DOJ suing Apple over ebooks.

[SteveEisenberg]

Re price of eBooks, this whole web site is one big argument why paper should be cheaper. Obviously there are lots of people who personally prefer eBooks, meaning they have more value to them.

From a social utility standpoint, books should have expensive luxury versions for those who can afford them, and cheaper versions for those of lesser means. This works great with paper where one can choose between hardback, paperback, and used in a variety of conditions. Maybe there will be comparable differentiation in eBooks if interactive versions start appearing at higher prices than plain old eBooks. But, for now, the only real differentiation is generally higher prices for newer releases.

[Greg Anos]

Originally Posted by SteveEisenberg

Re price of eBooks, this whole web site is one big argument why paper should be cheaper. Obviously there are lots of people who personally prefer eBooks, meaning they have more value to them.

From a social utility standpoint, books should have expensive luxury versions for those who can afford them, and cheaper versions for those of lesser means. This works great with paper where one can choose between hardback, paperback, and used in a variety of conditions. Maybe there will be comparable differentiation in eBooks if interactive versions start appearing at higher prices than plain old eBooks. But, for now, the only real differentiation is generally higher prices for newer releases.

Unfortunately, that is not an option. You can't enhance the quality of the product to sell a luxury version. (You can do that with music and video, by offering higher resolution (quality) options.) But other than offering higher quality resolution luxury options, there isn't anything else you can really meaningfully do, digitally. (where the digital is wedded to an analog form, like a disc, you can offer all sort of trinkets as a luxury product, but in the end the enjoyment of the primary product, the digital product, is no different than the econo version...)

[HarryT]

Originally Posted by Ralph Sir Edward

Unfortunately, that is not an option. You can't enhance the quality of the product to sell a luxury version. (You can do that with music and video, by offering higher resolution (quality) options.) But other than offering higher quality resolution luxury options, there isn't anything else you can really meaningfully do, digitally. (where the digital is wedded to an analog form, like a disc, you can offer all sort of trinkets as a luxury product, but in the end the enjoyment of the primary product, the digital product, is no different than the econo version...)

That's certainly true for your average novel, but Penguin Classics do "enhanced eBook" versions of some books in their range which are very nicely done indeed - "Pride and Prejudice" is one that I have.
In addition to the introduction and footnotes of the "Standard" version of the book, the "enhanced" content is:

• Filmography.
• Nineteenth-Century Reviews
• Chronology
• Further Reading
• What Austen Ate
• How to Prepare Tea
• Austen Sites to Visit in England
• Behaving Yourself: Etiquette and Dancing in Austen’s Day
• Illustrations of Fashion, Home Decor, Architecture, and Transportation
• Explanatory Notes

Which really does add a lot to the book.

[fjtorres]

Originally Posted by HappyMartin

But what of all the books that don't sell? Suddenly the price of printings, distributing, removing from shelves and returning, warehousing and pulping is not offset against a sale. It is added to the costs of doing business and must be borne by the books that do sell.

When we talk about changing the way publishers do business, this is among the things that *will* change. And soon.

The Vynil LP business used to be the same way; the record companies would automatically take back any returns from retailers for full credit because, most of the time, it was their fault. Stamping vynil simply wasn't precise enough and shipping or storage variances could deform it. The cost of the returns was "baked in" to their pricing.
Then CDs came out, LP sales started to decline, returns started eating up too much of the costs... and since CDs were leading people to re-buy old releases, the studios decided to "encourage" CD adoption: they stopped taking returns. Within 6 months most record stores were CD outlets. Much grumbling followed. The world didn't end.

The only reason publishers deal with returns/remainders/warehousing/pulping is because that is the way it's always been done. There is no law of man or nature that demands it. It is sheer inertia. No other manufacturing business is structured that way: because it isn't necessary. It is pure inefficiency.

Want to do away with returns? (and, make no mistake; the day isn't far off when the BPHs do this) Print *less* copies on spec. Do market research, hold retailers to their orders, encourage consumer pre-orders, do just-in-time print runs, do print-on-demand... There's a dozen ways to *think* your way past this dated (and expensive) business practice. Most manufacturers of other *products* figured it out so the BPHs don't even need to be original. They can just copy the best practices of others. (Music, video, game publishers just for starters.)

Now, they can be proactive and do it wilingly because it makes business sense and fortifies their bottom line, or they can wait until pbook sales volumes decline to the point where returns overwhelm their bottom line.

