Interesting article on book pricing and why it might rise

[tompe]

Originally Posted by ficbot

I'm not sure its true that ebook sales will 'cannibalize' paper sales, since some people (like me) do not buy paper books. I simply don't have any more space for them. So, you sell me the ebook or you don't sell me anything, not having an ebook does not mean I will buy it in paper.

It is still the best selling hardcover books they talk about when they talk about cannibalizing. It is people that instead of buying round 100 books a year buy 1-10 books that are important here.

[leebase]

Originally Posted by Purple Lady

How is the publisher not gouging me when they won't let the bookseller give me a coupon for 30% off? The publisher has already got their money

The publishers were responding to a rogue client, Amazon, who was selling the entire best seller's list at a loss in order to dominate the market. It was not in the publisher's best interest for this to continue.

They gave Amazon a choice. Either allow the publishers pricing power -- or -- Amazon would not be able to sell ebooks until LATER -- exactly the way paper back editions are handled. You wanna sell our books at paper back prices? Fine, then we'll only allow you to sell them during the paper back time window.

Why did Amazon choose to give up pricing power? Because Amazon knew that people, the new hard back book people (the one's who matter), would happily buy ebooks at $12.99 - $14.99 which is several dollars cheaper than the hard back books. If Amazon wasn't selling those books, then Apple and B&N would putting Amazon at a competitive disadvantage.

And we can see that for the most part, ebooks have indeed tracked paper versions. New ebooks start higher, ebooks where there is a paper back already out, are priced lower. Yes, there are exceptions, but they are exceptions.

The reality is that ebooks are cheaper than paper books and that the "paper back price" comes to ebooks if you just WAIT -- like paper back book buyers always have.

Those who want paper back prices on new release books -- just don't matter. Really. Never have.

Lee

[Sil_liS]

Originally Posted by leebase

The publishers were responding to a rogue client, Amazon, who was selling the entire best seller's list at a loss in order to dominate the market. It was not in the publisher's best interest for this to continue.

What makes you think that Amazon was selling at a loss? Amazon is already established in functioning online. They are optimized for this. If they get the books 50% off from the publisher and sell them 30% off, they have 20% of the price to cover expenses and make a profit. Plus, the more ebooks they sell, the more kindles they sell.

And why would the publishers have a problem with that? If they really didn't want to work with Amazon anymore, they could just stop using Amazon as a retailer.

[DMcCunney]

Originally Posted by GA Russell

Dennis, aren't the book publishers threatening to sue pirates like the music companies have done? If so, then apparently they do care. If not, then I guess you are right, at least for the time being.

I don't offhand know. I haven't heard about it.

They'd have fun trying, as there is no publishing industry equivalent of the RIAA or MPAA, which are the bodies trying to combat piracy in music and films.

And electronic books are still in their infancy. Right now, music and film are in digital format to begin with. When you buy a CD or DVD, you have something dead easy to rip and share. You also have a much larger market for pirated copies. Everybody listens to music and watches films. People who read for pleasure are a much smaller subset of the market.

If I were a publisher, I'd worry about getting people to buy and read ebooks in the first place. Then I'd worry about piracy.
______
Dennis

[ficbot]

It would only be cannibalizing the sale if I would have bought the paper in the absence of anebook version. I would not have. I am buying anebook version instead of buying no version at all.

[DMcCunney]

Originally Posted by Elfwreck

Without any free/cheap sharing options, authors and publishers are stuck doing a lot of advertising that isn't necessary for print books because of the used book market. There isn't any ebook equivalent of "moving out of parents house and into my own apartment; never reading these again--here, you take three boxes of books and see if you like them"--and deciding that one or two of those authors, you like very much and want to buy their newer books.

The used book market only helps so far. If an author has more than one book out, you might buy an older title used, decide you like the author's work, and buy the new one at the regular price. Baen's Free Library addresses this: it offers back catalog by participating authors free. It promotes authors - you read one of more books by the author, decide you like their stuff, and buy the author's latest when it comes out, and likely in hardcover. (Some participating authors reported gratifying pops in backlist sales, too.)

And there are reviewers where negative=positive: if the reviewer hates it, it's likely I'll like it, because I know the reviewers tastes are diametrically opposite mine.

One interesting question is how you find out about new books to begin with. At this point, my experience is skewed. Buying new books becomes very much a matter of "Which of my friends has a new book out I ought to buy/read?" Fortunately, they're good enough writers that it's not exactly an imposition.

But it takes a while for a book to hit the used book store, and many books never do. And it doesn't help the case of "first novel by a new author". They have no prior work available used to sample.

