WSJ: E-Book Sales Fall After New Amazon Contracts

[MikeB1972]

Originally Posted by eschwartz

KU is still a sustainable business model, on the grounds that the publishers with the unhappy response aren't the only source of books.
Competition.

#1 goal of the service should be: figure out a way to not go bankrupt as a matter of course.
#2 goal: find people willing to work with your *sustainable* business model.

Agreed, although as I said, sustainable for the subscription provider and the publisher are not the same thing, it's possible KU will never make long-term sense for the BWM's.
Totally agree with your 2 points, but most of the subscription providers seem to have started with 2, then only looked at 1 after they had a number of subscribers.

Originally Posted by eschwartz

If I had meant to say BPH, I wouldn't have said BWM. That isn't a typo.

Apologies, my bad, I was actually talking about the word herd but reading back see that it was actually a response to the post above yours.

[MikeB1972]

Originally Posted by Cinisajoy

Also one other thing on the topic of book selling.

Let's say someone offered to give you 65% on every 99 cent item they sold or 30% of every 2.99 item they sell. Where will you make more money?
One little detail, they sell twice as many at 99 cents.
So which has more profit?

Obviously you sell it at 2.99 then, when you have run out of people who will pay that, you drop the price to .99

[eschwartz]

Originally Posted by MikeB1972

Obviously you sell it at 2.99 then, when you have run out of people who will pay that, you drop the price to .99

Actually, you stay at $0.99 the whole time, because the vendor is apparently willing to pay you a substantially bigger cut in order to sell more books for less money and less profit.

cut * sales * unit profit

2*2*1
vs
1*1*3

Profit: 4 vs 3
Sales: 2 vs 3


Yes, making four times as much money per book manages to tip the balance in favor of the $0.99 books.

[fjtorres]

Originally Posted by MikeB1972

Obviously you sell it at 2.99 then, when you have run out of people who will pay that, you drop the price to .99

"Traditionally", Indies have been most successful doing it the other way: launching at $0.99 to build up ranking visibility and then going to $2.99. When sales drop below a given threshold, they go to $0.99 for a week or so to rebuild ranking visibility. (Where traditionally means "until last year". Because 2015 isn't 2014 any more than it is 2010. The digital disruption is still far from played out.)

The way the evidence is stacking up, however, there is even more money in putting the title in KU and setting the sale price at $3.99. ($0.99 pricing is increasingly "so last year..." )

One thing to remember is that it makes a difference who the publisher is when it comes to subscription sevices. A payout level that is perfectly fine for author/publishers (AKA Indies) or small tradpubs in the Carolinas or Michigan will be totally unacceptable to a BPH with seven Vice presidents per imprint and Manhattan glass tower rents.

Justifying high prices over an unwillingness to address non-value add overhead isn't going to resonate with buyers who only care about their costs. I.e., those not employed by publishers.

[MikeB1972]

Originally Posted by eschwartz

Actually, you stay at $0.99 the whole time, because the vendor is apparently willing to pay you a substantially bigger cut in order to sell more books for less money and less profit.
cut * sales * unit profit
2*2*1
vs
1*1*3
Profit: 4 vs 3
Sales: 2 vs 3
Yes, making four times as much money per book manages to tip the balance in favor of the $0.99 books.

Nope, you are making 0.90 per sale at 30% of 2.99 and 0.64 at 65% of .99 so grab the .90's first then go after the .64's.
You are just taking the overall 2x sales when you would could sell a chunk of those at the higher price before dropping the price.

[MikeB1972]

Originally Posted by fjtorres

The way the evidence is stacking up, however, there is even more money in putting the title in KU and setting the sale price at $3.99. ($0.99 pricing is increasingly "so last year..." )

Agreed, although it's a fixed pot size determined by Amazon. So it mostly depends on how many people they have using KU.
In it's simplest breakdown - if less total money goes into the KU Pot than went into the old buying ebooks pot then authors/producers/publishers as a whole will make less money (and most subscription users only use the subscription to save money - Gym users being the obvious exception).

Originally Posted by fjtorres

One thing to remember is that it makes a difference who the publisher is when it comes to subscription sevices. A payout level that is perfectly fine for author/publishers (AKA Indies) or small tradpubs in the Carolinas or Michigan will be totally unacceptable to a BPH with seven Vice presidents per imprint and Manhattan glass tower rents.

Agreed.

Originally Posted by fjtorres

Justifying high prices over an unwillingness to address non-value add overhead isn't going to resonate with buyers who only care about their costs. I.e., those not employed by publishers.

True, but if the publisher can't cover the non-value (or even value) added overhead then they go bust if they try to enter KU, so it's a moot point.

[eschwartz]

Originally Posted by MikeB1972

Nope, you are making 0.90 per sale at 30% of 2.99 and 0.64 at 65% of .99 so grab the .90's first then go after the .64's.
You are just taking the overall 2x sales when you would could sell a chunk of those at the higher price before dropping the price.

You'll also lose a chunk of customers altogether, who see the high price and go find something else. It's not as simple as selling to each person individually for the highest price they are willing to pay for it.

You will sell more virtual SKU if you keep a $0.99 price tag.



But I don't really have any idea how that breaks out at different levels.
Indie authors do, though, and they are pricing at $2.99 and dropping to $0.99 just to maintain visibility.

