Interesting article on book pricing and why it might rise

[Sil_liS]

On publishers vs Amazon you say:

Originally Posted by DMcCunney

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.

Originally Posted by DMcCunney

The Agency Model folks actually cut off sales of ebooks for a bit, and Amazon had to capitulate. They were in a position where they could do that for at least some period. But they would hardly want to do without Amazon permanently. It was ultimately a negotiating ploy.

Originally Posted by DMcCunney

The Agency Model folks cut off ebook sales to Amazon, and they were five of the six largest publishers. If Amazon wants to be the dominant force in ebook retailing (and they do), it's a little hard to do that when most of the ebooks you might want to offer are not available to you.

So it's a game of chicken. Amazon may know it's a strategy. They won't know how long the Agency Model folks are willing to withhold product from them. But since the Agency Model folks are still primarily selling print editions, Amazon is still selling those, and ebooks aren't yet critical to their success, they might just be willing to hold back product a long time.

The summary of this would be: publishers can't refuse to sell to Amazon because Amazon is too big. The Agency publishers did the impossible but only for a little while, and only with ebooks since they don't care about ebooks anyway. Amazon, clearly afraid that the publishers might keep this indefinitely caved in.

This doesn't make sense. You said that Amazon is responsible for a "significant part of any publisher's revenue". If they were playing a game of chicken, Amazon wasn't trying very hard, since they could just refuse to sell the pbooks if they can't sell the ebooks. Another way is to stop giving pbook discounts, and promote primarily the ebooks and used pbooks.

Originally Posted by DMcCunney

The hope is the book will "earn out" - sell enough copies to cover costs, make money, and generate additional royalties paid to the author in quarterly statements. Most books don't earn out. The advance is all the author sees.

How is this different from me saying "At the end of the day, in the case of pbooks, the author has an advance *or* royalties (depending on what is higher, and from what I understand, for most authors it is the advance that is higher)."?

Originally Posted by DMcCunney

If a Carina title doesn't sell, they are out the editorial and production costs (which they try to keep as low as possible.) They are not out the advance, because they don't pay advances. If the book does sell, they must pay royalties, but those royalties will be on copies sold. They'll be crying all the way to the bank.

Royalties are always on copies sold. And you make it sound like they don't want the books to sell.

Originally Posted by DMcCunney

You wouldn't? How do you know?

Math. If you multiply percentages like x% and y%, you get x*y/10000.

Originally Posted by DMcCunney

Part of the requirements when they decided to do the Carina line was that it would be profitable "out of the box".

So was it?

Originally Posted by DMcCunney

You can assume books published electronically by Carina may not be up to the rest of Harlequin's offerings, but that won't make them "bad". Carina won't survive publishing bad books.

Yes, but to the authors it's saying that "you're here because we don't think that you are good enough, but this is your chance to prove yourself"; and to the public it's saying "you get what you pay for".

Originally Posted by DMcCunney

They've been in operation for months now and the plug hasn't been pulled, so I have to assume they are meeting projections.

But that could be market share rather than profit.

Originally Posted by DMcCunney

Reading slush is soul destroying.

And isn't that true for the buyer as well?

Originally Posted by DMcCunney

The question is how many folks will spends the time reading first chapters and voting?

Go out into the interwebz and see. It actually bothers people if they can't comment on something.
And you should see how people like to get involved a webcomic. The story gets to a point where the hero has to make a choice and the readers get to vote on the outcome.

Originally Posted by DMcCunney

I'm not one of them. I have other uses for the time, and the first chapter may not be a good indicator for the rest of the book.

But if the author and editors see what people like about the first chapter they are more likely to meet expectations.

Originally Posted by DMcCunney

And if all you see are vampire books and books you already bought, you buy an awful lot of books, or have a very small local bookstore, or both.

Actually it is because I buy books in English in the Netherlands. The books are printed in the UK, and we only get the ones that were selling well. The vampire madness arrived a little later than other places, but there were a couple of months when all new fiction books were about vampires. Then they started to bring books about magic, and now they slowly go in other directions. We don't have zombies yet, but there is always next year.

