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Amazon “Pay to Preview” a pricing model too far?

September 27, 2010

An interesting article on Techflash  in the US has highlighted a new patent application by Jeff Bezos and others at Amazon whereby people who want to preview an information product prior to purchase may have to pay for the privilege. If this is true, it represents an interesting development in pay-per-view online information which has already moved in new directions with News International’s moves with the Times and  now the News of the World.

One reason for this could be that Amazon takes the view that many people decide NOT to buy once they have previewed the data. This has some, albeit minor, merit: information of any kind has value and as such that value must be charged for. Indeed, implicit in this article is that Amazon’s current “pay per view” approach has a cost attached which needs to be retrieved somehow. But is “pay per view” valued by Amazon users – indeed, should it be? Will they pay for something which previously was free?

Such an approach takes value-based pricing in new directions – it assumes that people take a view of information, don’t pay the full price but pay some price for the value received. In other words, they pay less than they would have done had they bought the whole book/product and then decided it was rubbish. In some ways, it represents a tax on consumer research – whatever you want to know, even when comparing products, you have to be charged for it. Surely the real reward for “pay per view” is that customers end up buying the book so Amazon should view this tool as a marketing cost rather than an additional retail opportunity?

I confess to being a little confused by this approach. International trade, after all, is made up of comparisons of products prior to purchase: clothes, watches, motorcycles, cars. In many cases, it’s a fundamental of trade to “try before you buy”. If Amazon’s model is based on the premise to charge people to try the products, I cannot see that this represents a great leap forward in commerce, save to recover development costs for Amazon. It is almost a negation of everything that Amazon has done so far to create an eponymous brand based on amazing customer service.

My suspicion is that this approach is not really about “pay to try before you buy”. It reads more like a development in how people can read books – in particular business and B2B books – whereby only the value which is required is read, used and paid for. This is a much more interesting development and highlights a potential strategic move by Amazon into the B2B and reference market – to develop long-term paying relationships based on consumer niches and groups. A way of leveraging the bite-size research habits of today’s social-media savvy consumers.

If my premise is correct, “Pay to Preview” highlights at last a way forward for information providers who only publish books: a way to develop long term revenue from consumer groups rather than having to rely on the random purchase of individual titles. A way of developing sustainable revenue streams and avoid the nightmare of continuous one-year product life cycles and the horrors of the remainder shelf.

So, is “Pay to Preview” a pricing model too far? In my view, to charge people for a comparison process prior to purchase is singular and not supported by consumer buying behaviour in all other areas of the economy. However, if developed as a way of reading, reviewing and using relevant data and information in the B2B arena, it represents a fascinating development – and one which publishers need to watch carefully as this clearly has copyright issues beyond the conventional publisher – retailer – purchaser relationship.

In any case, as ever, the price needs to reflect the value received and offer value in excess of the price paid. That has always been the challenge facing book publishers in particular and it will be fascinating to see how this concept moves forward.

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