Time is Money: New Thinking on Digital Book Pricing - Tech Forum 2014 - Nathan Maharaj


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"Time is Money: New Thinking on Digital Book Pricing" - Nathan Maharaj (Kobo, Inc.) at BookNet Canada's Tech Forum (BookNet 101) - March 5, 2014.

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  • I want to talk with you today about what I often talk about when someone drops me on a stage. [click]
  • Of course that’s pricing. But we’re going to look at it a little differently from what I think you might be used to.
  • So as fascinating as it would be to discuss the nuances of pricing among different segments of the Kobo catalogue, right up front I’m promising no histograms.
  • And no zany line charts to follow.
  • Instead we’re going to ask some big questions.
  • Like, really big.
  • And so we’ll look at this from a few different angles, using data that we haven’t been looking at seriously until recently, and I’ve never before presented.
  • First, we’ll look at what happens to ebooks after they’re bought. Are they read? Do they get finished? Then we’ll look at the intersection of time spent reading and what different kind of ebooks cost. And finally we’ll look at the trend of serialization as a means to not only sell a book incrementally, but also how effective it is at creating an audience.
  • We’re living in the era of sales data. If a channel of any significance sells one of your titles, you can find out within a matter of days, or hours in some cases.
  • And after a decade of being preached at, we’re now living in a world where sales data is not only gospel; it’s our master. Everything from print runs to marketing to author advances now has some of this data in the mix.
  • And this abundance of retail-level data has highlighted what we still don’t know, like which books get read when they leave the store. Our personal experiences as readers provide some guidance, but the people in this room read too much and have a lot of unusual economic forces driving their reading decisions, whether it’s the books you get for free or the stuff you have to read to do your job well. And while we may never know what will happen to this [click] book when this customer gets home…
  • ebooks, especially those read inside a cloud-based, app-serving ecosystem, are different. Keeping track of a user’s library securely in the cloud means syncing not only which books have been purchased, but also which have been opened, and where to place the bookmark so the user can pick up where they left off.
  • A by-product of this activity is a mountain of data, the like of which didn’t exist until the rise of ebooks. To make sense of it, we take a page from email marketing & ecommerce.
  • Email marketers and ecommerce veterans will be familiar with these metrics: they’re the lifeblood of online retail, but they also have application in our world of content consumption.
  • With that in mind, let’s look at an array of award-winning Canadian literary award-winning or –nominated titles which all of you have certainly heard of (one of these stands to win CanadaReads tomorrow morning). So this is the % of opens. And completions. And finally, the # of reading sessions that users spent to reach the end. Let’s look at the extremes: here are two killers for open rate, and completion rate. But this one took 50% more sessions to complete, so we should credit the author with writing a book that not only won a major award, and not only sounded interesting enough that people who buy every award-winning book actually tried reading this one, but they also stuck with it for a long time and had a strong tendency to complete it. And here’s one that seems to exist on the level of kale in the shopping cart; despite winning prestige and accolades, it was barely read – though readers who did engage with it finished after only a few sessions, which contributed to a strong completion rate.And I’ve been messing with you a bit here: this one is the baseline for the “Literary Fiction” BISAC.This shouldn’t shock us. As readers we know which books are slogs, and which ones pull us deeper and deeper until we turn the final page. There are the books we buy because it seems to be the thing to do, and the books we buy because someone we trust assured us that we’re going to have a great time.
  • What’s going on?
  • It turns out that the stack of books on the night stand wasn’t left behind by digital. For various reasons, readers are still buying faster they can they can read. And that’s familiar to all of us. We buy books as much to engage with them in the moment as to express to ourselves an intention of engagement. And that’s okay. http://lifeofadoctorswife.files.wordpress.com/2013/03/night-stands-7.jpg
  • Maybe there’s just something inherently greedy about reading. And technology hasn’t done anything to adjust our vision of what we think we’ll get through.