Originally Posted by DMcCunney

If you are a producer, I sell your goods, and I try to use my position as a dominant seller to extract terms more favorable to me from you, that might well be called "extortion".

I thought that was wholesale price.

[BearMountainBooks]

Originally Posted by DMcCunney

See Charlie Stross's blog post referenced earlier in the thread about some of the steps in the process before a book reaches the stage of actual publication. Tell me which you suggest not be done to save money.
______
Dennis

Streamlining--I would suggest the marketing approval steps be left out (There's the big meetings where they bicker about which books get published and marketing does an analysis). Is that important? Yes, it is--but let's say they're taking a few books through only an ebook release first. Cut some of the overhead meetings. Par down the number of people who have say in art, and so on. Cut back on marketing through channels that add additional cost.

Basically go at some of these books like a self-publisher. Buy cheaper art (I did). Definitely edit and copyedit. Cut it loose to all the major retailers. See which books get some traction and go from there to any next steps. And in fact, this is what some publishers are doing--only they are letting people self-publish, following the numbers and picking up writers when they see success--and then they price the book higher, take a larger cut from the author (because they have to with their overhead--there's only so many people who are going to make a living from a book) and so on. (There's about 5 authors who have recently seen interest from agents and/or publishers over on kindleboards.com--this doesn't mention those already signed like R.J. Keller, Karen McQuestion, Sam...what is his last name--he wrote Metagame, I think the title is. )

I know that some of the largest overhead in a company is salary, retirement and healthcare. People talk about the book cost, but it really is the people cost behind it. You would have to leave out some of the people cost and the one that can be put off until later is probably marketing. Cover art is already being cut drastically down to photoshopping images, so they actually have made cuts there in their cost. I don't *like* that cut, but it is a reality.

It's actually easier and cheaper for me to do it on my own, but I think it should also be easier for small publishers to lower their costs. I just read a post from a small publisher (her company was bought so she is no longer small). Her thoughts on pricing? People won't buy it if we price it too low-we want to look like the big guys so no one thinks we're less.

The smaller (we) are, the more nimble we have to be. And I don't happen to agree with "price too low and no one will buy because it's a reflection on quality." It's possible she is right--but my best selling books are the series that starts at $1.99.

My point is, that if publishers *know* there is a market for books under 5 dollars, they have got to find a way to hit that target--if it's only via ebooks, then they still need to hit that target--or someone else will.

I happen to think there is a market there, which is why I cater to it. But I could be wrong. Maybe pricing the book higher and having that marketing and a publicist is really the right answer.

[DMcCunney]

Originally Posted by EricDP

And for eBooks that don't sell, at least you don't have a warehouse full of them to deal with. How much does the industry lose in unsold print copies, and the cost of building/leasing warehouses?

Unsold print copies are part of the "reserve against returns" line in the book's P&L.

Depending on the book, the costs can be substantial, though I don't see the cost of warehousing being significant. It's not like the industry is constantly building new warehouses or leasing additional space to accommodate returns. The warehousing is to hold newly published books to be distributed. Returns may go there, but see below.

Only hardcovers are actually returned, and those go back out again for sales on remaindered tables. Paperbacks have the covers stripped, and those get returned. The bodies of the books should end up as landfill, but often wind up for sale really cheap to those who just want to read the book. Publishers are not happy about this, and PB books tend to have legal notices on the copyrights page about it.

Should ebooks ever take over completely, with print editions no longer published, these costs will go away. Meanwhile, they're there, and constitute part of the budget for the book.
______
Dennis

[DMcCunney]

Originally Posted by BearMountainBooks

Streamlining--I would suggest the marketing approval steps be left out (There's the big meetings where they bicker about which books get published and marketing does an analysis). Is that important? Yes, it is--but let's say they're taking a few books through only an ebook release first. Cut some of the overhead meetings. Par down the number of people who have say in art, and so on. Cut back on marketing through channels that add additional cost.

The question is what those meetings and approval steps actually cost. The people involved will be at them in any case, and are on salary.

Basically go at some of these books like a self-publisher. Buy cheaper art (I did). Definitely edit and copyedit.

