why Alone and Saving Rachel are at $1 while Cross Fire is at $14.99. They’ll wonder why Stieg Larsson and Sara Gruen are at $5 while Deborah Harkness is at $14.99.

Is A Discovery of Witches really worth three times what Water for Elephants is worth? Is it really worth fifteen times what Alone is worth?

Sooner or later readers are going to figure out that it might not be worth paying triple just to be able to read a book a few months early.

Everything in the book market is defined by the sum totality of what every creator and seller is doing. If there are indie authors and published authors experimenting with $1 and $3 and $5 – It slowly kills the viability of $15 books and $10 books.

We’re moving towards a world where ebooks will be between $1 and $5

The shift is already happening. We looked at how we’ve gone from 5% of books in 2008 being at or below $5, to 22% of books being at or below $5 in 2010. Now, in 2011, an enormous 48% of books are at or below $5.

In 2008 there were zero books priced at $1 in the Top 100. Now, in 2011, there are 21.

We won’t have to wait until 2013 for a world where every ebook is below $5. We might hit that by next year. By end of 2011 we will probably have 75% of the Top 100 at or below $5.

That careless prediction brings us to the most interesting question.

What happens if ebook prices drop to the $1 to $5 range?

Well, here are a few random guesses -

1. Hardcovers become almost extinct. If you’re getting a new release for $5 in ebook form, would you really pay $10 extra for the hardcover version?
2. Publishers start dying out. Publishers were having a hard time surviving on $9.99. Do we really think they can survive on $5? What about $3?
3. Authors start going solo. Would you rather choose ’25% of $14.99′ or ’five times the sales and 70% of $5′?
4. A lot more book sales and a lot more reading. Publishers had managed to drive hardcovers to $15 and $20 and had introduced artificial delays in the release of paperbacks. Now, anyone who wants to get a book early and at a reasonable price, will be able to.
5. Reading competes more effectively against TV and games and movies. A good book for $5, or a good indie book for $1, is super competitive when compared to a $10 movie or a $50 game or even a $2 app.
6. A huge decline in ‘consumer culture’. TV and the main stream media play a hugely important role in keeping people trapped in a world where the only path to happiness seems to be ‘consuming’. Having kids and young people reading books written by wiser, older authors (for the most part) is much better than having them be brainwashed by Don Draper wannabes. Would you rather have your 15-year-old daughter read Vogue and start believing she is ugly and needs to buy designer clothes to be happy, or have her read Pride and Prejudice and Catcher in the Rye?
7. A huge shift in education. We live in a world where you can’t really prove anything. So have no idea how to make an argument for this. However, once kids start reading more, and start reading classics and books of all types, it’s going to change how they approach life and their education.

There are also other changes that might happen -

1. With $1 and $3 and $5 books there would probably be much less motivation to pirate books.
2. The lack of eBook reselling and the limited ebook lending might become much smaller concerns.
3. There might be a detachment of the profit motive from the writing of books. An author writing a book weighs financial aspects very differently from a company that needs to survive based on book sales.
4. The number of people with access to books would probably go up by a lot. Libraries would still play a pivotal part.
5. We might find that there is a lot more choice in each and every genre of books.

It’s very difficult to predict what will happen when books come down to the $1 to $5 range and can flow freely and easily to nearly all the people who want to read.

Gutenberg’s invention of the press was such a pivotal moment in so many ways. eReaders and eBooks promised to do the same. However, it’s only when the price savings and the benefits of increased competition transfer to readers that we will know whether we are at another Gutenberg moment.

My closing statement would be – It’s not the eReader or the eBook that is the pivotal change here. The biggest change is that there is now tremendous competition due to anyone being able to publish, and due to anyone being able to sell their books for any price they like. The drop in the price of books is the real revolution. It is the free market, the authors and indie authors making the most of the opportunity, and readers encouraging indie authors and published authors to go direct to readers that are the Gutenberg’s Press of the 21st century.