In a recent post to All Things Digital (Book Publishers Beware! At iTunes, Expensive Music Equals Slower Sales) Peter Kafka noted that the move by the major record labels to ‘variable pricing’ in the iTunes Store resulted in a slowing of music sales on the platform. This has been noted before by Glenn Peoples over at Billboard, and given the relative maturity of the iTMS/paid singles market the result is hardly surprising.
Industry wide, year-over-year “digital track equivalent album unit growth” was at five percent in the December quarter, down sequentially from 10 percent in the September quarter and 11 percent in the June quarter.
The big takeaway for the book publishing business was Kafka’s comment on price elasticity and market maturity:
So here’s the question for the book industry, which has been working very hard to boost the price for its digital goods: Which lesson do you learn from this?
My gut is that the industry will see this parable the way (Warner Music Group chair and CEO) Bronfman apparently does: If you can move prices up early in the digital adoption cycle, you’re much better off.
The ultimate question of course, and Kafka notes this, is whether higher prices will stunt ebook market growth? I think a problem of much greater concern is the perception amongst some ebook buyers that the major publishing houses are price gouging. This all comes back to the price war between Amazon and the Big 6.
Given that the book publishing industry has done little, if anything, to inform consumers of the costs associated with the production of its content it’s hardly surprising that some will hold this world view.
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