Which, alas, are steps increasingly left out to save money...

Cut it loose to all the major retailers. See which books get some traction and go from there to any next steps. And in fact, this is what some publishers are doing--only they are letting people self-publish, following the numbers and picking up writers when they see success--and then they price the book higher, take a larger cut from the author (because they have to with their overhead--there's only so many people who are going to make a living from a book) and so on. (There's about 5 authors who have recently seen interest from agents and/or publishers over on kindleboards.com--this doesn't mention those already signed like R.J. Keller, Karen McQuestion, Sam...what is his last name--he wrote Metagame, I think the title is. )

The folks most likely to succeed at something like this are those who have already built a market via traditional publishing.

Interest from agents/publishers on places like Kindleboards is a mixed blessing. It depends upon just which agents and publishers.

I know that some of the largest overhead in a company is salary, retirement and healthcare. People talk about the book cost, but it really is the people cost behind it. You would have to leave out some of the people cost and the one that can be put off until later is probably marketing. Cover art is already being cut drastically down to photoshopping images, so they actually have made cuts there in their cost. I don't *like* that cut, but it is a reality.

Not just people cost, though I agree that's probably the biggest single component. There are other costs like rent on office space, electricity and phone service and the like that are part of the overhead of any business and get allocated as posrt of the cost of a product.

It's actually easier and cheaper for me to do it on my own, but I think it should also be easier for small publishers to lower their costs. I just read a post from a small publisher (her company was bought so she is no longer small). Her thoughts on pricing? People won't buy it if we price it too low-we want to look like the big guys so no one thinks we're less.

The smaller (we) are, the more nimble we have to be. And I don't happen to agree with "price too low and no one will buy because it's a reflection on quality." It's possible she is right--but my best selling books are the series that starts at $1.99.

I think she is right, for her audience. Your audience differs.

My point is, that if publishers *know* there is a market for books under 5 dollars, they have got to find a way to hit that target--if it's only via ebooks, then they still need to hit that target--or someone else will.

Do they? For any producer, there will be a minimum size for the market and price point to hit, to make the market worth addressing at all. The bigger you are, the larger your market has to be, and chances are the price you have to charge goes up, too.

For a major trade publisher, the question is two fold: first, can they address the market for ebooks at $5.00 and under, and actually make any money at it? If the answer to that is "yes", the next question is "Should they?" The answer to that question may be "No, they shouldn't, as they won't make enough money to justify the effort."

Management at publicly held companies are custodians of Other People's Money. They have a fiduciary responsibility to preserve and if possible grow their shareholder's value. So when they decide what to invest corporate funds in, the question is what the return will be. There are any number of cases of companies getting out of lines of business, because they were profitable, but not profitable enough, and management decided they could get better returns elsewhere.

As a relevant case, there were worries when Sony introduced the Sony Reader about their long-term commitment. Sony is a big consumer electronics manufacturer. They have to sell a lot of devices to make it worth doing. They had previously made and sold the popular Clie line of Palm OS PDAs. They got out of the market, because, while profitable, it wasn't profitable enough. The question was whether the market for a dedicated reader was big enough and would carry a high enough margin to justify Sony's investment, or whether they would pull the plug on the effort. Fortunately, the market does seem to be big enough, as Sony is still in it and introducing new models, but it was a source of concern.

A major trade house might decide to leave that market to folks structured to address it, and concentrate on stuff they can sell at a higher price with greater margins. They already do that in any case, declining to publish titles because they don't see a large enough market, and leaving such business to smaller specialty publishers structured to do it.

I happen to think there is a market there, which is why I cater to it. But I could be wrong. Maybe pricing the book higher and having that marketing and a publicist is really the right answer.

I think there is indeed a market there. And I think small publishers/self-publishers like yourself can address it. I don't think the big boys can.
______
Dennis

[DMcCunney]

Originally Posted by EricDP

Which we've already established says it only costs about $8,000 - $20,000 in total. I would assume $8,000 is what would be invested in books expected to have low sales. Unless they have fewer than 8,000 sales, it would be less than $1/book. If only 4,000 sales, it's still only $2/book.

