E-books worth 5% of Hachette's business

[EricLandes]

Originally Posted by leebase

Any numbers to back up your opinion? Of course, unless you are inside the inner circle at Amazon or one of the publishers, you don't have any hard numbers....neither do I.

Amazon is apparently on track to sell 8 million Kindles this year. This after an estimated 3 million last year. http://www.sfgate.com/cgi-bin/articl...es-2010-12.DTL

This is on top of the ~12 million iPads that will be sold this year. That's a whole lot more devices on the market that can read books. And I haven't even gone into the claimed 18K Nook Colors per day or other eInk devices.

My point is the publishers know what their sales are with Agency pricing. What they don't know is whether those numbers are better or worse than they'd get without Agency pricing, because the market is changing so radically nearly quarter by quarter. They can't judge by 2009 numbers.

At the end of Q1 this year, before the iPad and the advent of Agency, there were (and this is a semi-educated WAG) between 6 and 7 million non-phone devices out there capable of reading books. The number now is at least triple. My gut says if your book sales aren't matching that trend, you're falling behind.

Originally Posted by leebase

They also have an extreme economic incentive to maximize profits. They have a track record that at least has allowed them to stay in business and grow to being one of the top 6 publishers in the world.

So....I'm still betting on the publishers. They successfully established a much higher price for hard back books than they are asking for ebooks. I see little evidence that the folks on this forum (including me) happen to be a LOT better about running a book business.

I think that the market that can afford $139 to $500 for ereading devices can handle the difference between $10 and $13 or $15 for the price of an new release, popular ebook.

Here's the problem with what the publishers are doing now versus what they've been doing for the rest of their existence. They have never before sold directly to the reader or controlled pricing. Their customer, forever, has been the retailer (or, even worse, the wholesaler.) Now, with Agency, they're selling direct to you and me. And, frankly, they're not equipped to handle that relationship.

If they did, they'd be reacting to the report linked just above about how people aren't flocking to these Agency-priced books.

Time will tell, but I'm not betting on the existing publishers. I simply think they're too entrenched in their old way of doing things to successfully adapt to a completely different marketplace.

[abookreader]

We don't know what we don't know, and the numbers have not been provided to tell us if the decrease in per user ebook buying is simply the result of ebooks being cheaper than hard backs.

Sure we do. Amazon and Kobo have both indicated that post Agency pricing their sales shifted toward lower priced eBooks.

[DavidI]

Eventually enough people will have eReaders that a fair number of authors will be able to make a living selling only ebooks. We're already getting close, but I bet at some point (soon) Amazon will be selling eReaders for under $99, or giving them away free when you sign up for an Amazon Prime account. As this happens, authors will be able to start publishing ebooks directly and just cutting the publishers out of the loop. Once a few authors make this transition, and can prove they can make a living, it will become a flood of authors leaving publishers. Eventually we'll also see our first blockbuster ebook author along the lines of a J.K. Rowling or Stephanie Meyer -- one of those books that just everyone has to have. Just wait until someone makes millions without a publisher.

Do you think that as this starts happening publishers will suddenly discover that the prices they're charging for ebooks is too high, and the royalties they're paying authors for ebooks is too low? Or will they be left trying to sell books on their back list for exorbitant prices and trying to hold on to aging authors who don't like change?

[JSWolf]

Originally Posted by EricLandes

Amazon is apparently on track to sell 8 million Kindles this year. This after an estimated 3 million last year. http://www.sfgate.com/cgi-bin/articl...es-2010-12.DTL

And as we know, since Amazon doesn't release hard numbers, any of these articles guessing the numbers are worthless.

[Andrew H.]

Originally Posted by DavidI

Eventually enough people will have eReaders that a fair number of authors will be able to make a living selling only ebooks. We're already getting close, but I bet at some point (soon) Amazon will be selling eReaders for under $99, or giving them away free when you sign up for an Amazon Prime account. As this happens, authors will be able to start publishing ebooks directly and just cutting the publishers out of the loop. Once a few authors make this transition, and can prove they can make a living, it will become a flood of authors leaving publishers. Eventually we'll also see our first blockbuster ebook author along the lines of a J.K. Rowling or Stephanie Meyer -- one of those books that just everyone has to have. Just wait until someone makes millions without a publisher.

Do you think that as this starts happening publishers will suddenly discover that the prices they're charging for ebooks is too high, and the royalties they're paying authors for ebooks is too low? Or will they be left trying to sell books on their back list for exorbitant prices and trying to hold on to aging authors who don't like change?

