Interesting article on book pricing and why it might rise

[Lemurion]

Originally Posted by Fbone

Before the Kindle did many people really buy their books online from Amazon? Was it because of the selection? The prices? The convenience?

For me personally I never have. I could usually find them cheaper locally or borrow from library.

I bought books from Amazon before the Kindle came out, fairly frequently. They've always been one of the best sources for graphic novels.

For me it's the intersection of price and selection. I can get pretty much all the books I want in one place, and if I'm after new books I can have them delivered on release day so it's a win win situation.

[DMcCunney]

Originally Posted by Eastlondonboy

This is where self-publishing gives authors an advantage and enables books to be sold cheaply, without the writer losing out on royalties. Who needs publishers?

Who needs publishers? Anybody who wants to make any actual money writing.
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Dennis

[DMcCunney]

Originally Posted by Fbone

Before the Kindle did many people really buy their books online from Amazon? Was it because of the selection? The prices? The convenience?

Yes, they did. It's how Amazon became the largest book retailer.

My SO and I buy from Amazon on occasion. In our case, it tends to be Amazon UK, as we can get things like British editions of Terry Pratchett, Tom Holt, and the Harry Potter books, though we buy occasional other things as well.

For me personally I never have. I could usually find them cheaper locally or borrow from library.

It depends on the books. I'm in walking distance of a Barnes and Noble superstore, and The Strand, which advertises itself as the world's largest second hand bookstore. They claim 8 miles of books, and are not joking.

Purchases from Amazon rest on convenience: I can do it at any hour, day or night, and expect the book(s) to arrive in a few days. I can get equivalent selection and price in most cases from local brick and mortar retailers.

But I'm in the middle of a major metropolitan area, with such resources in walking distance. Most folks aren't, and Amazon may be a far more attractive option.
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Dennis

[DMcCunney]

Originally Posted by Purple Lady

If a retailer is offering me a 30% discount for any book in the store, then I feel entitled to that discount. I don't feel entitled to have everything discounted, just the ones that are offered to me and that I could get if the publisher didn't refuse to allow it. I don't feel entitled to any discount from the publisher, but I do feel entitled to buy at a discount if the retailer wants to sell it at a discount.

The problem is, you aren't entitled to the discount. It's an option chosen by the retailer for competitive reasons, and the retailer is free to stop offering it at any time. If the retailer thinks they can, they'd much rather sell at full retail price. They make more money that way.

The discount offered by the retailer comes out of the retailer's margin. The retailer is choosing to accept less profit on any individual sale in the hopes of generating more overall sales, and more sales of other things not discounted.

The publishers in this case aren't not allowing discounts. They are changing the terms on which they do business with retailers. The retailer can still offer a discount, but they have a lower margin to play with, and can't offer discounts as deep and make money.

The publishers are free to set the terms at which they'll sell to the retailer, and those terms may result in higher prices to you.

And I didn't buy a book recently specifically because of that, not because I couldn't afford it or didn't have time to read it.

Like I said, you have the choice to not to buy you don't like the price.
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Dennis

[DMcCunney]

Originally Posted by nwhitfield

One person wrote to me following the publication of the piece on RegHardware, saying that according to the Society of Authors, only 2-6% of published authors make enough money to make a living out of their work.

That sounds about right. I know an assortment of published authors. A few actually make enough money to make a living at it. Most get part of their income from writing, and do other things for the rest.

Once in a while, a midlist author writing in spare time breaks through with a bestseller, and reaches a point of being able to write full time, but those are few and far between.

Essentially, they are writing in their free time, and have a day job to pay the bills. And for those people, it's perhaps even more vital that there is someone else to take on tasks such as editing, marketing and so forth, otherwise they'll have even less time available to write.

Yep. The most effective job of marketing I can recall by an author was by SF writer Wen Spencer, who used the advance from her first novel as a marketing budget to get her name and work out there to readers who might like her stuff. But Wen's husband was a well paid IT professional, so she could afford to do that - the money didn't have to go to helping keep food on the table and a roof over her head. Most writers lack that luxury.

Perhaps cutting out publishers would enable some of those people to make enough money to write full time - but I suspect it would be an incredibly small number of them.

Vanishingly small.

The only folks I can think of that have a prayer of making any real money through self publishing already have an audience for their work gained through traditional publishing channels. New authors, starting through self-publishing, will be lucky to cover their costs.
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Dennis

[DMcCunney]

Originally Posted by Barcey

I heard Lou Gerstner (former CEO of IBM) speak years ago. He was talking about how IBM had lost the WINTEL server market share to Compaq not because they didn't have the technology advantage, but because they refused to deploy it in the low end server market. They were afraid that if they did they would lose the high margin sales of their UNIX and mainframe servers. They had developed RAID technology and hot plug drives but they let Compaq bring it to the low end servers first. I believe that Mr Gerstner said, "We learned that if you don't eat your own children someone else will."

The question is what IBM actually lost.

Intel compatible PCs are are commodities, with commodity pricing. Margins are razor thin, volume is critical, and the lowest cost producer wins.

IBM has never been the lowest cost producer in any of their lines of business.