For the books expected to sell well, they could invest up to $20,000. I assume most of those books would certainly sell more than 20,000 copies, which means less than $1/book.

And yet these books are selling for >$10/book. Clearly those preparation costs are not the bulk of the costs to produce the books.

No, they aren't. Consider what happens when a book is acquired.

A manuscript comes in from an agent. An acquiring editor reads it, decides it's a book her house can sell, and decides to make an offer. It may have to get kicked upstairs to get the publisher's approval if the offer is large enough. (There may be meeting about this to gauge interest and determine what efforts the publisher will make, like in the case of a possible best seller.)

The agent negotiates the exact contract with the publisher's contracts department, covering exactly which rights are being acquired, the advance offered, the royalty schedule, and various other details. A contract is finalized and the author gets a copy to sign and the specified advance.

(Note that in the case of a new author, a full manuscript will be required, to prove the author can complete the book. An established author usually sells on the basis of a proposal, including an outline and sample chapters. In that case, the author will get partial payment up front, and the remainder on delivery of the completed manuscript.)

The completed manuscript gets line-edited - a detailed review by an editor (often the commissioning editor, but it doesn't have to be), to tighten and refine the manuscript and produce a book more likely to sell. The result of this is a revision letter detailing things the editor thinks need changes, and there's a back and forth till editor and author agree on a final form. (Most writers will admit this is crucial, and a good editor can help them make a good book into a great one.)

The final form gets copy edited and proofread to produce the version that will be published. Depending on the book, there may be a legal review, if the subject is controversial and the publisher sees a risk of getting sued. ("It's all true and we can prove it!")

Meanwhile, an Art Director is designing a cover and commissioning cover art, and jacket copy is assembled, and a book designer is designing the interior.

At some point here, there will be sales conferences where editors present the upcoming titles to the publisher's sales force, to let them know what they'll have to sell. Editors try to get the sales force enthusiastic about their titles, as enthusiastic sales people make better sales.

The completed final manuscript, along with jacket art and the like goes to DTP. DTP imports it into Adobe InDesign and does typesetting and markup based on the design specs. The result is a PDF file to go to the printer, who will feed it to an imagesetter to make the plates from which the book will be printed. If an ebook is part of the offering, that will be extra steps, as a PDF is likely not the desired ebook format, and someone else must take the manuscript and art and generate the ePub, MobiPocket, or whatever file.

The printer prints the specified number of copies. Binding may be done by the printer (for a PB), or handled by a binder (for things like hardcovers.)

The printed books go to the warehouse for distribution, and are shipped to big retailers and wholesalers based on orders received.

Each book will also get an allocated share of corporate overhead (rental on office space, electricity, phones, salaries of folks not directly involved involved in producing books), and there will be a reserve against returns.

The biggest variable is likely to be the size of the advance offered.

Most of the steps above happen before the book ever reaches the stage of being published, as a print volume or an ebook. Costs of print/bind/warehouse/distribute are perhaps 20% of the total.
______
Dennis

[BearMountainBooks]

Originally Posted by DMcCunney

The question is what those meetings and approval steps actually cost. The people involved will be at them in any case, and are on salary.

From what I read about those meetings and having been in many a meeting...they should probably all be canceled...

The folks most likely to succeed at something like this are those who have already built a market via traditional publishing.

Interest from agents/publishers on places like Kindleboards is a mixed blessing. It depends upon just which agents and publishers.

Yes, you're right about the ones who have a traditional background/experience. The interest isn't done via kindleboards, it's just authors reporting their 'deal." Two or three have gone with Amazon Encore and another one ... I think her husband signed with TOR if I remember correctly. Two or three others have signed with some fairly big named agents. If that is the dream, well, it probably won't hurt them to go down that path for a while.

Not just people cost, though I agree that's probably the biggest single component. There are other costs like rent on office space, electricity and phone service and the like that are part of the overhead of any business and get allocated as posrt of the cost of a product.

Yes, and to be competitive, it's got to be darned hard to make the numbers make sense when your building space is in NY.

I think she is right, for her audience. Your audience differs.