As Mr Shatzkin himself has pointed out, in several narrative text categories, and for several publishers, ebooks *already* make up over 50% of the sales volume. He also points out that the expectation in most market is that B&M retail space will be shrinking by 40%. (40% less retail sale volume).

http://www.idealog.com/blog/extendin...shly-difficult

He has also pointed out that online, non B&M book sales (p- and e-) *already* make up 50% of most book sales.
http://www.idealog.com/blog/by-one-b...the-revolution

So, not only are returns not necessary for 50% of the business *now*, the need for returns is going to decline further. There are no valid excuses for the practice; inventory management is supposed to be a core retailer competence of modern retailers.

At the top of the list of unnecessary BPH costs (right there with the Manhattan glass towers and golden parachutes) return costs are the easiest to dispose of and a perfect example of how the BPHs can help themselves by changing their outdated practices.

[elcreative]

Originally Posted by HarryT

That's certainly true for your average novel, but Penguin Classics do "enhanced eBook" versions of some books in their range which are very nicely done indeed - "Pride and Prejudice" is one that I have.
In addition to the introduction and footnotes of the "Standard" version of the book, the "enhanced" content is:

• Filmography.
• Nineteenth-Century Reviews
• Chronology
• Further Reading
• What Austen Ate
• How to Prepare Tea
• Austen Sites to Visit in England
• Behaving Yourself: Etiquette and Dancing in Austen’s Day
• Illustrations of Fashion, Home Decor, Architecture, and Transportation
• Explanatory Notes

Which really does add a lot to the book.

Only if it is of interest... I read fiction to read the content of the book - the rest is unnecessary fluff that I never look at, just like all the "wonderful" DVD extras... Mostly never looked at or very occasionally, once - I want the film... and all these great add-ons provide an equally great excuse to add on to the price...

[HarryT]

Originally Posted by elcreative

Only if it is of interest... I read fiction to read the content of the book - the rest is unnecessary fluff that I never look at, just like all the "wonderful" DVD extras... Mostly never looked at or very occasionally, once - I want the film... and all these great add-ons provide an equally great excuse to add on to the price...

Certainly only if it's of interest. I do find it of very great interest, which is why I bought it.

[fjtorres]

Originally Posted by kennyc

Good blog post from Kristine Katherine Rusch on several of the topics touched on in this thread:

http://kriswrites.com/2012/04/18/the...of-publishing/

Excellent find.
I'll have to bookmark her blog.
And her husband's.
I've read both of their work before (pbooks) but I wasn't aware they were deep into ebooks and independent publishing.

Try this one:
http://www.deanwesleysmith.com/?p=6481

So, if you sell 20,000 copies traditional, you make $8,500. If you sell 20,000 copies indie over the same ten years, you make $86,000.00

In fact, by selling only 2,000 copies over ten years, (or about 17 copies across all sites and in paper per month), you will make about $75 per month or $9,000, which is more than you would have made traditionally.

Not the first time I've seen these kind of reports on BPH practices.
But yes, that's a pretty solid way of saying that, yes, BPHs routinely ripoff most authors.

Note I emphasize BPHs.
Some publishers out there do treat authors fairly and earn their keep honestly and don't collude to break the law and rip off customers as well as authors to perpetuate their fraying oligarchy.

But the ones that do...
...well, those deserve everything they've got coming.

[Elfwreck]

Originally Posted by HarryT

So Ms Rusch, whoever she may be, knows more about the economics of digital publishing than Penguin's global digital director?

What is Ms Rusch's background in publishing?

She's been a professional author for several decades, of both novels and short stories. She's worked with (and more recently, against) several different publishers. She has her own publishing business, still active if small. She & her husband run publishing seminars for authors.

And yes... she knows more about some aspects of the economics of business publishing than Penguin's director, because Penguin's director assumes that authors *need* a BPH to be truly successful. Rusch knows that what authors consider "successful" is not the same as what Penguin considers "successful"--and that it varies by author. She helps authors sort out how they can be successful on their own terms.

BPHs that assume they can set the terms for author success are on a long slow downward slide as many talented authors decide that they'd be better off doing things differently. Whether that's "sign with an indie press with more flexible terms and more author control over covers, descriptions, and sales venues" or "publish solo with hired editors" or even "publish solo with no editors for $1, and capitalize on the cheap-impulse market," Penguin (and other BPHs) are going to lose a lot of great authors by not being more flexible in their contract terms.

[HarryT]

Originally Posted by Elfwreck

BPHs that assume they can set the terms for author success are on a long slow downward slide as many talented authors decide that they'd be better off doing things differently.

I hear that said, but is there any evidence to support it? Penguin had their best ever year in 2011, with an 8% increase in profit. Is that indicative of a business that's in decline?

[fjtorres]

Originally Posted by HarryT

I hear that said, but is there any evidence to support it? Penguin had their best ever year in 2011, with an 8% increase in profit. Is that indicative of a business that's in decline?

It depends on *how* they got that increase.
Auto companies (to single out just one industry) the world over have been in overall decline for decades yet they still manage to grow revenues in most years.
Sometimes short-term "growth" comes at the expense of long-term suicide.