Complete wishful thinking. The ability to sell your own music through iTunes hasn't revolutionized music publishing; the vast majority of people still want music from the labels. (They may want to steal it, but that's a different issue.) Book publishing will be no different: people want quality books that have gone through the editing and development process of a publisher. They don't want badly written indie books, and very few people want to dig through dozens of indies to find the one readable book.

@leebase:

There's nothing in that article that says "after pricing on Agency 5 books rose, sales of those books plummeted, while sales of books at $5 increased". We don't know what we don't know, and the numbers have not been provided to tell us if the decrease in per user ebook buying is simply the result of ebooks being cheaper than hard backs.

Based on the evidence, this is correct. The Agency numbers are what tripled, and they don't sell $5 books.

@eric

At the end of Q1 this year, before the iPad and the advent of Agency, there were (and this is a semi-educated WAG) between 6 and 7 million non-phone devices out there capable of reading books. The number now is at least triple. My gut says if your book sales aren't matching that trend, you're falling behind.

This would only make sense if: (1) the people buying new e-readers didn't already have an e-reader (and it's clear that a lot of people are replacing old readers with new readers); and (2) people couldn't own two new devices (a lot of people own an K3 and an iPad); and (3) we knew what percentage of iPad owners were regular readers (i.e., the only reason someone would buy a Kindle or Sony reader would be to read on it, but reading is only a small part of what an iPad can do, and many people with iPads never read books on them).

Big publishers tripled their sales. That's good for any business, and it's pointless speculation to suggest that they could have (or should have) sold even more. Not to mention the fact that book sellers are in the business of making profit, not sales.

[Ankh]

Originally Posted by Andrew H.

This would only make sense if: (1) the people buying new e-readers didn't already have an e-reader (and it's clear that a lot of people are replacing old readers with new readers);

That, I am afraid, is not so clear to me.

I can see the trend on Mobile Read, but I am definitely not sure that the same applies to the population in general. The previous generation of eInk devices, barring physical damage, is still perfectly usable for reading.

[leebase]

@Eric....you haven't said anything to establish that you have a better understanding than the publishers on ebook pricing. You haven't any numbers on what actual sales are so how can you know is the $12.99 to $15.99 pricing is unsuccessful. We can assume that sales go up as prices go down, but we don't know at what point the increased sales of lower prices brings in more or less money. I'm sure the publishers have that information if anyone does.

Lee

[tompe]

Originally Posted by tech_au

Hachette, The evil instigators of geo-restrictions world-wide.

Really? In what way?

They are for legal reasons respecting the contracts they have. Why is this wrong?

[tech_au]

Originally Posted by tompe

Really? In what way?

They are for legal reasons respecting the contracts they have. Why is this wrong?

The stupidity of geo-restricted internet sales has been done to death here over the last couple of years here so I won't rehash it again.
It is pretty stupid that you can buy a paper book that is only for sale in a certain country from another country using the internet but you can't buy an electronic book.
But thats the dinosaur book industry for you.
Also what other industry would fix the prices that the retailer must sell them for. I still haven't worked out why this isn't illegal yet.
Anyway, rant mode off :-)

[tompe]

Originally Posted by tech_au

The stupidity of geo-restricted internet sales has been done to death here over the last couple of years here so I won't rehash it again.
It is pretty stupid that you can buy a paper book that is only for sale in a certain country from another country using the internet but you can't buy an electronic book.
But thats the dinosaur book industry for you.

In what way was the book industry involved in the agreements about point of sale? It is an international agreement between countries.

It is annoying that people seem to blame the publisher for everything the do not like.

[DMcCunney]

Originally Posted by tech_au

The stupidity of geo-restricted internet sales has been done to death here over the last couple of years here so I won't rehash it again.
It is pretty stupid that you can buy a paper book that is only for sale in a certain country from another country using the internet but you can't buy an electronic book.

But thats the dinosaur book industry for you.

It arguably is stupid, but you can't just blame the publisher. Georestrictions exist because publishers don't have the rights to sell certain books in certain territories. They acquired the book for publication where they do business. The rights elsewhere may be held by someone else, who can and will sue if they think their rights are being stepped on.

Going forward, I expect more publishers to try to acquire worldwide electronic rights for titles, but existing titles are covered by existing contracts.

Also what other industry would fix the prices that the retailer must sell them for. I still haven't worked out why this isn't illegal yet.