I disagree. I was a buyer of her "products." The only reason I didn't buy more was because they were too expensive. They were also extremely slow to get into ebook form those times a book was chosen to be put in ebook form. Had she been more competitive with pricing, I would have bought a couple more books. At 15 a pop, I got three via the library and still haven't bought one because I'm hoping it will go ebook and be cheaper via that route. Speaking as her audience, not as an author--the publisher put out mass market type mystery books in trade format. If she could have done it cheaper, she should have. I would have bought the books had they been priced better.

Management at publicly held companies are custodians of Other People's Money. They have a fiduciary responsibility to preserve and if possible grow their shareholder's value. So when they decide what to invest corporate funds in, the question is what the return will be. There are any number of cases of companies getting out of lines of business, because they were profitable, but not profitable enough, and management decided they could get better returns elsewhere.

As a relevant case, there were worries when Sony introduced the Sony Reader about their long-term commitment. Sony is a big consumer electronics manufacturer. They have to sell a lot of devices to make it worth doing. They had previously made and sold the popular Clie line of Palm OS PDAs. They got out of the market, because, while profitable, it wasn't profitable enough. The question was whether the market for a dedicated reader was big enough and would carry a high enough margin to justify Sony's investment, or whether they would pull the plug on the effort. Fortunately, the market does seem to be big enough, as Sony is still in it and introducing new models, but it was a source of concern.

A major trade house might decide to leave that market to folks structured to address it, and concentrate on stuff they can sell at a higher price with greater margins. They already do that in any case, declining to publish titles because they don't see a large enough market, and leaving such business to smaller specialty publishers structured to do it.


I think there is indeed a market there. And I think small publishers/self-publishers like yourself can address it. I don't think the big boys can

I think the big boys need to set up smaller shops to address it in some manner. I don't particularly *care* if they do. At the moment I am finding plenty of books to read. I know their goal is to make money, but they haven't done much to try to get rid of waste (like the discussion on returns.) Sure the booksellers are going to fight them on it. But it's been hurting the industry for a long time--ingrained policies usually do.

Your points are all valid--but the world is changing and I think those who are able to offer a good product at a lower price are going to do well. Large Publishers need to at least address that niche market rather than whine about it!

[EricDP]

Originally Posted by DMcCunney

No, they aren't.

So, earlier, you were saying the linked article explained why eBook prices are no different from pBook prices. Now that we have demonstrated that those steps are not really a significant cost item, you have created an entire new list of your own for why eBooks cost as much to produce. No reference to how much these steps might cost...

All I can say is just because the list of todos is long doesn't mean it's expensive. And in most cases, the process is scaled to fit the expected sales of the book - a new author won't get the same thorough treatment of somebody with a proven track record, so the cost to produce the book will be a lot lower.

Whatever the case, I think two things: 1) you're tenacious at defending your point, even if few others agree, and 2) we still don't agree on what price would yield the highest profits based on a combination of unit price and fixed price. I still think that, since the unit price is almost nothing for a eBook, the sales price could be a lot lower, yielding much greater sales, offsetting fixed price more quickly, and yielding higher profits.

You still haven't come close to convincing me that eBook prices should be the same as pBook prices. They should be lower, no matter how you spin it. Especially after the paperback comes out for less that the eBook - that is unforgivable!

[Fbone]

Originally Posted by DMcCunney

Depending on the book, there may be a legal review, if the subject is controversial and the publisher sees a risk of getting sued. ("It's all true and we can prove it!")
______
Dennis

Do the major publishers confirm the author has copyrighted the material?

Does the legal dept do a copyright search to confirm the material hasn't been published or copyrighted by someone else?

Do the publishers purchase title insurance against future infringement claims?

[DMcCunney]

Originally Posted by BearMountainBooks

From what I read about those meetings and having been in many a meeting...they should probably all be canceled...

I've been in them too, and don't I just wish. But there's still a question of how much they add to costs.

Yes, you're right about the ones who have a traditional background/experience. The interest isn't done via kindleboards, it's just authors reporting their 'deal." Two or three have gone with Amazon Encore and another one ... I think her husband signed with TOR if I remember correctly. Two or three others have signed with some fairly big named agents. If that is the dream, well, it probably won't hurt them to go down that path for a while.

