Graph by Silicon Alley Insider

Years ago it became clear to us that we were heading for a Gillette Event.  That day may be only months away.

The Gillette Event is the day that the price of e-readers drops to $0.00.  The above chart shows that since 2007 the price of a Kindle has slid sharply from $399 to its current $79 (at least for one model). The slope is so steep it’s hard to avoid any other conclusion than that Free is inevitable.

The Gillette Event is named after King Gillette, the inventor of the safety razor and marketing genius who conceived the scheme of giving away the razor and selling the blades.  The analogy to e-readers is clear: give away the device and sell the content.

I’ve never believed that information wants to be free but it looks like the devices that provide it are just begging for gratis status.

Does it make sense for Amazon to go on charging anything at all for the Kindle?  There are compelling arguments in favor of taking the ball across the Zero goal line.

The first is that Amazon has never been afraid to sell the Kindle at a loss in order to undercut the competition. Some observers say that low-end models of the device are breaking even.  So, going into deficit to gain a competitive advantage would not plunge the company into trouble by any means. A million Kindles at $79 per is $79 million – hardly a ding in Amazon’s revenue armor. A free Kindle would give Amazon a decisive lead in the e-reader arms race from which rivals might never recover.

The second argument for free Kindles is that the amount of paid content carried on the e-reader has soared to the point where critical mass sustained by media sales is within reach. As an inducement to consumers the device would come pre-loaded with a starter set of rich content. No charge for your first set of razor blades.

These speculations were prompted by an interesting article by Pascal-Emmanuel Gobry in Business Insider Research, How Amazon Makes Money From The Kindle.

The author discusses the larger Kindle environment he calls the Kindle Ecosystem. At the headwaters of that ecosystem is the device itself.  A free Kindle could create a flood of business that would dominate the marketplace for the foreseeable future.

By the way, the Gillette strategy isn’t limited to Amazon.  Are you listening, Barnes & Noble?

Richard Curtis

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

If authors are being asked to do the publishers’ job of marketing and publicizing their own books, shouldn’t the publishers pay them for it, as they would pay a staff member or outside publicist?

M. J. Rose thinks so. In fact, she’s beating the drum to promote the idea. “In almost all cases, publishers are making it clear that they expect authors to supplement their marketing/PR effort in various ways and, in some cases, even soliciting the author’s help with both time and yes, money. As a result, today the author’s marketing/PR effort is often equal to or even greater than what the house is doing.”

Authors are subsidizing marketing and PR and but that’s not enough, says Rose, a well known and savvy publicist for authors (as well as for herself). She wants to change the way publishers compensate authors. Read about it in Publishers Must Change the Way Authors Get Paid

RC

When did book clubs become book clubs? That is, how did the book industry evolve from a business model defined by commercial reprinters like Book of the Month Club and The Literary Guild, to one heavily dependent on groups of book-loving – and book-buying – amateurs?

At whatever point we crossed the line from definition #1 to definition #2, the reading circle has become a driving force in book marketing, and the author who knows how to work the clubs has become a formidable promotional machine.

“The focus on book clubs has spurred the evolution of a new breed: the author-hustler, the writer who succeeds in large part because of door-to-door salesmanship,” says Mickey Pearlman, a “professional book club facilitator” as Francesca Mari, blogging in The Daily Beast, describes him. In The Book-Club Hustlers Mari details Pearlman’s very professional approach to what most of us think of as an informal and loosely organized activity.

Pearlman offers four-hour book-marketing seminars (for $500), focusing on “how to creatively market your book on the Web and in other outlets”—one of those outlets being, of course, book groups. “You’re building an interest in you,” Pearlman says, “so they’ll be very likely to buy your next book.”

Mari cites the activity of a typical self-promoter, Joshua Henkin, who has made the rounds of more than 175 groups. “With 10 people in each group, that’s 1,750 books sold right there.” Another, Adriana Trigiani, works the clubs by phone, as does Chris Bohjalian. Laura Dave even does hers via Skype.

You can’t fault authors for wanting to hustle their goods. But you might get a little squeamish to think that authors and publishers may deliberately be shaping books to appeal to book clubs. Mari reports how one author, Robert Alexander, hired an editor after his novel had been turned down fifteen times.

She told him to shoot for a book-club ‘gem’, to cut the manuscript from 460 pages to 250 and hone in on the historical fiction. Alexander did and got three offers in eight days. His Viking and Penguin contracts, he says, even state that his books should be around 250 pages. The Kitchen Boy is now in its 22nd printing, and was optioned to be made into a movie by Glen Williamson, the man behind American Beauty and Eternal Sunshine of the Spotless Mind.

We referred to book club members as “amateurs” – by which we mean, literally, those who love books more as a pastime than a profession. But in fact clubs have evolved far beyond the cliché of schoolmarmish intellectuals reading Proust over tea sandwiches. Chelsea J. Carter blogging on PaperBackSwap.com says, “Around the country, book clubs also have become networking tools for young professionals.” There is even an instructional book for clubbers: The Book Club Companion: A Comprehensive Guide to the Reading Group Experience by Diana Loevy.

Richard Curtis

They came out of the womb with keypads grafted to their hands, monitor cables trailing from their optical nerves, thumbs hyperdeveloped for texting, and umbilical cords terminating in USB’s ready to interface immediately after weaning. They passed up electric trains for video war games, dolls for Facebook accounts, and Little League participation for YouTube and Craigslist.

They are the Net Generation, also known as Millennials. And if you don’t understand them, or aren’t sure you like them even if they belong to you, thank your stars that Don Tapscott does. And if you’re a businessperson hoping to make a market on them, you’d be smart to listen very, very carefully to him. For proof of this assertion, ask the President of the United States. Barack Obama’s juggernaut political campaign drew its power from the social networking values of Net Gen youth the way a hurricane sucks up energy and momentum from warm open ocean water. Here’s a blurb on the book:

Poised to transform every social institution, the Net Generation is reshaping the form and functions of school, work, and even democracy. Simply put, the wave of youth, aged 12-30, the first truly global generation, is impacting all institutions. Particularly, employers, instructors, parents, marketers and political leaders are finding it necessary to adapt to the changing social fabric due to this generation’s unique characteristics. Within its comprehensive examination of the Net Generation, and based on a 4.5 million dollar study, Don Tapscott’s Grown Up Digital offers valuable insight and concrete takeaways for leaders across all social institutions.

Harry Hurt, who has written many an entertaining New York Times feature, is grateful to Tapscott for decoding his 11-year-old son. “How can an otherwise healthy boy like mine spend a sunny day playing World of Warcraft for five consecutive hours instead of playing soccer or baseball outdoors?” Hurt asks. His answer? Tapscott’s book, Grown Up Digital: How the Net Generation Is Changing Your World, “gives parents from the baby boom generation — like me — reason for optimism.”

Tapscott, an adjunct professor of management at the University of Toronto, writes a really interesting blog about the Net Gen, drawn in some measure from his observations of youngsters like his own children. His book cogently summarizes those observations, and for anyone hoping to bottle and monetize the Millennial zeitgeist, Tapscott’s points are worth committing to memory. As Hurt summarizes them:

* They prize freedom
* They want to customize things
* They enjoy collaboration
* They scrutinize everything
* They insist on integrity in institutions and corporations
* They want to have fun even at school or work
* They believe that speed in technology and all else is normal
* They regard constant innovation as a fact of life

Paul Lynde’s “Bye Bye Birdie” lyric asks, “What’s the matter with kids today?” Actually, it sounds like the Millennials have their heads screwed on pretty tightly.

RC