  • Whatever’s piled on the nightstand or locked up in your cloud library, people read for a lot of different reasons. Entertainment, information, escape, enlightenment, participation in a cultural phenomenon, and any combination of any of these.
  • But in light of these kinds of results, which I have to emphasize are normal as far as we can tell, we discover that there’s a spectrum of experiences spanning purchasing, reading, and having read.
  • While we can’t measure intent, we can at least take a page from Clay Christensen, the visionary writer on business strategy, and suppose that whatever the reader’s reasons, they are at the very least paying a book to do a job for them.
  • If you were choosing to read books based strictly on the amount of reading time you could get for your dollar, what genre would you choose? Here are your options.Now here’s relative Average Selling Price. Immediately apparent: “serious” categories command a premium. And Mystery is the champagne of genres. But this only tells us what people will pay to access ebooks in these categories.Here’s what it’s costing these readers by the hour. The highest hourly cost hits Comics/Graphic Novels/Manga and this Big Ideas category. Why is that? Well, with the former, it looks like it simply takes about an hour to consume a graphic novel, or at least the ones that drive a category with a fairly low ASP. As for the latter, I think we’ve all heard the old saw about business books always being 70% longer than they need to be. And that tells you a couple of things; either the books really are largely redundant, or the type of reader who reads them doesn’t have patience for a nuanced argument developed slowly. And if we look at the rate of abandonment, we can see if that’s the case.Meanwhile in genre fiction, rate of abandonment is half what it is in popular non-fiction.
  • Okay, but did they come back to the book a lot? Did they give up after only a couple of sittings? Did they spend a long time with it in each sitting?Who wants to guess on the category with the most sessions? Least? So here’s the # of sessions it took on average to complete. We see a cluster of session #s for genre fiction here, but Erotica is the genre outlier with the shortest sessions by far. Huh. Among non-illustrated books, again these big ideas come in behind on both session length and # of sessions, suggesting rapid skimming of a slightly bored reader.
  • Thinking further about popular “big idea” non-fiction, this type of book is so much an outlier in terms of how readers value it, both in terms of time spent with them, and money spent to access them, that even in the absence of any data like what I’ve just shared, that it’s spawned a whole category of publishing …
  • … and services that fly under the traditionally calibrated publishing radar, designed to deliver better $/hour.
  • One of the big trends to emerge since erotic romance became a mainstream genre, is digital serials.
  • While we all know that nearly 2 centuries ago readers rioted for the latest instalments from Dickens, there was some doubt as to whether a novel released piecemeal would be commercially viable.
  • So having looked at abandonment rates for titles and categories, let’s look at one of the more successful serials of the last 12 months or so, a popular erotic romance. here we have sales of each volume, of which there were 6. It’s an impressive build, and strongly suggests that readers stuck with the series. But did they, and to what extent? Was it too long? Could it have succeeded at 8 volumes? 12?
  • Now bear in mind that we’re talking about a genre that’s not among the highest in terms of Average Sell price
  • But by selling at $1.99 each, the weighted average paid by any customer who bought 1 or more volumes: $8.11.
  • Now here’s the drop-off rate in terms of purchases. So just over a quarter of people who purchased volume 1 stopped there; and over half who purchased volume 1 bought all the way through the series.
  • But did anyone read it?
  • Indeed they did: the abandonment rate for Erotica is roughly 30%, and every volume in the series held to that. What’s surprising is that it wasn’t higher. But in any case it was sufficient to drive strong sales through the series and set this author up for another hit.