Oh, sure. And getting interest from Tor is certainly a plus. I know an assortment of the Tor folks, and their offices are within walking distance of me. I consider Tor one of the best houses out there, and Tom Doherty, Tor's founder and CEO, has probably forgotten more about publishing than most folks will ever learn. If the bug strikes me and I produce a novel, Tor will be the house where I would want to place it.

The same if they get nibbles from recognized agents. But there's a whole sleazy ecosystem preying on wannabe writers, from agents who charge "reading fees" to publishers that are vanity presses in disguise.

The trick is telling the difference.

Yes, and to be competitive, it's got to be darned hard to make the numbers make sense when your building space is in NY.

Yes! Especially when you occupy it under a multi-year lease, or you own the building, and you can't just pick up and move somewhere where the costs are lower. (Leaving aside what your employees who live in the area will think of being asked to relocate.)

I disagree. I was a buyer of her "products." The only reason I didn't buy more was because they were too expensive. They were also extremely slow to get into ebook form those times a book was chosen to be put in ebook form. Had she been more competitive with pricing, I would have bought a couple more books. At 15 a pop, I got three via the library and still haven't bought one because I'm hoping it will go ebook and be cheaper via that route. Speaking as her audience, not as an author--the publisher put out mass market type mystery books in trade format. If she could have done it cheaper, she should have. I would have bought the books had they been priced better.

Fair enough. But the questions are "Could she do it cheaper?", and if she could, "Should she?"

Pricing is a black art. We all want books priced cheaper, but the best price (in terms of yielding the most revenue and profit) probably isn't the cheapest possible price. Price too cheap and you can lose overall, because the regular customers buy at the cheaper rate, and the additional sales don't make up for what you lose by discounting.

The fact that a price is higher than I want to pay doesn't necessarily mean it's the wrong price - only that I won't pay it.

I think the big boys need to set up smaller shops to address it in some manner. I don't particularly *care* if they do. At the moment I am finding plenty of books to read. I know their goal is to make money, but they haven't done much to try to get rid of waste (like the discussion on returns.) Sure the booksellers are going to fight them on it. But it's been hurting the industry for a long time--ingrained policies usually do.

It's a Catch-22 situation. I had a conversation the other night with a woman who had been a editor for many years before retiring. She said, among other things, that the "100% returns" policy which has been hurting the industry for decades originated way back when to get bookstores to take a chance on stocking new and unfamiliar work. If it didn't sell, they could send it back. There have been a few experiments by publishers offering a higher discount in exchange for limits on what could be returned, requiring the bookstore to estimate demand the same way retailers in other industries must. They haven't gotten far. Making it stick will require the major houses to all agree to do it and stick to the resolve, and won't there be a hue and cry about collusion and the like if they did?

It's a problem similar to the one of "too many books chasing too few readers". Everyone knew there were too many titles being published, but nobody wanted to be the first to trim their lines, because they were afraid that they would lose retail shelf space and not get it back. So things would go on until someone finally bit the bullet and trimmed their line, and the rest would follow in a wrenching spasm, with attendant authors being dropped from contract and people people losing jobs.

The current Big 6 is another side effect, as bigger houses acquired smaller ones in attempts to gain economies of scale (again, with attendant job losses.)

Lots of things that might be done, but nobody wants to be the first to try it if they think it will make them vulnerable to a competitor.

Your points are all valid--but the world is changing and I think those who are able to offer a good product at a lower price are going to do well. Large Publishers need to at least address that niche market rather than whine about it!

Large publishers may not be able to address niche markets.

I think something like what you suggest - setting up smaller subsidiaries to go after niches - will be the direction taken. While size can yield economies of scale, it also places lower limits on the size a market has to be to address profitably.
______
Dennis

[DMcCunney]

Originally Posted by Fbone

Do the major publishers confirm the author has copyrighted the material?

Probably not. Under the Berne Convention, copyright exists on completion of the work. You don't need to explicitly claim it. The usual reason to actually register copyright with the Library of Congress is that you can sue for far greater damages in the case of infringement if you have registered it.

