Buy one, get one free.  Buy three for the price of two. Buy two and get the third for half price. These marketing ploys are designed to overcome your resistance to buying more than one item at a time. They come under the rubric called bundling, a common sales technique in which two or more products are packaged and sold at a single price.

The tactic has commonly been used in merchandising every product under the sun including books. Now, accordingly to Jeffrey A. Trachtenberg of the Wall Street Journal, it is being used more and more to move e-books too.  “Publishers are increasingly offering bundles of digital titles in a bid to generate buzz and to wring higher sales from the fast-growing base of e-reader owners,” writes Trachtenberg.

It is well known that the first book of a series outsells – often by a wide margin – the second and subsequent books.  Bundling helps to bring sales of those books up to par with the first.  Though you might be disinclined to buy all three titles in a trilogy for $8.99 each, totaling a bit under $27.00, you might spring for them if the combined price were $20.00. “By bundling titles at a discount we’re raising their visibility and making them more price-attractive,” Rosetta’s Arthur Klebanoff told Trachtenberg.

Not every publisher sees the benefit of bundle discounting. If a publisher knows that fans will buy every book in a series, it will not see any point in creating a bargain price for the bundle.

For e-book publishers bundling is trickier than it looks to the customer.  Each title in the package has its own ISBN identifying number. However. in order to sell, say, a trilogy at a special price, the publisher has to assign an ISBN number specifically to the bundle. As different retail formats may require their own ISBN number, the bundle may have as many as half a dozen.

Bundling e-books with other e-books is a lot easier than bundling e-books with their print edition. Though some publishers do it, the technological challenges have thus far proven daunting. (See Bundling: Publishing’s Next Battleground)

Richard Curtis

Our recent post on bundling of print and e-books (see Bundling – Publishing’s Next Battleground) set off a thread of interesting and provocative responses.  One that we found particularly cogent was written by Joe Esposito, CEO of GiantChair.  He addresses the question of why bundling is so hard. He also suggests some viable solutions. We reproduce his post here in its entirety, with thanks to Mr. Esposito for hitting a lot of nails on the head.

RC

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To bundle you need: a direct relationship with the consumer, clearance of IP issues with authors, an ISTC-ready platform (so multiple ISBNs can be grouped together on one page), ecommerce capability (shopping cart, etc.), links for fulfillment (for both e
and p), and a marketing or merchandising strategy.

A bookseller (e.g., Amazon) has a direct relationship with the consumer, but typically does not have IP clearance with authors, which makes bundled pricing difficult. A publisher that wishes to sell direct has the relationship with the author, but typically has only weak connections to consumers. This is why bundling is hard: the necessary components are rarely found in any one organization.

Part of the reason to bundle is that creates unique SKUs [stock-keeping units, sort of unique identifiers for bundled products]. In the U.S. publishers’ direct marketing is limited in part because of discounting on widely available SKUs. Thus a publisher may try to sell a book in print from its Web site for $20 and a PDF for $16, but Amazon may sell a Kindle edition for $9.95. Thus consumers who go to the publisher’s
Web site “bounce” to Amazon or B&N.

A unique SKU, however, reduces the bounce rate. Get the print and the PDF for $20 — and you can’t get this combination anywhere else.

Of course, a publisher could also try to undersell Amazon for a standalone e or p book, but that is an assault on the entire retail supply chain. I do not advocate discounting by publishers when they sell direct.

Our experience with e and p combinations with our clients has been very positive. I am amazed by the proportion of PDF sales we get, with out without the print bundle. The bundles sell better than any one format.

Why do people want the PDF (or it could be ePub or MP3 audio, etc.) if they already have the print? It depends on the type of book and the individual consumer. For intellectually serious books, people appreciate the search capability (and tiny storage requirements).

Outside our company’s own experience, there is the interesting capability of all the ebook vendors, which keep the book in an online account indefinitely. That is an interesting feature. So, for example, I read The Da Vinci Code in print and then gave it away. I will never look at that again. But I am reading Wolf Hall now, a truly serious book. I may want to refer to that again sometime. Having a cloud-based version is attractive for that reason.

