Re: The App Store Effect

[Pippa Smart <pippa.smart@googlemail.com>]

I agree that the picture is complex, and made doubly so in a time
when customer expectations are changing quite rapidly. What is at
issue is not the amount that a journal or book (or article) is
being charged, but the perception of that charge - whether it is
felt to be acceptable or not. In STM publishing there was a
traditional perception that free meant poor quality, however this
has been completely overturned in the last 10 years.

I remember being told of an ailing journal in the late 1970s,
where the time had come to decide whether to close it. Instead,
the publishing editor (a very well-respected publisher now)
decided to triple its cover price with the argument that even if
they lost a few subscribers, they would still increase the
revenues sufficiently to make the finances work. The result was
that the number of subscribers actually increased - quite
dramatically - and the journal is now a well-established and
respected title.

However, I very much doubt that this policy would work today!

Pippa Smart
Research Communication and Publishing Consultant
PSP Consulting - www.pspconsulting.org
Tel: +44 1865 864255
Mob: +44 7775 627688
Skype: pippasmart
pippa.smart@gmail.com
****

2009/6/14 Joseph Esposito <espositoj@gmail.com>:

> The "app store effect" is much more complex than Pogue
> suggests. Very surprising, as Pogue is usually a very
> well-informed commentator.
>
> The problem with applying a model of low prices to specialized
> media such as research publications is that the content itself,
> not only the price and the format, determines the size of the
> market. How much larger would the readership of "The Journal of
> Retinal Surgery" be if it were half the price or free?  The
> elasticity of the market is not very great. There would be
> some increase in readership, but in many cases (probably most
> and possibly all) the increase in readership would not offset
> the decline in margin.
>
> There are exceptions to this. In consumer media there is no
> question that lower prices bring in more users or customers.
> Even in research publications, there are untapped audiences for
> certain categories. For example, I personally might want to
> read an occasional article in "The Journal of the American
> Historical Society," to which I do not subscribe, nor have I
> any training as a historian. But there is nothing that could
> induce me to read a journal of statistical economics at any
> price.
>
> I want to be very clear that in taking exception to the
> extension of Pogue's comments, I am not suggesting that the
> world of research publications is rosy or that all publishers
> have equal skill in establishing pricing models.
>
> Joe Esposito
>
>
> -----Original Message-----
> From: owner-liblicense-l@lists.yale.edu
> [mailto:owner-liblicense-l@lists.yale.edu] On Behalf Of Mark Funk
> Sent: Friday, June 12, 2009 7:06 PM
> To: liblicense-l@lists.yale.edu
> Subject: The App Store Effect
>
> Yesterday, New York Times columnist David Pogue wrote about the
> iPhone's "App Store Effect."
>
> http://www.nytimes.com/2009/06/11/technology/personaltech/11pogue-email.html
>
> Pogue was amazed that Apple will be selling its upcoming version
> of OS X (called Snow Leopard) for only $29, instead of the usual
> $130. After listing three reasons why this might be so, he
> settles on a final possible reason: the App Store Effect.
>
>> When programmers write iPhone programs, Apple encourages them
>> to set a price that's really low--like free, or, if you insist,
>> $1. As a result, the huge majority of programs in that store
>> are impulse buys. Nobody blinks at $1; it's less than a soda,
>> and it's something you'll have for a long time. Price is
>> virtually no barrier at all.
>>
>> That's quite a bit different from any other software category.
>> Even shareware usually starts at $20. There's a huge
>> psychological difference between $1 and $20.
>>
>> The App Store Effect says this: if you cut a software program's
>> price in half, you sell far more than twice as many copies. If
>> you cut it to one-tenth, you sell far more than 10 times as
>> many. And so on.
>>
>> It's a little counter-intuitive, but this principle has paid
>> off beyond anyone's wildest dreams. The numbers are staggering:
>> as you've probably heard, iPhone/iPod Touch fans downloaded 1
>> billion apps within 9 months. Some iPhone programmers have
>> become millionaires within months--yes, selling $1
>> software--because of this crazy math. $20 may sound like more
>> than $1, but not when 1,000 times more people buy at $1.
>>
>> I can't help wondering if Apple has the App Store effect in the
>> back of its mind with Snow Leopard. If the previous Mac OS X
>> version sold for $130, then Apple would need five times as many
>> Snow Leopard sales to equal the revenue.
>>
>> The App Store Effect says: Oh, baby, that's a no-brainer.
>
> Granted, STM journals are hardly impulse buys. But we're all too
> familiar with the death spiral of increasing journal prices
> leading to cancellations which leads to increasing journal
> prices, leading to more cancellations. Couldn't there be an
> opposite effect? In a normal economy (not now, unfortunately),
> could there be an App Store Effect for publishers if journal
> prices were slashed instead of increased? I'm not suggesting that
> STM journals be priced at $1. But a significant reduction of the
> current prices would practically eliminate cancellations and
> absolutely cause more subscriptions. Librarians desperately want
> to buy more resources, it's just that we can't afford them. When
> they become affordable, we buy more.
>
> Yes, I know: "That is so naive." "You don't understand how
> publishing works." "That would never work in reality." What I do
> know is that Apple's App Store is demonstrating an economic
> theory that actually works in the real world, and in the process
> not only are millions of copies of applications being sold, their
> authors are making a ton of money--all because of low prices.
>
> Mark Funk
> Head, Resource Management - Collections
> Weill Cornell Medical Library
> 1300 York Avenue
> New York, NY 10065-4805
> mefunk@med.cornell.edu