Does the legal dept do a copyright search to confirm the material hasn't been published or copyrighted by someone else?

Probably not. I believe the contract has language stating things like the author asserting that the work is their own and they own the rights. If the publisher does somehow publish a work already published or to which the authors does not own the rights, it's on the author, not the publisher, as the author lied in claiming rights.

And I can't recall any stories of attempts to publish an entire book like that. I have heard stories of attempted plagiarism by authors submitting someone else's short story under their own name. That's actually more likely to slp through, as no editor can read everything, and the person accepting the story may be unaware of the prior publication.

Do the publishers purchase title insurance against future infringement claims?

Not that I'm aware of. See above for reasons why.

Publishers will worry about being sued over content in some books, not ownership of the work.
______
Dennis

[DMcCunney]

Originally Posted by EricDP

Whatever the case, I think two things: 1) you're tenacious at defending your point, even if few others agree, and 2) we still don't agree on what price would yield the highest profits based on a combination of unit price and fixed price. I still think that, since the unit price is almost nothing for a eBook, the sales price could be a lot lower, yielding much greater sales, offsetting fixed price more quickly, and yielding higher profits.

As for 1 above, it really doesn't matter whether people agree with me or not. I've been an observer of publishing for decades. Most of the folks I know and hang out with these days are in publishing, and I talk to them. I happen to actually know a bit about it, and try to pass along some of what I know in discussions like this.

If I'm correct in my assertions, it doesn't matter whether you believe me or like it, it's simply the way things are. The fact that you don't believe something doesn't make it untrue.

As for 2, we have a differing notion of unit costs. As mentioned, the print/bind/warehouse/distribute steps for pbooks is about 20% of the total costs for a book. The rest occur before the book is published in any form, and each book will get an allocated share of corporate overhead. Those costs get allocated across the production run, and become unit costs.

The fact that it's an ebook does not magically make costs other than the print/bind/warehouse/distribute costs go way. The ebook is simply another format for the book, along with hardcover, trade paperback, and mass market paperback. Each book has a P&L, and the ebook will be expected to contribute to revenue and help cover expenses.

If the ebook is the only edition published, the print/bind/warehouse/distribute costs go away, but the rest don't. If the ebook is he only edition, you still have to sell X copies at Y price to cover costs and make money. The questions are what X and Y are.

You still haven't come close to convincing me that eBook prices should be the same as pBook prices. They should be lower, no matter how you spin it. Especially after the paperback comes out for less that the eBook - that is unforgivable!

I'm not trying to convince you the the ebook price should be the same as the pbook. What I am trying to do is give reasons why the ebook price is unlikely to be as low as a lot of folks would like it to be. It won't be because it can't be if the publisher wants to stay in business.

Agreed on the unhappiness of an ebook having a much higher price than the pbook. I'm not trying to defend that sort of nonsense. There's an awful lot of wishful thinking on the part of publishers about how much they can charge, just as there's a lot of wishful thinking on the part of buyers on how cheap an ebook can be, and various publishers will find out the hard way they have inflated notions.

Ultimately, I think the price for an ebook will level out to comparable with the MMPB edition, when the MMPB edition is released. Ebooks released at the same time as the hardcover will carry a higher price.
______
Dennis

[Bev M]

Originally Posted by DMcCunney

Agreed on the unhappiness of an ebook having a much higher price than the pbook. I'm not trying to defend that sort of nonsense. There's an awful lot of wishful thinking on the part of publishers about how much they can charge, just as there's a lot of wishful thinking on the part of buyers on how cheap an ebook can be, and various publishers will find out the hard way they have inflated notions.

