Quote:
Originally Posted by HansTWN
Of course this author is not interested in having lower prices.
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This perfectly illustrates a point I haven't seen made in this entire thread (and I've read nearly all of it) that I think will prove very important in less than two years.
Authors shouldn't care less what their books sell for. They should care about how much revenue is generated. Their royalties are percentages of revenue, not a strict $/copy model.
Early on in this thread, there was a conversation about how obviously people are paying $12.99 and up for agency-priced ebooks because of the growth we're seeing in the ebook industry.
What we'll never know (because that portion of the ereader adoption curve is past) is how much the growth
would have been without agency pricing. I haven't done the research, but it would be very interesting to see how Random House ebook numbers looked versus, say, Penguin before March 2011 (when RH went agency).
Nearly all the costs in producing an eBook are generated before the book goes on sale. The cost per sale after that is essentially zero. When putting a book on sale, the publisher's job should be to price it at a point that maximizes revenue. This has the best chance of recouping the production costs and has the side effect of generating the most income for the author.
This is not the case for paper. There are significant per-sale costs for paper which put a floor on the price that can be charged and still make a profit.
The problem with the industry right now is ebook sale percentages aren't high enough for ebooks to drive their own market freely. Paper still rules (at 80+% of revenue), and publishers can't afford to undercut their own product. So, while a $4.99 price might maximize the revenue for a particular author's ebooks, that price will destroy the market for a $14.99 paperback (not mass-market) of the exact same book.
Self-published authors don't have these paper chains weighing them down. So they can sell at $2.99 (the cheapest price to gain the maximum percentage revenue on Amazon) and not worry about losing money because after they've recouped costs, it's ALL profit. Indie publishers have leaner fixed costs outside of production, so they can price things cheaper and still come out okay.
The changes in the industry have only just begun. We'll see some major shifts when ebook revenue hits 40-45% of total. Then I'm betting you'll see one major publisher flip from paper-first to ebook-first with paper only for books that "deserve" it.