The used bookstore is a useful source of knowledge if you happen to have one nearby with a good selection and you visit it. Not everyone is in that happy circumstance.

Right now, ebooks are piggybacking on the print industry for publicity; that's not going to work for e-only publishers.

<shrug> They'll have to find other methods of reaching the audience. But if a publisher is doing both print and ebooks, some publicity is applicable to both. And everybody is actively looking for new ways to connect with the reader, and exploring things like social media as marketing channels.

Even new, single-novel authors benefit from the exchange of older books; if someone's book is advertised as "like Heinlein's early works!" or "if you liked The Shining, this will blow you away!" those let readers know something about whether they'd like it.

It may well. The question is whether you trust the testimonials and reviews. The real test is actually reading the book for yourself. I've read books with that sort of recommendation, and the response has often been "Well, yeah. The author is trying to work the same territory as Heinlein's early works. But Heinlein knew how, and this author doesn't."
______
Dennis

[DMcCunney]

Originally Posted by ficbot

It would only be cannibalizing the sale if I would have bought the paper in the absence of an ebook version. I would not have. I am buying anebook version instead of buying no version at all.

On the contrary, that is precisely cannibalizing the sale. If both versions are available, you buy the ebook. If an ebook version isn't available, you don't buy. I'm guessing that at some point, the number of folks who only want the ebook edition will be great enough that it will no longer be feasible to produce a mass market paperback. MMPBs only make sense if produced in volume. If you can't produce/sell in sufficient volume, it makes no sense to do it at all, because you'll lose money if you try.

As more people get devices that can display ebooks, dedicated or multi-purpose, and shift to reading on them, the market for the MMPB will decline. IF it declines enough, the MMPB will go away, replaced by a higher priced POD edition for those who insist on print.
______
Dennis

[ficbot]

Via wikipedia: In marketing strategy, cannibalization refers to a reduction in sales volume, sales revenue, or market share of one product as a result of the introduction of a new product by the same producer.

So, if I would have bought the paper and now I am not and am buying the ebook instead, that is cannibalization. If there was no hope I would ever buy the hardback (indeed, I have never bought a hardback novel in my life, I would get from the library or read paperbacks) and now am buying a product instead of buying no product at all, that is an improvement, not a cannibalization

[Fbone]

Originally Posted by Sil_liS

What makes you think that Amazon was selling at a loss?

It's been reported since 2009 that Amazon was selling ebooks up to $5.00 below cost.

http://www.teleread.com/ebooks/amazo...n-999-e-books/

[Sil_liS]

Originally Posted by DMcCunney

As more people get devices that can display ebooks, dedicated or multi-purpose, and shift to reading on them, the market for the MMPB will decline. IF it declines enough, the MMPB will go away, replaced by a higher priced POD edition for those who insist on print.

Or we could end up with mass market print on demand: if you get 10k people to request the paper version, it gets printed. It would be a win-win situation, since the people who want the printed version will advertise the book themselves. This removes the marketing costs, the formatting and cover would have been done already in the ebook version, so all that would be left would be the actual printing. And that could be done for $1/ paperback right?

[Sil_liS]

Originally Posted by Fbone

It's been reported since 2009 that Amazon was selling ebooks up to $5.00 below cost.

http://www.teleread.com/ebooks/amazo...n-999-e-books/

I don't see $5.00 below cost.

As the articles point out, Amazon has to pay the same wholesale price to the publishers for e-books as for print editions of those books—more or less half of the print edition price.

It is saying that Amazon gets to pay less than half of the print edition price on some books. Maybe even the ones that are considered to be sold at a loss?

Then comes an example:

Thus, if a hardcover book has a suggested retail price of $24.95, Amazon pays the publisher about $12.50 for the e-book version—and loses about $2.50 when it turns around and sells it for $9.99.

Did you notice how it said "suggested retail price", and not "print edition price" like before? It is probably not the same value, as the retail price would have normally the added costs of the retailer, and as I said in my previous post, Amazon would have lower costs than other retailers.


And now it's time for conspiracy theories. I just love them .
So a year and a half ago Amazon was fighting the publishers who were powerless to stop buyers from getting ebooks at paperback values. As a result, happy customers also bought kindles to be able to enjoy cheaper books.

Fast forward a few months and there is a new price war. This time: ereaders. Amazon, sitting on top of a huge chunk of the market is able to offer competitive prices for a device that is better than most.

