That also most sounds like a looping question. In the real estate market a house is worth as much as somebody is willing to pay. But in media world a song may be worth millions but people are only willing to pay .99 cents for it. In the case of the house, you only have one buyer, but the song you have millions of buyers. Still with both products there is only so much a buyer is willing to pay for a product. Price something too low and you will get a lot of buyers but you lose out on potential profits, price something too high and you have less buyers, possibly losing more money than if you had just priced it a little cheaper. It is a tight rope walk.
Last year music companies were able to set their prices on their songs with iTunes variable pricing. The variable pricing gave music lables the ability to set prices as low as .69 cents to as high as $1.29 for individual songs. So how did that pan out a year later?
Not so good, music sales are slower. Warner Music Group (WMG) announced that its unit sales growth (individual song sales, not album) on iTunes has slowed since the price increase. Sales at the $1.29 level were down and if it weren’t for the revenue generated by the .69 cent songs, they would never have made a net gain. The CEO of WMG acknowledged he was unsure as to whether it was the economy or the 30% price increase (or both) that was the cause. “It’s difficult to know, even today, if it is just consumer resistance to a higher price points or if taking a pricepoint of 30 percent more at such a fragile time (is to blame). I don’t think there’s been another company to have taken such a price increase in the 2009 period.”
So why is this a big deal for medical libraries and companies who provide content to them? The last 3 or 4 technology webinars and discussions I have sat in on have all talked about pay for access book and journal article content. Instead of libraries paying big bucks for ejournals and ebooks they can make them available to users by making them pay access at the user level. Right now I only hear academic libraries seriously discussing this but I can see it making its way into the cash strapped hospital world.
Pay for access is nothing new. Almost every journal publisher I can think of has their own pay for access public site where they charge unaffiliated (or sometimes unaware affiliated) users anywhere from $25-$40 for a copy of an article. Publishers have also experimented and used institutional pay access models, most of the models I have seen have been where the institution pays for the accessed material not the user. During the webinars more people spoke about models where the user pays for access. In some libraries this is a foreign concept, but in others such as academics where students have copy and printer accounts associated with their library accounts, this is not so radical an idea.
If more and more libraries begin to look at userd to pay for access, price will be a key factor in overall usage. The music iTunes model is an established model. The ebook purchasing model where people download a title to a handheld device is still fairly new. Yet they are already experimenting with price for buying electronic title access for handhelds. Amazon.com looks to return to providing Macmillan books at a higher price (Amazon.com’s usual top price was $9.99), and there is speculation that many other publishers will follow Macmillan’s lead. The industry is already predicting a short term slump in ebook revenues as customers resist price increases, but they are banking (literally) on the system to adjust and be to their benefit in the long run.
Really? Will that work? Granted there is only one year’s worth of data from the iTunes price change but I am willing to bet publishers are going to have a difficult path in more than just the short term and we haven’t even begun to discuss ejournals and paying per article to download to a handheld device. The world of popular literature is different than academic or medical literature, but these publishers also have be aware of the thin line where price is a burden to convenience. I just wonder with consumers balking at music content costing $1.29 whether they are willing to buy print materials (ejournal or ebook) at a considerably higher price. Or have we as a society been conditioned by iTunes to expect a .99 cent item? I am not saying that a whole book goes for .99 cents, after all a whole album goes for much more than that. But in the world of academia and medicine where people are using reference books and journals for that “one needed chapter” or that “one important article” are people going to want to pay full price for the entire ebook or $40 for the online article? Or are they going to start demanding ala cart pricing within the item level?
I have no idea, it is just something that has been bouncing around in my head the last few days. But one thing is for certain, as people become more and more used to getting things on their handheld devices, delivery, demand and pricing are going to change considerably.