Kobo on eBook pricing

Kobo's Michael Tamblyn has a great story up on eBook pricing and sales with some slides that he had produced for Digital Book World:

As you can see, regardless of publisher-set prices, most books sell for $10 or so, accurately described by Michael as "The Pinnacle of Negative Margin". Books meant for sale higher than $20 clearly sit and collect electronic dust (e-Dust?)

He predicts (hopes really) that the $10 point will shift northward and lose it's margin-killing properties. The agency model all but guarantees that - the question is will sales drop long term once all major publishers are setting new and bestselling releases at higher than $9.99, and major resellers are required by agreement to go along with that. I suspect the answer is yes.

He points out some opportunities (and caveats):

• Dynamic Pricing: The ability to rapidly decrease the price of books to increase sales. He also references the self published author, who at $2.50 starts getting a lot of sales and raises prices.
• Shorter New Release Window: The ability for books to pass through new release status faster. He says that most Kobo new release sales occur within the first 120 days. Perhaps eBooks can drop in price faster than in the print world where the time between hardcover and paperback is 6-8 months easily.
• Publisher-set Prices Will Require Much More Collaboration, New Business Functions. He cautions that publishers have never set pricing without the safety net of retailer input adjusting prices to meet customer demand. He says the solution is to review numbers daily and weekly, not monthly and quarterly.