[DMcCunney]

Originally Posted by Sil_liS

I don't think that they get applied at all since the price is set based on guess work. And my point is that you won't find an article on that since publishers like to pretend that hardcovers are the only ones out there.

I think I understand. We're dealing with the Amazon Effect.

A lot of this is fallout from the Agency Model pricing scheme. For some interesting background on how it came about, see this Boston Review article.

But unhappiness with the rise in price of ebooks on Amazon created a distortion of subsequent dialog.

The basic question is how much you should pay for an ebook released at the same time as the hardcover.

The hardcover best seller is critical to a lot of publishers. It generates the highest revenue and earns the most profit. Whether they have hardcover bestsellers often determines whether publishers show a profit for the year or take a loss.

Amazon was selling Kindle editions of new books at $9.99, competing with hardcovers priced at 2.5 to 3 times that. As you may imagine, publishers were not pleased. They saw declines in revenue and profit because people bought the cheaper ebook edition.

There's a fair bit of controversy over what Amazon was paying the publishers for the ebooks, and whether they were taking a loss on every copy, or whether they were paying under a different price schedule and the publishers were getting less per book. I suspect the latter, but don't know for sure.

The publishers initially pressed Amazon to delay the ebook release by several months to give the hardcover time to sell. The mass market PB edition isn't released till a year after the hardcover, to avoid competing with it with a lower priced edition. Publishers wanted the same thing for the ebook.

Amazon's response was to price some Kindle editions cheaper than $9.99, in a nose thumb at the publishers. The publishers then withheld ebooks from Amazon entirely. Amazon was forced to compromise. The compromise was Agency Pricing, which required Amazon to charge a higher price on ebooks and not give a discount.

The practical effect was to tell Amazon "If you want to sell the ebook at the same time as the hardcover, you have to charge a higher price and give us a greater cut, to compensate for what we lose by not selling the hardcover."

The unanswered question thus far is what happens to the ebook price when the MMPB is released. It ought to drop to prices comparable to the MMPB editions. Whether it will is another matter. There are publishers dumb enough to try to keep prices at HC levels.

But as a general rule, I'd say if you want to read the ebook at the same time as the hardcover, expect to pay more for early access. If you want the ebook cheap, expect to wait, just like you do for the paperback.

If I would truly take a guess at how the pricing is done I would say that some of the costs like marketing and the cover art for example are only attributed to the HC and the price is set accordingly. So the price that we get for a PB is lower because some of the costs have been covered already. If I'm right, the reason why the publishers can't say this out-loud is because they would be saying that whoever buys a HC is covering some of the costs for those who buy PB, essentially paying more because some people are cheap.

I don't think you are right.

To begin with, not all books get a hardcover edition. Most start life as mass market paperbacks.

The traditional market for hardcovers has been libraries (which like durable reading copies), collectors, and people who simply want to read the book now if there is a hardcover edition first.

More books get hardcover editions now because more people buy hardcovers. An example is Baen Books, who credit the Baen Free Library with driving their transition from a struggling mass market publisher to a thriving hardcover publisher with a 70% sell through rate. Baen discovered that their audience would buy hardcovers of books by authors they liked that they discovered though the Free Library, so more Baen Books get hardcover publication.

But meanwhile, the hardcover is still the exception, not the norm.

What happens to your assumptions when there isn't a hardcover to hang costs on?

Then the reason that the price of the ebooks can't be lower is because while in themselves they represent a lower risk (no returns), they increase the uncertainty for the paper version. While if you see a popular HC you will want to buy it before the store runs out, the ebook can be there forever, which means that there is no worry, and who knows, maybe tomorrow it will be cheaper, or if you don't find the HC anymore, you can just get the ebook.

See above about "there's no HC edition". And the ebook isn't guaranteed to be there forever.

Back in the days before ebooks, you had the notion of "out of print". Publishing contracts stated that when the publisher let a book go out of print, the author could request that the rights revert, and attempt to resell it elsewhere.

Ebooks and print on demand forced a reevaluation of what "out of print" means, as they meant a publisher could potentially hold on to the rights indefinitely. Authors who want publishers to actually try to sell their books aren't thrilled by that idea. So current contracts factor that in, and include sales levels for electronic and POD editions. Sales below the level specified in the contract are taken as evidence the publisher is no longer actively trying to sell the book, and the author can ask that the rights revert.

Once the rights revert, the ebook isn't available from the publisher or retailers (though there are probably pirated copies floating around.)

Increasingly savvy authors will likely try to sell their own ebook editions once the rights revert, like this effort: https://www.mobileread.com/forums/showthread.php?t=98016, but there will still be a hiatus.

Since they are accustomed to working only with paper, such an event wouldn't fit their predictions, especially since the number of people with ereaders is continually increasing and will spread differently among readers with different book preferences. As many who buy their first reader will buy more books in the beginning, it is even more difficult to interpret the trend. A higher price for ebooks limits these erratic behaviors in buyer mentality and also means that some of the extra profit of ebooks will cover some of the extra losses of HC.

Well, they'd like to think so. But once again, there may not be a hardcover.

Ebooks are an increasing factor in publishing. There are optimists on MR who look forward to the day when there won't be paper books. I advise not holding your breath waiting: there are whole classes of books ill suited to electronic publication, and lots of people who still prefer print. But I do suspect the ebook will increasingly cannibalize the mass market paperback market, especially for fiction, because that sort of thing is well suited to electronic publication.

What happens in the case where there is no print edition to theoretically soak up various costs?
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Dennis