August 03, 2008

Price Of A Book

On an e-mail message board, folks were promoting a new book on e-mail marketing. At a list price of $18.99, the community shared with each other that the book was available on this site for $17.09 with free shipping.

However, a member suggested (with a smiley face :) that readers should wait a few days, because the book would appear on Amazon at a cost of just $12.91.

People talk about how the internet is ruthlessly efficient, that it cuts out the middleman. Certainly, this isn't true. The internet is about a new group of middlemen named Amazon and Google and eBay (and someday Facebook and YouTube and Twitter), middlemen using technology to cream off the profit available to those producing content or selling merchandise.

As best I can tell, Amazon.com makes $7 for every dollar I earn when a copy of my Database Marketing or Multichannel Forensics book is sold. That's what happens when there is price parity. When the Multichannel Forensics book went on the market, Amazon sold the book at a 33% discount, driving volume while earning maybe $2 for every dollar I earned.

Look at my Multichannel Secrets book, sold on Lulu. If the book is sold for $14.95 on Lulu, I earn $7.02. If the book is sold for $14.95 on Amazon, I earn $2.74. If the book is sold as a download, I earn $6.36.

In this process, the internet middleman leverages the power of the audience to drive down prices. The message board participant gains juice by being a hero, by sharing with the audience that they can save $4.18 by waiting a few days to purchase the item on Amazon.com.

In some ways, the content producer loses. The individual who wrote the e-mail marketing book is an e-mail marketing executive. "The market" decided that all of his knowledge, everything he knows, is only worth $12.91. The price creates a dramatic disincentive for making content available to the public. Well, that's not entirely true. If sold through Forrester Research as content created by that organization, the document be worth hundreds of dollars.

Of course, the pundits will say "Yabut this book is just part of a multichannel platform for creating awareness for the products and services his organization sells. And Amazon makes it possible for you to sell ten times as many books as you would sell otherwise, allowing you to make more money and reach a larger audience." True!

It's funny how the disincentives created by the folks at Amazon drive people like me to simply give information away. Maybe the internet does eliminate all middlemen --- we both bypass the middleman --- I create content, and you get to choose whether to pay for the content with your most valuable currency --- time.