Prediction for 2011 from Smashwords Founder

[Steven Lyle Jordan]

Originally Posted by MrsJoseph

And although I severely disagree with Steven Lyle Jordan regarding his take on the future of DRM...

Sorry about that, but I call 'em the way I see 'em... as in, it might not be the way I want it, but it's the way I believe it will be.

[murraypaul]

Originally Posted by bhartman36

With a freebie, it's different. The person offering it as a freebie explicitly wants people to download it for free. Maybe those people will like it, and maybe they won't. But the point is that the writer and the people downloading the work have an agreement that the work is free. It's not a lost sale to the writer, because the item wasn't being put up for sale to begin with. Change that equation to one where the writer doesn't agree, and the whole thing is different. Whether you read the first few pages and delete it, or you read the whole thing through, the fact of the matter is that it's still a lost sale, because it's only by obtaining for free what you would have had to pay for that you know whether you like it or not.

No, because it was only downloaded *because* it was free. If it wasn't free it wouldn't have been downloaded.
There are lots of books on Amazon that might interest me, but I'll never know, because I don't want to pay $10 for them. If one drops to $2, I might buy it to see if I like it. That sale at $2 is not a lost sale at $10, because I wouldn't buy it at $10.
(This has nothing to do with whether it is legally/illegally available for free, or the morality of obtaining it, just that the desire of someone to have something for no cost does not translate to the desire of that person to have it for non-zero cost)

[JSWolf]

Originally Posted by Steven Lyle Jordan

Maybe you want your own thread for this... we're discussing Mark's predictions, here.

6. Ebook prices to fall – It’s all about supply and demand. Demand is surging, but supply will overwhelm demand. Average ebook prices will decline, despite attempts by Agency 5 publishers to hold the line. The drop will be fueled by the oversupply of books, abundance of low-cost or free non-book content, influx of ultra-price-sensitive readers who read free first, fierce competition for readership, and digitization of reverted-rights and out-of-print books. Indie authors, since they earn 60-70% retail price, can compete at price points big publishers can’t touch.

Defeating the agency model will lower prices. Especially if we don't have $12.99-$14.99 priced eBooks for new hardcover releases. And, not all the eBooks drop in price when the paperback comes out. I've seen it happen and not happen. Another question, are these lower cost eBook going to be books we want to read? Will we even know enough about them to be able to decide?

[JSWolf]

Originally Posted by murraypaul

No, because it was only downloaded *because* it was free. If it wasn't free it wouldn't have been downloaded.
There are lots of books on Amazon that might interest me, but I'll never know, because I don't want to pay $10 for them. If one drops to $2, I might buy it to see if I like it. That sale at $2 is not a lost sale at $10, because I wouldn't buy it at $10.
(This has nothing to do with whether it is legally/illegally available for free, or the morality of obtaining it, just that the desire of someone to have something for no cost does not translate to the desire of that person to have it for non-zero cost)

This is what the Agency 5 do not get. They don't get that sales of their expensive eBook sis declining. They aren't getting money from me with such high prices. So it's a lost sale. But if they lowered prices, they might get a sale and that sale is worth more in profit then no sale at all.

[OtterBooks]

If you think the only marketing advantages big publishers offer are books propped up in stores and magazine ads, try to get your self-published book reviewed by the New York Times. Or any major outlet, for that matter.

The bulk of book marketing is basically enhanced word-of-mouth. It isn't like the branding or image based marketing of other consumer products. Publishers use their influence to get books reviewed by widely read (and trusted) sources, as well as considered by award committees and book clubs.

Agents will use these publishing platforms for negotiating leverage against large publishers. The conversation will go something like this: “You’re offering my author only 15-20% list on ebooks when I can get them 60-70% list working direct with an ebook distributor like Smashwords or a retailer like Amazon?”

Huh? Is an agent necessary when self-publishing an ebook through an online retailer?

[Steven Lyle Jordan]

Originally Posted by OtterBooks

If you think the only marketing advantages big publishers offer are books propped up in stores and magazine ads, try to get your self-published book reviewed by the New York Times. Or any major outlet, for that matter.

The bulk of book marketing is basically enhanced word-of-mouth. It isn't like the branding or image based marketing of other consumer products. Publishers use their influence to get books reviewed by widely read (and trusted) sources, as well as considered by award committees and book clubs.

True. But the enhanced word-of-mouth is (slowly) shifting away from those sources, as people are realizing how much of the market those "established, trusted sources" are ignoring. Money, of course, will always bolster those "trusted sources," but new sources for non-big-pub content will develop and grab consumer eyeballs.

Originally Posted by OtterBooks

Huh? Is an agent necessary when self-publishing an ebook through an online retailer?