I think we will see a great deal of uptake for the bundled Google Editions, especially when they are sold directly by publishers. It is an entirely new marketing paradigm and should be watched closely.

Joe Esposito

The following question is deceptively simple, and we urge you to take your time responding. How much time?  Three or four months. You’ll need that much.  A lot rides on your answer.

Here’s the question:

When you purchase a print book you should be able to get the e-book for…

• a) the full combined retail prices of print and e-book editions
• b) an additional 50% of the retail price of the print edition
• c) an additional 25% of the retail price of the print edition
• d) $1.00 more than the retail price of the print edition
• e) free

The subject of this little quiz is bundling, a common marketing tactic in which two or more products are packaged and sold at a single price. In this case the package is a printed book plus its e-book iteration.

As simple as it sounds, bundling is shaping up to be the battleground for clashing publishing philosophies, and the time will soon come when publishers will have to choose one of the above strategies and put it into effect. Misjudging consumer attitudes could prove to be a big mistake and possibly a ruinous one.

The essence of bundling is to offer customers a discount for selecting the combo instead of the individually priced components, so choice a) above is a non-starter.  But choices b), c) and d) reflect just how aggressive a discounter wants to be and the various thresholds at which consumer resistance is expected to melt.  A good argument can be made for each and as the bundling issue warms up you can expect to hear them all endlessly debated.

Yet even the cheapest package – a dollar or even less than a dollar over the cost of the print edition – may not suffice to capture the consumer’s fancy. Why? Because many people believe they’re entitled to get the e-book free with purchase of the print book. How large is public support for that position?  We need to take a poll to find out, but if anecdotal reports are any indication, they may be in the overwhelming majority and they are unquestionably the most vocal. You will certainly hear their outpouring of joy when one publisher steps up to offer a print and e-book combo for the price of the print edition alone.  Our own prediction? Free will become the standard, and even ten cents above free will be a competitive disadvantage.

Economic factors aside, consumer negativity toward double-charging is a contributor to piracy. Comments sent to us in response to postings about piracy strongly suggest that the public expects digital versions of books to be tossed in for nothing when a printed book is sold, and if it isn’t tossed in, many of those customers will feel no compunctions about downloading an unauthorized copy. They simply feel entitled to it. Libertarian spokespeople like Cory Doctorow have articulated this sense of entitlement, and though some feel that their arguments go too far, there is a solid core of realism in their position. We can condemn the immorality of consumer attitudes ’til the cows come home; and we can (quite reasonably) complain that if people were willing to wait for the paperback reprint they should be willing to wait for the e-book reprint. It makes no difference: the public’s sense of entitlement creates an environment susceptible to the allure of piracy.

With so many sound arguments in support of heavily discounted bundles, why have we seen so little of it in book marketing? The answer is that it is harder to assemble print/e-book packages than it looks.  Publishers that control both formats are in the best position to do it but the technology is not yet in place.  Customers purchasing the latest James Patterson or Nora Roberts novel in a bookstore have no simple way to download the e-book in the same transaction. The publisher might offer a discount coupon but that requires a number of steps  and clicks that discourage a quick and easy procedure.

What is wanted is a one-click experience: “Click here to order the print and e-book.” Such a deal might best be offered by a publisher on its website.  However, the price of that bundle might undercut the prices offered by retailers or e-tailers for the individual components, and for publishers to compete with their own retailers is to cut their own throats.

Amazon is in a good position to offer print/e-book bundles but hasn’t done so yet, probably because it recognizes the complexity of the issues.  Book pricing is already fraught with so much angst that adding bundling to the debate will undoubtedly induce cardiac infarction among book people already near apoplectic with worry.

For the record, we at E-Reads strongly support the position that the e-book version should be included free of charge with the purchase of one of our print editions and are working to overcome the technical obstacles to implementing our conviction.

We invite your comments and look forward to seeing the debate over bundling heat up on the next stretch of road to the future of books.

Richard Curtis