Amazon and the publishers Macmillan recently engaged in a very public spat regarding the retail price of e-books.  Amazon wanted to price Macmillan’s e-books at $9.99, while the publisher demanded a figure of $15.  Amazon eventually capitulated to the publisher’s demand after Macmillan threatened to withdraw their books from sale through the website.  For the consumer this ostensibly means they will be paying a third more for Macmillan e-books.

Is the publisher’s gain the consumer’s loss?  Moves to end Recommended Retail Prices (RRPs) undoubtedly increased competition driving down prices for consumers.  However, critics countered arguing that major retailers discounted major titles, such as those by J K Rowling and Dan Brown, to grab market share and unfairly undercut rivals by selling titles as loss leaders.    Does the consumer care if we pay lower prices; are we losing out at a result?

As long as there is sufficient competition between retailers, which the internet has afforded in abundance, should we be worried about retailers selling books at a loss to increase market share?  The answer is yes, if publishers receive insufficient funds to support new writers.  It would be a travesty if publishers were unable to help the next Alice Sebold or F Scott Fitzgerald for all of us that like to devour a great novel.

However, through all the recent debate one area seems to have been neglected – the rise of the amateur novelist that is prepared to sell e-novels for very low prices.  As e-readers become more prevalent, the new Apple iPad will undoubtedly dramatically expand this market, we could see the literary world facing the same dilemma that has faced the music industry.  If consumers can access new novels beyond those published by mainstream publishers and potentially illegally download novels why would they pay $15 for a mainstream publisher’s e-book?

Will we see publishers attempting to create there own virtual Fahrenheit 451 – scouring the net to delete illegal copies of books under copyright awaiting download?  The virtual world has dramatically increased supply and choice and we may rapidly approach an online literary world where it is no longer publishers and retailers arguing over prices, but an industry worrying if it can survive in the face of dramatically reduced revenues.

The rise of e-readers and the ease at which it could afford budding novelists the opportunity to publish their works could drive down the price consumers are prepared to pay for all books, unless they have been written by a writer with existing ‘name value’.  Unlike in the music world established novelists will not have the opportunity to perform concerts and live performances to replace monies lost as prices fall and could find their earnings dramatically reduced.  It’s a Brave New World…

Do you believe that retailers should have the right to determine prices and dictate these terms to suppliers?

T.
Fatcheese.co.uk

Are we all heading for a farmhouse speakeasy?

As shoppers we could shortly face rapid price inflation if governments set on a path of instituting minimum pricing, or increased taxation, for products deemed harmful to our health.  While taxation for smoking is widely accepted, I can envisage a huge backlash if shoppers believe they are being controlled by the nanny state.

One of Britain’s leading heart surgeons, Shyam Kolvekar, has suggested that in order to save lives butter should be banned.  Could we see prohibition for butter, with farm shops turned into undercover speakeasys for the dairy inclined?   Again there is huge debate in the media about whether the consumer has the capacity to make choices for themselves.  Given the NHS’ stretched resources in the UK, some argue that we cannot afford to let public health continue to decline and we should socially engineer positive changes through taxation.

MPs are increasingly looking at whether they should institute minimum pricing for alcohol.  In Scotland the SNP administration is proposing the introduction of unit alcohol pricing, with a minimum price set by statute.   However, a question remains whether minimum pricing actually change shoppers’ behaviour.

At the very bottom of the market, consumers buying Tesco Value Lager or Skol are likely to be price sensitive and may reduce consumption.  At the higher end minimum pricing may see consumers go one of two ways.  If the price differentials between brands like Stella Artois and Carlserg are maintained, with an underlying price increase, consumers may switch to the cheaper brand.

Alternatively, if the lower priced brands have to charge more and the more expensive brand keeps their price static, consumers may migrate to the more expensive brand.  Almost invariably the more expensive brand has higher alcohol content, so the minimum pricing strategy could actually lead a significant proportion of drinkers to increase the volume of alcohol they consume.

With public coffers running perilously low, the administration may see the taxation of ‘harmful to health’ consumables as an attractive mechanism to increase the tax yield.  If they can overcome the inevitable public backlash by highlighting the benefits to the nation’s health we could see shoppers paying ever greater prices for so called ‘bad’ foods.  The question we as consumers need to put to the lawmakers is this, ‘how do you decide which foods to tax?’  If you tax butter, why not chocolate, cheese and cream – where does it end?  My worry is that shoppers may soon be propping up the NHS by paying additional taxes, which will limit choice and see the state increasingly looking to manipulate our purchasing decisions.

Do you believe the government should use taxation and minimum pricing to change shoppers’ behaviour?

T.
Fatcheese.co.uk