[MikeB1972]

Originally Posted by fjtorres

"Traditionally", Indies have been most successful doing it the other way: launching at $0.99 to build up ranking visibility and then going to $2.99. When sales drop below a given threshold, they go to $0.99 for a week or so to rebuild ranking visibility. (Where traditionally means "until last year". Because 2015 isn't 2014 any more than it is 2010. The digital disruption is still far from played out.).

For indies yes, however, for larger publishers you run the risk of taking sales away from your other books by promoting a single title so I suspect it gets more complicated the more frontlist titles you have at any given time. BPH's seem to have mostly stuck on the idea of dropping the price of the previous book in a series to boost author ranking instead. I am now approximately 1 book behind in most of the series I follow and saving a fortune

[MikeB1972]

Originally Posted by eschwartz

You'll also lose a chunk of customers altogether, who see the high price and go find something else. It's not as simple as selling to each person individually for the highest price they are willing to pay for it.

You will sell more virtual SKU if you keep a $0.99 price tag.

But I don't really have any idea how that breaks out at different levels.
Indie authors do, though, and they are pricing at $2.99 and dropping to $0.99 just to maintain visibility.

True, so the indie authors at least, seem to think that the people who saw the high price and went elsewhere are not adverse to coming back if the price drops again, which means it isn't a given that you will sell more in total if you keep the price low (some people seem to be actually put off by very low prices).

It was a lot simpler when you paid the price printed on the back of the book cover
Although at least I am paying a lot less for many more books now, so it's all good in my corner.

[eschwartz]

Originally Posted by MikeB1972

True, but if the publisher can't cover the non-value (or even value) added overhead then they go bust if they try to enter KU, so it's a moot point.

Over time the overhead will get paid off, as long as people continue to buy or borrow the book. ebooks are 100% profit, the publisher can't sell at a loss.
There is no need to factor in per-book overhead, so the wisest course of action is to simply go for sheer revenue.


Maybe they need to fix the pbook business.
POD might help them with that. Stop paying so much money to ship paper from point A to B.

[MikeB1972]

Originally Posted by eschwartz

Over time the overhead will get paid off, as long as people continue to buy or borrow the book. ebooks are 100% profit, the publisher can't sell at a loss.
There is no need to factor in per-book overhead, so the wisest course of action is to simply go for sheer revenue.

Not sure I agree, people only read x books a year.
If someone normally reads 10 books a year, then dropping the price to .99 won't magically make them read 100 books per year.
Going for sheer revenue might work for an indie and you are selling a handful of books, but if you are kicking out 20k books per year, you are going to end up shooting yourself in the foot at some point.

Originally Posted by eschwartz

Maybe they need to fix the pbook business.
POD might help them with that. Stop paying so much money to ship paper from point A to B.

Perhaps, I thought that it was still cheaper to bulk print and ship rather than POD at the current quantities? I could very easily be wrong of course.

[darryl]

This is a very fundamental issue for Tradpub, though I don't know to what extent they are facing up to it. I agree with you that Tradpub in its current form cannot survive on a remuneration model which would allow a sustainable subscription service. Their competitor, Amazon, can. This is because they are structured for a publishing industry that quite simply no longer exists. As others have pointed out, their costs are simply unsustainable, despite them paying most of their authors a pittance. What they seem to be doing is trying to differentiate their books from Indies, claiming such superior quality that they are not in fact in competition. If this were true to any significant degree, this would be a viable strategy. But unfortunately for them their stint as gatekeepers does not seem to have resulted in them having superior quality books. Their choice is compete or die. They have to re-structure their businesses so they can compete, or reach some accommodation with Amazon which leaves them with some significant role. I don't know that Amazon would be all that interested in the latter, but the more time passes the worse the position of tradpub. Don't get me wrong. They are not going to vanish overnight They have significant and valuable backlists and the vast majority of the top best selling authors. But whilst their heads remain firmly buried in the sand their position grows weaker and weaker with the passage of time.

[eschwartz]

Originally Posted by MikeB1972

Not sure I agree, people only read x books a year.
If someone normally reads 10 books a year, then dropping the price to .99 won't magically make them read 100 books per year.
Going for sheer revenue might work for an indie and you are selling a handful of books, but if you are kicking out 20k books per year, you are going to end up shooting yourself in the foot at some point.

It will make them read *your* ten books, rather than your competitor's books.
If dropping the price doesn't net you more sales, than maximizing revenue means raising the price. The point is not to focus on keeping the price high to offset per-book distribution costs.

Perhaps, I thought that it was still cheaper to bulk print and ship rather than POD at the current quantities? I could very easily be wrong of course.

That is a networking problem. There is no good reason why, for example, a single POD factory can't serve everyone's needs in a city, churning out all the books that city needs on behalf of all vendors and publishers.
Or whichever area is most efficiently served by a POD factory. The key is a) distributed printing networks, b) printing the number of books you need, not churning out a 2-year supply of a book and then warehousing them while you drip-feed the entire country; repeat ad nauseam.

Amazon is working on this, at least for Indies (tradpub hates POD ).
Using whatever secret sauce Just-In-Time calculation to predict when and where to print books in regional factories.

[DiapDealer]

I was told there would be no math.

[MikeB1972]

Originally Posted by DiapDealer

I was told there would be no math.

We lied