Ultimately, I think the price for an ebook will level out to comparable with the MMPB edition, when the MMPB edition is released. Ebooks released at the same time as the hardcover will carry a higher price.
______
Dennis

I have no problem with the concept of paying roughly the same price as for a paperback. I never did buy an ebook from Amazon, but patronized Fictionwise heavily. Not for the $9.99 bestsellers, which I didn't buy anyway, but for all the ebooks which had been out for a while and cost $4 to $8 before discounts. I never bought new hardbacks, happily waiting for for PBs. What seriously annoys me is NOT that I want new $25 hardbacks in ebook format for a few bucks. I don't even necessarily want ebooks any cheaper than I can buy a PB for. The discussion about what ebooks 'ought' to cost based on the publishers' costs misses the mark for me. And being told that I'm annoyed because I just want 'cheap' books isn't exactly true, either. What I do want is for retailers to have the same freedom to 'entice' my purchases that they used to have for ebooks, and still do have for paper! Let me look for deals, bargains, coupons, multiple purchase discounts, and any and all other forms of little perks, the same way that I can when I want a couple of paperbacks. Or discontinue allowing retailers to discount all formats. The real irritation factors are ebooks costing more than PBs, and, for me, refusing to allow retailers to discount ebooks as they see fit for THEIR business and THEIR customers.

[b0ned0me]

Originally Posted by Sil_liS

This doesn't make sense. You said that Amazon is responsible for a "significant part of any publisher's revenue". If they were playing a game of chicken, Amazon wasn't trying very hard, since they could just refuse to sell the pbooks if they can't sell the ebooks. Another way is to stop giving pbook discounts, and promote primarily the ebooks and used pbooks.

You seem to want this whole thing to make logical coherent sense, and to be easily understandable. The reality is going to be that within Amazon there are a bunch of people continually arguing about what is the best way to move forward, and the same within each of the major publishers.

During the brief time when Amazon was peeing on the cornflakes of some of their key suppliers of profitable inventory, and the publishers were peeing on the cornflakes of their biggest single customer, you can bet there were an awful lot of fraught meetings going on within each and every company, as the people tasked with maintaining profitability of the pbook sales arm-wrestled the ones whose salaries depended on growing the ebook business.
Meanwhile the executives would have been demanding that this all get sorted out soon so the fuss dies down before the next stockholders meeting, various individuals would have been giving off-the-record hints to people they knew and trusted on the 'other side' in order to trip up colleagues they didn't like and/or help steer things to an amicable conclusion, lots of other important projects would have been going down in flames because everyone was distracted by the fight, and on and on and on.

I've been involved in a few customer-supplier dustups, and you have to remember that even if there is a master plan involved, it's usually wrong. Most of the people involved are either ordinary schmoes who just want to get to year-end without being fired for screwing the pooch, or crazed egomaniacs who've drunk too much espresso after reading some crappy management book they found at the airport. There are generally no geniuses involved in these affairs.

My personal take on this - could the publishing industry make a better job of dealing with The Coming of The Ebook? Certainly.
Based on what has happened over the years in every other industry that has faced disruptive change, can we realistically hope the industry to get it right without a lot of stress, confusion, job losses, bankruptcies, customer inconvenience and stacks of money flushed down the toilet? No.

I think eBooks will be a mess for several more years, because the people who actually have to take the decisions and do stuff have their livelihoods on the line. Given the choice between boldly striding forth into a brave new world at the risk of an immediate pink slip, or muddling through for one more year as things are, muddling is usually the most attractive option.

Fortunately, the situation with ebooks is not so bad. Relative to e.g. people who have to fly twice a week, or spend a lot of time in dealing with hospitals, government departments or the like, ebook fans are blessed. With luck, things will improve from 'rubbish' to merely 'mediocre' in the next few years, and there is still a small hope of achieving 'efficient and rational'.

[murraypaul]

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.

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.

Isn't that exactly what the Agency agreement is, a requirement that the price is fixed by the publisher and not lowered by the retailer?

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.

Until and unless it is found to be unlawful. In the UK I can't see how they can get away with exactly what they were forced to stop doing for pBooks.

[murraypaul]

Originally Posted by DMcCunney

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.

They got back into it, and are very successful.
Wintel servers form the majority of their server business.
"Revenue from servers based on x86 chips was $7.18 billion (of $10.8 billion total server revenue), up 32 percent, while unit shipments climbed to 2.06 million. Revenue from high-end RISC and Itanium-based servers declined by 27 percent, and the "other" category -- mostly mainframes -- declined by 15 percent."

They lost big by missing out early on, and realised they had made a mistake.