IBM was also broadly based, having mainframes, mid-range machines (the System 34/36/38 and AS-400 series), Unix servers running AIX on PowerPC based systems, and a healthy business in software and services which had been a determined push to reduce the reliance on hardware for revenue.

They may have surrendered the Wintel server business to Compaq, but where is Compaq now? They no longer exist, after being acquired by HP. They were in trouble before that, as they were having problems trying to lower costs to be competitive with people like Dell.

You can make a good case IBM did the right long-term thing by getting out of that business.
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Dennis

[bminata]

Rise?? Good. Let the ebook revolution start is in earnest.

Frankly I'm getting tired of publishers or their defenders trying to justify ebook price = hardcover price by selling bull like "the production cost is miniscule." Do they seriously think we're going to believe that the "printing + binding + warehousing + distributing + returns + limited shelf space/life equals the cost of selling electronically?" Because that's pretty much the difference between print books and ebooks. The other costs including advance, editing, art et al are pretty much the same.

[DMcCunney]

Originally Posted by bminata

Frankly I'm getting tired of publishers or their defenders trying to justify ebook price = hardcover price by selling bull like "the production cost is miniscule."

Print/bind/warehouse/distribute come to perhaps 20% of the total cost for a book. That's not minuscule, but it's not enough that dropping it will alone permit the kind of ebook prices a lot of folks with for.

Do they seriously think we're going to believe that the "printing + binding + warehousing + distributing + returns + limited shelf space/life equals the cost of selling electronically?" Because that's pretty much the difference between print books and ebooks. The other costs including advance, editing, art et al are pretty much the same.

Correct in part. "The other costs including advance, editing, art et al are pretty much the same" is true save for the advance and the royalties given. The advance will be based on the number of copies the publisher thinks it can sell. And hardcovers have a higher royalty rate than paperbacks.

But basically, publishers want to make money. Any producer will price at what they think the market will bear. The question is just what that is, and they are engaged in finding out, often the hard way.

There is the additional problem is that many publishers are simply trying to survive. There are too many books chasing too few readers, and the industry has gone through waves of consolidation as smaller houses were acquired by larger ones to get economies of scale and reduce costs (with attendant losses of publishing jobs.)

You can make one fairly solid assumption: you will not be able to buy an ebook issued at the same time as the hardcover edition, sold at the mass market paperback rate many folks consider a reasonable top end for an ebook edition price. If you want it early, you'll pay a premium for faster access. If you want the lower price, you'll have to wait for the PB edition, at which point the ebook edition should drop in price to match.

I'd say everything else, including exactly what the various prices will be, is up in the air.
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Dennis

[Elfwreck]

Originally Posted by DMcCunney

The publishers in this case aren't not allowing discounts. They are changing the terms on which they do business with retailers. The retailer can still offer a discount, but they have a lower margin to play with, and can't offer discounts as deep and make money.

The impression we've gotten from what we've heard of the agency pricing contracts is that no, retailers are not allowed to offer discounts. They aren't paying the publishers (for example) $7 for a $10-retail-price ebook, and have $3 to take as profit or offer discounts from. They are getting 30 percent of the $10 price, which they are not allowed to touch.

Amazon was perfectly willing to sell with lower profit margins, and to lose money on some books in order to encourage people to buy other things from them.

This was not about the publishers insisting on a higher price per book -- it was about trying to prevent the public from thinking $10 was a reasonable price for an ebook. More than one publisher announced that they were very disturbed at the idea of people getting used to $10 ebooks, because then they'd start to demand them, and publishers insisted that they can't make any profit at that price.

[Purple Lady]

Originally Posted by DMcCunney

The problem is, you aren't entitled to the discount. It's an option chosen by the retailer for competitive reasons, and the retailer is free to stop offering it at any time. If the retailer thinks they can, they'd much rather sell at full retail price. They make more money that way.

Why aren't I entitled to a discount that a retailer offers? It is an option and if they choose to offer it to me I should be allowed to use it.

The publishers in this case aren't not allowing discounts. They are changing the terms on which they do business with retailers. The retailer can still offer a discount, but they have a lower margin to play with, and can't offer discounts as deep and make money.
Dennis

The publishers are not allowing the discount according to the retailers - just like the retailer is not allowed to set their own price because the publisher forbids it.

[Sil_liS]

Originally Posted by DMcCunney

Selling more Kindles is a minor benefit. What Amazon wants is to sell you ebooks. It's why I was unsurprised when the Kindle app for various platforms arrived. The Kindle was priming the ebook pump.

But it *is* a benefit. Plus Kindles have the options that most of the buyers need. But buyers also have other toys, so the next choice was no DRM or Kindle app. Did you notice that Amazon also sells iPads?

Originally Posted by DMcCunney

Oh, really? Amazon is probably the single largest book retailer in the world. A significant part of any publisher's revenue will come from sales through Amazon. You don't simply decide to stop working with them. Depending upon who you are, you may not survive without them.

So Amazon can decide to stop being a retailer for a publisher and effectively destroy them? How is it then that the Agency pricing was enforced if Amazon has that much power?