Simple enough. The Agency Model changes the relationship between the publisher and the retailer. The publisher is no longer selling books to the retailer at a specified discount, which the retailer can then then offer at a lower price by reducing the margin they'll accept on the sale. Instead, the retailer is an agent, selling the publisher's wares for a defined commission, under a contract that specifies the price they have to charge.

You may not like the deal, but there is nothing illegal about it. (And you may assume the publishers involved made very sure of that before proceeding.)
______
Dennis

[DMcCunney]

Originally Posted by JSWolf

And as we know, since Amazon doesn't release hard numbers, any of these articles guessing the numbers are worthless.

No, they aren't. You can make good guesses digging through the numbers in annual reports and 10Ks and interpolating. They won't be hard numbers, but they'll likely be in the ballpark. Financial analysts have a lot of experience doing such detective work.
______
Dennis

[DMcCunney]

Originally Posted by abookreader

Sure we do. Amazon and Kobo have both indicated that post Agency pricing their sales shifted toward lower priced eBooks.

And the question is how much credence to place in those statements. Agency Pricing was aimed at Amazon in the first place. They'll certainly shout to the housetops that sales of books priced under the Agency Model are failing. How true this is is another matter, but it's part of an ongoing struggle between Amazon and the big publishers. That was happening before the Agency Model got imposed.

Amazon wants market share, and uses pricing to get it. They were getting a better than 50% discount from the publishers on print books (I've seen claims that are reasonable their actual discount was 55%), and wanted an even bigger one. Larger discounts to Amazon mean less revenue to publishers, so you can assume they'd be unhappy at such demands.

Retail margins are normally very thin, and may amount to pennies on a dollar. That's why market share is coveted: the bigger your market share, the more dollars you make pennies on. The appropriate measuring stick for retail is usually inventory turns and return on assets, not profit margin.
______
Dennis

[DMcCunney]

Originally Posted by Ankh

That, I am afraid, is not so clear to me.

I can see the trend on Mobile Read, but I am definitely not sure that the same applies to the population in general. The previous generation of eInk devices, barring physical damage, is still perfectly usable for reading.

Indeed they are. But dedicated readers based on eInk technology are following the same pattern as any other consumer electronics.

The biggest expense in producing such things is the cost of building the factory to make them, and the service of the debt you took on to build the facility. The more you make of whatever it is, the broader a base you have over which to amortize costs, and the cheaper each unit can be.

Add to that supply chain constraints. When Amazon and Sony were in the early stages of selling their respective readers, there was one outfit actually making the screens: PVI. There were questions about supply constraints, and whether PVI could produce enough screens to meet everyone's orders. eInk subsequently got licensed to other manufacturers, so scarcity and attendant higher prices were no longer an issue.

It's why Amazon can offer a Kindle model for $139 and still make money, when the earlier ones were almost three times that.

As prices fall dramatically, do you really think satisfied reader owners won't see an opportunity to trade up to a new model which is faster and more powerful than the one they have at a much cheaper price?

I have no idea what percentage of new readers sales are people "trading up", but I suspect it's a fair bit.
______
Dennis

[DMcCunney]

Originally Posted by DavidI

Eventually enough people will have eReaders that a fair number of authors will be able to make a living selling only ebooks. We're already getting close, but I bet at some point (soon) Amazon will be selling eReaders for under $99, or giving them away free when you sign up for an Amazon Prime account. As this happens, authors will be able to start publishing ebooks directly and just cutting the publishers out of the loop.

Once a few authors make this transition, and can prove they can make a living, it will become a flood of authors leaving publishers. Eventually we'll also see our first blockbuster ebook author along the lines of a J.K. Rowling or Stephanie Meyer -- one of those books that just everyone has to have. .

You are living in a dream world.

The Internet and the available technology have made it relatively easy for people to "publish" their work. Selling it is quite another matter.

The only people I can think of with a plausible shot at making a living selling direct are those who have already built an audience through traditional publishing.

The vast majority of self-published authors will be lucky to cover their costs and maybe have a beer now and then.

You can argue that they do it badly in many cases, but selling books is what publishers do.

Just wait until someone makes millions without a publisher.

I strongly recommend not holding your breath while you wait for this to happen.

Do you think that as this starts happening publishers will suddenly discover that the prices they're charging for ebooks is too high, and the royalties they're paying authors for ebooks is too low? Or will they be left trying to sell books on their back list for exorbitant prices and trying to hold on to aging authors who don't like change?

They'll do what they think they have to do to stay in business. Don't assume it will be what you want to see.
______
Dennis