Not right now... though who knows how online retailers may develop in the future. But the statement was about dealing with Big Pub, and agents are still a big part of that dynamic. I doubt they'll impact online retailing outside of the Big Pubs, and authors will need marketers much more than they'll need agents.

[JackNolte]

Most writers I know are not abandoning NY publishing altogether, but moving quickly to a dual track approach. It's going to be a wild ride in 2011.

[Andrew H.]

Originally Posted by JSWolf

This is what the Agency 5 do not get. They don't get that sales of their expensive eBook sis declining. They aren't getting money from me with such high prices. So it's a lost sale. But if they lowered prices, they might get a sale and that sale is worth more in profit then no sale at all.

It's not about sales, it's about profit. Both the publishers and the authors will make more money if they sell 10,000 books at $9.99 than if they sell 20,000 books at $2.99. The profit that they make on a $2.99 sale that they would not have otherwise made is much less than the profit they they lose by selling a book at $2.99 to someone who would have paid $9.99 for the book.

What they publishers and authors are looking for is the magic price that will maximize profits by optimizing *both* the number of sales *and* the profit per sale. They can't just focus on the number of sales - you maximize that by giving the book away, or selling at cost.

Another question, are these lower cost eBook going to be books we want to read? Will we even know enough about them to be able to decide?

This is *key,* and it's a point that Smashwords may not want to dwell on. If you exclude books that were previously published, or by authors who were previously published, the vast majority (not all, but the vast majority) of self-published books are books that aren't good enough to be published. Of course, some people don't mind this, and people who are extremely price-sensitive may find it worthwhile to spend hours filtering out the dreck to find a near-publishable quality book at a self published price.

But for most people with e-readers, the $10 difference between a book that is $2.99 and $12.99 (which works out to $20-$40/month for avid readers) won't make it worthwhile to waste hours reading through a slush pile. (And of course the price difference is going to be less in reality, since people reading a lot of books will certainly buy some $7.99 books).

[JSWolf]

Originally Posted by Andrew H.

It's not about sales, it's about profit. Both the publishers and the authors will make more money if they sell 10,000 books at $9.99 than if they sell 20,000 books at $2.99. The profit that they make on a $2.99 sale that they would not have otherwise made is much less than the profit they they lose by selling a book at $2.99 to someone who would have paid $9.99 for the book.

What they publishers and authors are looking for is the magic price that will maximize profits by optimizing *both* the number of sales *and* the profit per sale. They can't just focus on the number of sales - you maximize that by giving the book away, or selling at cost.

If you have a hardcover and an eBook and you price the eBook at $9.99, then you will find you will have a lot more sales then you do pricing the eBook at $14.99. And I do feel that the increased sales would generate the publisher more money.

[Andrew H.]

Originally Posted by JSWolf

If you have a hardcover and an eBook and you price the eBook at $9.99, then you will find you will have a lot more sales then you do pricing the eBook at $14.99. And I do feel that the increased sales would generate the publisher more money.

I do wonder whether that would work. How much profit do you think they make from an e-book sale?

[vaughnmr]

Originally Posted by Andrew H.

I do wonder whether that would work. How much profit do you think they make from an e-book sale?

They make $0 when they price too high and don't make a sale.

[Andrew H.]

Originally Posted by vaughnmr

They make $0 when they price too high and don't make a sale.

True. But sales =! profit.

It's better to sell 10,000 books if you are making $6/book than to sell 50,000 books if you are making $1/book. So the numbers matter.

[vaughnmr]

Originally Posted by Andrew H.

True. But sales =! profit.

It's better to sell 10,000 books if you are making $6/book than to sell 50,000 books if you are making $1/book. So the numbers matter.

That would be true if the fixed costs stay the same for each book, but that's not the reality. At some point, you would be making far more profit due to the smaller ebook distribution costs.

[sabredog]

Originally Posted by JSWolf

If you have a hardcover and an eBook and you price the eBook at $9.99, then you will find you will have a lot more sales then you do pricing the eBook at $14.99. And I do feel that the increased sales would generate the publisher more money.

Certainly agree with this.

If publishers are fair dinkum at reducing piracy then reducing prices along with abolition of DRM and geo restrictions would go a fair way to achieving that goal. It would not reduce piracy altogether as that genie is well and truly out of the bottle. However it would reduce casual piracy where a potential buyer is turned away by being denied the ability to purchase and then turns to "other sources".

[JSWolf]

I have bought eBooks at $9.99. I have not bought eBooks at $12.99 or $14.99. So at $9.99, they get a sale and some profit. At higher prices, they get nothin, no sale, no profits.