[Kali Yuga]

Originally Posted by Barcey

I was disagreeing with this [the idea that readers do not value the non-material costs, and that pricing is based on demand]

Well, you shouldn't, certainly not on your failure to comprehend the economics of the situation.

The basic language of many reader's objections -- e.g. dmaul's "an ebook should not cost more than a paper version" -- clearly demonstrates that people value the material object. Further, the fact that some people are willing to pay $10 or $15 more for a hardcover, which probably only costs $1 or $2 more to produce, is another demonstration that people place excess value on the paper aspect.

The reality is that when you're buying the hardcover, you are not really paying for "more paper." You're paying because the book is new, the demand is higher, and people are willing to pay extra -- and willing to wait 6 months for the price to drop. The higher quality of a hardback is a thin veneer on the mechanics of demand.


As to this analysis....

Originally Posted by Barcey

1) I believe that selling 100,000 copies is reasonable for a successful author. (Demand)
2) At the $9.99 price that Amazon was successfully selling that's $1 million revenue.
3) $1 million is sufficient revenue to produce a professional book

My reference to Dan Brown selling 100,000 copies was just evidence that it's already been done (although the market is small).

Unfortunately, as I tried to point out before, your analysis is incomplete.

Dan Brown almost certainly received a multi-million dollar advance for The Lost Symbol. So even with $1 million in revenues from early sales, the publisher is still several million in the hole. That advance was paid long ago, a process that also incurs costs of its own -- including opportunity costs, since they cannot use the millions Brown was advanced to publish other books.

Also, for every Dan Brown, there are hundreds of John and Jane Does whose books do not break even. Again, over 47,000 new fiction books are produced each year, and I'd be stunned if more than 500 of those got onto a best-seller list. The revenues earned by Brown not only go to operations, they go to cover the losses by other authors. At the end of the day, a publisher will have margins, as I mentioned, around 8-15%.

So it does not make sense to isolate the sales of one of the biggest authors out there, presume that covers all the costs, and on that basis determine the "proper price."

Originally Posted by Barcey

As for the "enormous risk" that publishers are taking that's business. Complaining about the risk is just a negotiating tactic used to drive down the percentage going to the author.

Yes, it's a business. But that cuts both ways. The author signs a contract, is told right up front about the advance and royalties, and is given no guarantees of success. The only way the arrangement is "unfair" is if the publisher reneges on their contractual obligations, but that's not the issue here.

I'm not a publisher, and I'm not "complaining." I am pointing out that your perception of costs, and how prices are determined, and the analysis you present forthwith, are essentially incorrect.

Originally Posted by Barcey

I'm sorry if it falls on deaf ears when explaining costs to consumers. Most of us are working in industries with much larger risk.

Again, this is incorrect. Books have the same levels of risk as any other industry, and are just as susceptible to economic conditions as anyone else -- possibly more, since a) the industry is about to deal with a major disruptive technology, and b) it's a non-essential industry that can be disproportionately affected by a negative economic climate.