Originally Posted by DMcCunney

One interesting experiment along those lines is Carina Press, an eBook only imprint of Harlequin, the romance behemoth. Carina is "shared risk". To keep costs low, they [i]don't[/] offer advances, but give a higher than usual royalty. Most of the work of editing and production is done by freelance contractors, reducing overhead. And the carrot is that successful Carina releases might be picked up by Harlequin for print editions.

How is that a way "keep costs low"? If the royalty is higher, then the cost is higher. Plus how many housewives have ereaders now and know about Carina Press? It doesn’t sound like people thought this thru.

Originally Posted by DMcCunney

I'm not tired of it because it's not something I read in the first place, and don't care how much is published. The question is when the audience for it will tire of it.

But it takes up shelf space. Of course people are still buying these books, it's what they see when they go in a shop.

Originally Posted by DMcCunney

It's only extortion if you're forced to pay it. In this case, you aren't. Don't like the price? Don't buy. Whether having the book is important enough to you to pay the higher price is your decision.

You are still not reading what people are quoting. Tompe was talking about Amazon extorting the publishers. I was saying that it isn't extortion.

[Barcey]

Originally Posted by DMcCunney

The question is what IBM actually lost.

Intel compatible PCs are are commodities, with commodity pricing. Margins are razor thin, volume is critical, and the lowest cost producer wins.

IBM has never been the lowest cost producer in any of their lines of business.

IBM was also broadly based, having mainframes, mid-range machines (the System 34/36/38 and AS-400 series), Unix servers running AIX on PowerPC based systems, and a healthy business in software and services which had been a determined push to reduce the reliance on hardware for revenue.

They may have surrendered the Wintel server business to Compaq, but where is Compaq now? They no longer exist, after being acquired by HP. They were in trouble before that, as they were having problems trying to lower costs to be competitive with people like Dell.

You can make a good case IBM did the right long-term thing by getting out of that business.
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Dennis

IBM has never left the Wintel server business and has regained market share by changing their strategy. They lost significant business because they tried to protect their old business segmentation rather then trying to make the best product they could in every segment. At the time of the speech Compaq was number one, Dell was a growing second and IBM was a has been. I'm not sure why you think they would have been better off giving up the billions of dollars of revenue they've made in this segment.

The cannabilization concept is only important on the original decision to release the new product. Normally it doesn't matter because if you don't release it somebody else will. You are never guaranteed to keep the old business, you have to compete under the new terms.

[Barcey]

Originally Posted by Lemurion

I think the problem is that many people want two things for ebooks:

They want the same release date as hardcover.

They want the same pricing as paperback.

I think the majority of publishers are more than willing to provide these things: Just not simultaneously, and that's the problem.

No, I think what most people want is the ebooks to be available at the same time but at a cheaper price then the cheapest paper edition. It's a reasonable expectation and the publishers aren't going to change people's minds.

People also expect the price to drop below the paperback price when it's released and that noise hasn't started yet.

[tompe]

Originally Posted by Elfwreck

Amazon was perfectly willing to sell with lower profit margins, and to lose money on some books in order to encourage people to buy other things from them.

Why do you believe that is the motivation? The long term plan was to force the publishers to lower the prices that Amazon had to pay. They had already started doing that concerning one publisher (might have been for paper books).

[Lemurion]

Originally Posted by Purple Lady

Why aren't I entitled to a discount that a retailer offers? It is an option and if they choose to offer it to me I should be allowed to use it.

You are entitled to any discount that may be offered. What you, and I, and everyone else isn't entitled to is to be offered a discount on any and every item we wish to purchase.

My little local bookstore doesn't offer discounts, so any book I buy there is full price. I'm still entitled to discounts, I'm just not getting any on that purchase.

Originally Posted by Barcey

No, I think what most people want is the ebooks to be available at the same time but at a cheaper price then the cheapest paper edition. It's a reasonable expectation and the publishers aren't going to change people's minds.

It is a reasonable expectation, even for publishers; and most publishers do set their ebook list prices lower than their hardcover list prices for the same book. There's still the early adopter premium, but the ebook prices do average lower. The problem is that people have accepted online discounted prices as the true price of a hardcover, rather than the list price; so they compare ebook list price to hardcover below list price.

That creates a false comparison, because those prices aren't the same thing. If I go to the little independent bookstore downtown, I'll pay full list on hardcovers, so in that case ebooks are a cheaper alternative.

Personally, I think $10-15 is reasonable to pay for the ebook of something I'd be willing to buy at full price in hardcover.

Originally Posted by Barcey

People also expect the price to drop below the paperback price when it's released and that noise hasn't started yet.

I'll settle for at or below the paperback price, below would be better but I won't scream too much at $6.99 for the ebook of a mass market paperback. Take it up to $7.99 and I'm iffy, put it to $8.99 or above and I'm not buying it.

This is a bigger deal for me than the price of e-hardcovers. I can understand paying extra for those, though I may quibble about how much.

My real ire is reserved for those people who think $15 is a fair price for the ebook of something that's been in mass market paperback for twenty years or more. That's where I have problems.