Adam Smith immortalized the notion of the invisible hand of the marketplace, each person striving for his own gain, offering something of value to others who in turn buy it, thereby driving the engine of free markets. His book, An Inquiry Into the Nature and Causes of Wealth of Nations, published in 1776, is available on Amazon as a free Kindle book or in paperback for as much as $24.99. And, if you can figure out that pricing paradigm, let me know!
The broader point is that markets move and the people/companies that can move them have the real juice. Case in point - Amazon's Sunshine Deals program, a two-week discount blowout in which it is offering some 600 books from a variety of smaller publishers at prices from 99 cents to $2.99. Digital book guru, Mike Shatzkin says this is a wake-up call for the Big 6 that may force them to re-evaluate how they price ebooks.
Why? Because price matters. Amazon's decision to cut prices on a big bundle of books has immediately reverberated throughout the Kindle Bestseller lists, as reported by Dan Lubart's ebook MarketView blog. Lubart tracks rankings (not units sold) of Kindle ebooks based on price, dividing them into four categories, $0.00 to $2.99, $3.00 - $7.99, $8.00-$9.99 and $10+.
Lubart notes that the number of top 100 bestselling titles in each of these price bands rarely fluctuates much from day to day. However, he's seen a dramatic increase in the number of low priced titles in the top 100 since Amazon began its promotion and he attributes that shift to the Sunshine Deals.
This should come as no surprise. Discounting works. Ask Groupon or any self-published author who tinkers with price to become an Amazon bestseller for a day.
What's different about this is that when Amazon sticks its invisible hand into the Kindle marketplace, it could turn out to be part fist and part stranglehold, forcing the Big Six to follow suit while squeezing out self-published authors who rely on low price to attract readers.
The good news is that the marketplace is not driven by price alone. Quality matters. Good low priced self-published ebooks will have a better chance to compete than crummy ones. And isn't that what the invisible hand is all about?