And just as people are wondering if Amazon can survive selling at a loss, we get Agency 5 pricing, stopping Amazon from selling cheap books. What are the buyers to do? Stop buying form Amazon in protest? Of course not. It's not Amazon's fault, they did their best. Plus, isn't the new Pearl screen just so shiny? To use it, they have to buy from Amazon.

So, is Amazon winning in a game against the publishers, or on the same side as them? Only time will tell.

[GlennD]

There's a lot of talk about the initial costs of getting a pbook printed and distributed. I think that's missing one of the strongest benefits of ebooks for publishers. With a paper book, when there is a second printing the publisher saves some costs because the editing and typesetting is already complete. But, every new printing has costs for the printing itself and distribution. There are risks involved in deciding how many to print - underprint and you may miss your window of opportunity to sell a hot product, overprint and you have large remainder piles that cost more money to deal with. If you sell out a print run, there are always more costs to get more copies to market. Part of what you're paying for with a pbook is the costs of bearing those risks - the bestsellers help pay for the books that don't sell.

With ebooks, you have to recoup the initial costs of editing/typesetting etc. Once you've met those costs, every additional copy sold is pure gravy. You're going to have copies ready no matter how many you sell. If an author becomes a hot commodity with his third book, you already have ecopies of his previous work available in your ebookstore - no rushing an older book back into print. A brick and mortar bookstore doesn't keep copies of older books because it's expensive to do so. With ebooks an author's entire back catalog are there for no additional costs or risk, for as long as the author and publisher have agreed to keep them there.

Publishers and authors should be jumping all over ebooks - there's a ton of benefit to keeping large back catalogs in (e)print.

[DMcCunney]

Originally Posted by Sil_liS

I was talking about the case where the publisher is making both the pbook and the ebook, if you were wondering.

I assumed so.

And this is like saying that if an ereader manufacturer makes devices with two color options for covers, the device with the most desired color will cannibalize the other.

Nope. The equivalent statement there would be two printed paperback editions with different covers, assuming the more popular cover would cannibalize the sales.

If the price is in the impulse buy range, there would be enough people who would want to buy both, or buy an ebook rather than go to the library. Or get a book in the original language when they already have it translated. Try out a new writer with ebooks, and buy the pbook if they enjoyed the work. It would also be easier to buy books as presents.

And an "impulse buy" range is?

This would be the publishers doing. Obviously the small retailers can't match the prices of the bigger ones. They don't get the same deal on the books. But if the publisher only uses big retailers, then they effectively sell all books half-price. So the "value" that the book has for them is half the "value" that it has for the person who ends up buying it.

No, it's not the publisher's doing.

In any industry that produces goods sold at retail, there will be distributors. The manufacturer simply can't deal with all of the smaller retailers individually. They aren't set up for it, and can't do it profitably. They sell to distributors, who then service the retailers.

Book retailing is like any other form of retail. There will be huge retailers, like Amazon, B&N, Borders, CostCo or Sam's Club who buy in enough volume to deal with the publisher directly. (They will order thousands of copies of popular titles.) Smaller shop order through places like Baker and Taylor or Ingrams. Because the distributor takes a cut, the price they can offer the smaller retailer will not match the one gotten by the big chains, and the smaller retailer will have less margin to offer discounts. They simply won't be able to match the big guy's prices.

The consumer wants the best price, so guess where they shop? Don't blame the publishers for the demise of "Mom and Pop" bookstores: blame consumers buying on price who don't shop there.

This sort of consolidation has been happening across retailing for decades, and is not unique to bookselling.

Won't what? Comment? I just did.

No, that you wouldn't see publishers commenting on it. Like I said, why should they?

And you didn't contradict me on the fact that they make more profit then they do with new authors. Does that mean that you agree?

That they make more profit than they do with new authors? Oh, certainly, they likely do, for any individual title. They don't have acquisition costs or most of the editing costs. At issue is just how big a part of their business selling print editions of PD works is. Offhand, I'd call that a small slice in the overall scheme of things. It's worth doing because there's a market. But if that market disappeared tomorrow, it wouldn't sink the publishers who had been addressing it. It's a sideline for them, not a core business.

But while they may may make more money on them than they do on new authors, they have a strong incentive to continue to publish new authors. Bestsellers have to come from somewhere, and today's international best sellers were new authors, once. The publisher crosses fingers that a new author will find a market, and someday become a bestseller, or at least a consistent mid-list item.

These books will not bring the revenues that the gold mines bring, but they can bring a steady profit.

Which? Reprints of PD stuff, or new authors?

Yes to the first. The publisher hopes so to the second, but that hope is sometimes dashed.