  • Time is Money: New Thinking on Digital Book Pricing - Tech Forum 2014 - Nathan Maharaj

    1. 1. Time is Money: New Thinking on Digital Book Pricing March 5, 2014
    2. 2. Nathan Maharaj Director, Merchandising
    3. 3. Beard grooming & maintenance
    4. 4. eBook Pricing
    5. 5. KOBO CONFIDENTIALPAGE 5 The eBook pricing landscape 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 0.01-0.99 1-1.99 2-2.99 3-3.99 4-4.99 5-5.99 6-6.99 7-7.99 8-8.99 9-9.99 10-10.99 11-11.99 12-12.99 13-13.99 14-14.99 15-15.99 16-16.99 17-17.99 18-18.99 19-19.99 20-20.99 21+ KWL (Sales Weighted) KWL (Volume) Market (Sales Weighted)
    6. 6. KOBO CONFIDENTIALPAGE 6 Free 1st in serieses 3/8/2013 3/15/2013 3/22/2013 3/29/2013 4/5/2013 4/12/2013 4/19/2013 4/26/2013 5/3/2013 5/10/2013 5/17/2013 5/24/2013 5/31/2013 6/7/2013 6/14/2013 6/21/2013 6/28/2013 Paid Titles (Series A) Paid Titles (Series B) Paid Titles: Author's Catalogue (Excluding Series A & B) Free Title: Series A Free Title: Series B
    7. 7. What’s the value of a book?
    8. 8. What’s the value of reading?
    9. 9. KOBO CONFIDENTIALPAGE 10 Coming up… 1. Bought! Now what? 2. The wages of reading 3. Serial study
    10. 10. 1. Bought! Now what?
    11. 11. KOBO CONFIDENTIALPAGE 16 What can we measure? • % Opened • % Completed • # sessions & session duration
    12. 12. KOBO CONFIDENTIALPAGE 17 And the award goes to… 0 10 20 30 40 50 60 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% % Opened % Completed Avg. Sessions to Complete
    13. 13. And the award goes to… 0 10 20 30 40 50 60 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% % Opened % Completed Avg. Sessions to Complete
    14. 14. 2. The wages of reading
    15. 15. KOBO CONFIDENTIALPAGE 24 Value for money? Bio/Autobio Gladwellian Big Ideas Myst/Detective Romance Lit Fic Erotica CGN & Manga Avg. Cost/Hr ASP Avg. Abandon 70%
    16. 16. KOBO CONFIDENTIALPAGE 25 Reader engagement among those who finished? - 5.00 10.00 15.00 20.00 25.00 30.00 Bio/Autobio Gladwellian Big Ideas Myst/Detective Romance Lit Fic Erotica CGN & Manga Avg. Session Length Avg. # Sessions
    17. 17. 3. Serial Study
    18. 18. KOBO CONFIDENTIALPAGE 30 $1.99 at a timeJan Feb March Part 1 Part 2 Part 3 Part 4 Part 5 Part 6
    19. 19. KOBO CONFIDENTIALPAGE 31 Value for money? Bio/Autobio Gladwellian Big Ideas Myst/Detective Romance Lit Fic Erotica CGN & Manga ASP
    20. 20. $8.11
    21. 21. KOBO CONFIDENTIALPAGE 33 When did they stop buying? 27.5% 8.4% 5.1% 2.9% 0.2% 55.9% Part 1 Part 2 Part 3 Part 4 Part 5 Part 6
    22. 22. ?
    23. 23. KOBO CONFIDENTIALPAGE 35 Completion % 70% 73% 70% 71% 73% 74% 0% 10% 20% 30% 40% 50% 60% 70% 80% Book 1 Book 2 Book 3 Book 4 Book 5 Book 6
    24. 24. KOBO CONFIDENTIALPAGE 37 Now we know… • <100% of readers open the ebooks they buy. • And <100% of ebooks opened are read to the end. • Big Ideas come with a relatively big price tag for an evening’s amusement. • Serial publication drives sales and builds readership. 37
    25. 25. KOBO CONFIDENTIALPAGE 38 More to explore • What’s the impact of promotional pricing on completion %? • If/when customers read outside their core interest area, how is completion % affected? • What do bestsellers with extreme completion rates have in common? • How can publishers ensure their books are bought and read? (does it matter?) 38