It is hardly rare for a company amidst a tech disruption to shrug off change or think they are "managing" change, because they are focusing on the wrong metrics, only to get blindsided by a sea change tipping point. At which time they discover they did everything perfectly wrong; that is, they perfectly executed what was exactly the wrong strategy.

The BPHs are big and powerful and have a lot of resources, but in a lot of areas they are rowing against a strong tide, expending resources that might be better used looking for an alternate path. And some of the things the BPHs have done over the last 2-3 years have the smell of purely tactical thinking without much consideration for long term impact. (The price fix conspiracy, for one.)

Odds are we won't have long to wait and see what the proper strategy is.

[Elfwreck]

Originally Posted by HarryT

I hear that said, but is there any evidence to support it? Penguin had their best ever year in 2011, with an 8% increase in profit. Is that indicative of a business that's in decline?

A book company that disdains libraries is in trouble.

The BPHs have a lot of inertia, and the transition to ebooks has created a greater interest in books in general. For a while, the names that dominated the industry for the last century will benefit from the new activity--rising tide, all boats, and all that. But unless they sort out how the publishing business' core principles have changed--mainly, that it is no longer difficult to find an audience or distribute copies of a work--they'll be whittled away by smaller, nimbler companies, including a huge swarm of one-person author companies that have set their own terms for success.

Even if they don't get nailed by the lawsuit, if the settlement terms the other three publishers have agreed to are accepted by a judge, that'll put big dents in the profits of Penguin and Macmillan. Ebookstores will be free to discount the other books and their prices will look unreasonably high.

[HarryT]

Originally Posted by fjtorres

It depends on *how* they got that increase.
Auto companies (to single out just one industry) the world over have been in overall decline for decades yet they still manage to grow revenues in most years.
Sometimes short-term "growth" comes at the expense of long-term suicide.

Largely through a doubling of eBook revenues, according to the article I linked to. That's what I don't quite understand, you see: if I were to believe what I read on this site, I'd probably think that traditional publishers were on their last legs, but the financial results just don't bear that out. Penguin had an 8% increase in profit last years; Random House a 7% increase. Does that really indicate an industry which is in terminal decline?

[fjtorres]

Originally Posted by Elfwreck

...mainly, that it is no longer difficult to find an audience or distribute copies of a work--they'll be whittled away by smaller, nimbler companies, including a huge swarm of one-person author companies that have set their own terms for success.

I would suggest: "no longer difficult to find a small but profitable audience..."

The BPHs are very reliant on large print-run "bestsellers". A few big-return projects as a key to prosperity.

Much like the US TV advertising business could be in the pre-cable days.
Lowest common denominator content for mass audiences. The networks would (and still do) sneer at product that is well received, avidly followed by millions, yet doesn't cover *their* high overhead and expectations.

That same content, translated to a low overhead specialty cable network like A&E, LIFETIME, HBO, SYFY, or SHOWTIME can make a ton of money off that "limited" audience. That willingness of the cable networks to "think small" or "think genre" has over the past few decades whittled away the audience for the broadcast networks to the point that they are at a distinct disadvantage in obtaining quality content, some of which is never offered to them and instead goes straight to cable.
And, going a step forward; we are now seeing some quality video content going (experimentally) to the Internet as self-published ventures and succeeding. (DOCTOR HORRIBLE... anyone?)

It's not hard to see ebooks having similar (though not parallel) effects on books. BPHs = Networks, New Publishing = cable, self pub = internet video sites.

The BPHs are so worried about "giant" Amazon dictating to them that they are neglecting, even fostering, the development of a thousand low level competitors that are slowly eroding their domination just by taking away thousands of books they will never get to gatekeep. Or even see.

Barring change, irrelevance lies down that road.

[fjtorres]

Originally Posted by HarryT

Largely through a doubling of eBook revenues, according to the article I linked to. That's what I don't quite understand, you see: if I were to believe what I read on this site, I'd probably think that traditional publishers were on their last legs, but the financial results just don't bear that out. Penguin had an 8% increase in profit last years; Random House a 7% increase. Does that really indicate an industry which is in terminal decline?

Uh, through the conspiracy, those companies *raised* average ebook prices 30%.
30% price increase, 8% profit increase?
Uh, I dunno, but is that supposed to be a *good* result?

(That's what I meant about "how profits are achieved".)

The ebook business in the US and UK has been booming.
It won't be booming forever.
What happens then?

They try a *different* conspiracy?

[HarryT]

Originally Posted by fjtorres

The ebook business in the US and UK has been booming.
It won't be booming forever.
What happens then?

Time will tell, but I would hold off on the funeral arrangements for the time being at least.