Just so I'm clear about your way of thinking:
1. You read my post that said that HC don't cost that much more to make.
2. You see the fact that I quoted you for that statement.
3. You realize that your initial statement was wrong.
4. You decide to reply with "Who told you hardcovers don't cost all that much more to make?"

My question still stands, and see my revised numbers for why. My error on posting in haste and getting it wrong the first time - I was in a hurry, relied on memory, and didn't unearth the email giving the figures I quoted in my revision. I should know better than to rely on memory.

HCs have higher manufacturing costs than PBs. Those higher costs are why trade paperbacks exist: to provide books in the larger format (which might not be feasible to do as a mass market PB, be cause you just can't make an MMPB that big), but at a lower price than the one required to bind in boards.
______
Dennis

[Sil_liS]

Originally Posted by DMcCunney

Nope. The equivalent statement there would be two printed paperback editions with different covers, assuming the more popular cover would cannibalize the sales.

I guess that saying that the manufacturer makes 5" and 6" ereaders would have worked better? Anyway, most buyers won't buy both. And there is also the argument that the PB cannibalizes HC sales. There are people who want the book and won't buy the HC, but instead wait for the PB.

Originally Posted by DMcCunney

And an "impulse buy" range is?

How much do you spend on presents for friends?

Originally Posted by DMcCunney

No, it's not the publisher's doing.
[...]
This sort of consolidation has been happening across retailing for decades, and is not unique to bookselling.

So in the beginning publishers were selling directly to the readers. Then they got more and more greedy, until they made it impossible to buy directly from them. They could change that with ebooks, but won't, because it would be just too difficult for their atrophied accounting department to handle a small bookstore downloading directly from them.

Originally Posted by DMcCunney

No, that you wouldn't see publishers commenting on it. Like I said, why should they?

Confession is good for the soul.

Originally Posted by DMcCunney

That they make more profit than they do with new authors? Oh, certainly, they likely do, for any individual title. They don't have acquisition costs or most of the editing costs. At issue is just how big a part of their business selling print editions of PD works is. Offhand, I'd call that a small slice in the overall scheme of things. It's worth doing because there's a market.

No, the big slice comes from the best sellers. But they don't mention the costs related to titles that become bestsellers, and they definitely don't mention the profit.

Originally Posted by DMcCunney

But if that market disappeared tomorrow, it wouldn't sink the publishers who had been addressing it. It's a sideline for them, not a core business.

When schools will stop having a required reading list, we will have bigger problems than the financial state of publishers.

Originally Posted by DMcCunney

My question still stands, and see my revised numbers for why. My error on posting in haste and getting it wrong the first time - I was in a hurry, relied on memory, and didn't unearth the email giving the figures I quoted in my revision. I should know better than to rely on memory.

The revised numbers came later. Your first reaction was to pretend that you didn't say anything. You might have noticed that this is what I was talking about since I said "Just so I'm clear about your way of thinking" in my last post. But then again you might be pretending that I didn't write that.

The only question was you saying "Who told you hardcovers don't cost all that much more to make?", and the answer remains: you.

What I said initially was:

Originally Posted by Sil_liS

So now we get to ebooks, and we can fit an entire library on a microSD card, and we know that at least the cost of printing and shipment has to go away, and there are lower risks for the publisher. But now we are told that it was all just a misunderstanding. Hardcovers don't cost that much more to make. It's just the privilege of getting the book faster.

How does the change from:

Originally Posted by DMcCunney

Manufacturing costs are generally about 50 cents - $1.00 for PBs, and perhaps $2 for HCs.

to:

Originally Posted by DMcCunney

Unit costs of manufacture: (Accurate as of 2008)
Mass Market: $.50 - $1.
Trade Paper: $1-2
Hardcover: $2-$4.

influence my point? I can see that it means that since the costs for HC can be slightly higher than previously estimated, ebooks should cost slightly less, but the point was that we aren't paying for that anyway.

[Barcey]

Originally Posted by ficbot

Via wikipedia: In marketing strategy, cannibalization refers to a reduction in sales volume, sales revenue, or market share of one product as a result of the introduction of a new product by the same producer.

So, if I would have bought the paper and now I am not and am buying the ebook instead, that is cannibalization. If there was no hope I would ever buy the hardback (indeed, I have never bought a hardback novel in my life, I would get from the library or read paperbacks) and now am buying a product instead of buying no product at all, that is an improvement, not a cannibalization

Exactly, they've introduced a new product (ebook version). You previously would have bought a paper edition but now you have an alternate edition and you're not buying paper any more.

What you're talking about is individual consumer preference. You're correct, it's more important and really all that matters but it's separate from the cannibalization concept.